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MSMEs may get a big relief in Budget 2024, will the government take this big step?

Sagar Patel

By Sagar Patel

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The government can take a big decision regarding MSMEs in the budget.

The government may relax the requirement for MSMEs to make payments within 45 days of purchasing goods and services to prevent large companies from looking for other sources. Sources gave this information. Finance Minister Nirmala Sitharaman will present the full budget for the fiscal year 2024-25 in the Lok Sabha on July 23. This may be announced in the budget. Let us also tell you what kind of decision the government may take regarding MSMEs in the budget.

What is the government’s opinion?

Sources said the government is considering the suggestions given by Micro, Small and Medium Enterprises (MSMEs) during the pre-budget discussions on changes in Section 43B (H) of the Income Tax Act. In last year’s budget, the government had added a new section under Section 43B of the Income Tax Act to address the challenge of payment delays faced by MSMEs in the country.

Under Section 43B(h) of the Income Tax Act, introduced by the Finance Act, 2023, if a large company fails to make payment to an MSME on time (within 45 days in case of written agreements), it cannot deduct the expense from its taxable income and the amount cannot be deducted, which could result in higher tax.

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30 percent share of GDP

MSMEs fear that this provision may cause large buyers to bypass MSME suppliers and start purchasing from MSMEs (those not registered in the company) or from non-MSMEs.

Earlier in May, Finance Minister Nirmala Sitharaman had said that based on the representation submitted by MSMEs, if there is any change in the rule, it will be included in the full budget in July under the new government. The MSME sector accounts for 30 per cent of the country’s gross domestic product (GDP).

Sagar Patel

Sagar Patel

I am Sagar Patel, specializing in business news reporting. With a keen focus on economic trends, market analysis, and corporate developments,

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