The Finance Ministry has highlighted the benefits of recent amendments to Section 43B of the Income-tax Act, 1961.

The Finance Ministry has highlighted the benefits of recent amendments to Section 43B of the Income-tax Act, 1961. These changes aim to tackle delayed payments to Micro and Small Enterprises (MSEs). Minister of State for Finance, Pankaj Chaudhary, emphasized in the Lok Sabha that MSME associations across India support these amendments as vital for resolving cash flow issues faced by small businesses.

Key Highlights:

  1. Revised Section 43B
    Introduced in April, a new clause ensures that payments to MSEs exceeding 45 days from the acceptance date are deductible only after actual payment.
    • This step promotes timely payments and addresses working capital challenges for MSEs.
  2. Accountability for Large Enterprises
    Companies delaying payments to MSEs must now submit half-yearly returns to the Ministry of Corporate Affairs.
    • These returns include details of outstanding amounts and reasons for delays.
  3. Enhanced Invoice Discounting via TReDS
    Businesses with a turnover above ₹250 crore (revised from ₹500 crore) and all Central Public Sector Enterprises (CPSEs) must onboard the Trade Receivables Discounting System (TReDS).
    • TReDS allows MSEs to access quicker receivables realization through multiple financiers.
  4. Facilitation Councils
    A total of 159 Micro & Small Enterprises Facilitation Councils (MSEFCs) have been set up to handle delayed payment cases under the MSMED Act, 2006.
    • States like Tamil Nadu, Uttar Pradesh, and Maharashtra host multiple councils.
  5. Resolution Progress via Samadhaan Portal
    The Samadhaan portal has processed 2.13 lakh applications involving ₹47,366 crore.
    • Approximately 43,069 cases, totaling ₹7,085 crore, have been resolved through this platform.

Strategic Importance:

These measures aim to alleviate financial stress on MSEs, improve cash flow, and enhance their economic contribution. Furthermore:

  • Mandatory onboarding of TReDS ensures faster receivables processing.
  • Stricter compliance measures compel large enterprises to adhere to payment timelines, boosting confidence in the MSME ecosystem.
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