Srinagar: The Federation of Chambers of Industries Kashmir (FCIK) has called for deferment of new rules enacted recently by the central government under section 43B of Income Tax Act till these were comprehensively discussed with stakeholders for greater awareness and understanding about their compliance and pros and cons.
While acknowledging that the aims and objectives of new rules have apparently been enacted in pursuit of timely payments to and enhancing liquidity of MSMES, the FCIK observed in a statement to Ziraat Times that there was need for comprehensive discussions with industry representatives to assess advantages and disadvantages before such rules were put in place for implementation.
“The rules also seem to lack clarity on their applicability and implementation” stated FCIK in a statement, adding that registration as MSMEs was freely and equally available to all traders, agents, service providers, processors and manufacturers on Udhyam portal. Besides, MSMEs engaged in manufacturing and processing activities themselves happened to be buyers of raw material and other services from traders and fellow MSMEs well before producing and selling their finished goods.
The central government recently introduced significant changes in the Finance Act -2023 after insertion of clause (h) in section 43B of the Income Tax Act with a view to strengthen the enforcement of MSME payment regulations. The amended rules now made it mandatory for the buyers to release the due payments of MSMEs within a maximum period of 45 days or otherwise face disallowance of the expenditure eventually enhancing their taxable income tremendously. The Finance Act furthermore has advised all companies and trade entities for clearance of all previous outstanding dues to MSMEs before March 31, 2024 and failure to adhere to these timelines will result in the pending payment being treated as income, subject to taxation.
FCIK informed that the manufacturing sector in J&K had different types of buyers including government departments and Public Sector Undertakings; wholesalers and retailers and importers from various countries.
“Whereas hundreds of crores of due payments of MSMEs in J&K are withheld at the government departments and PSUs for longer durations, no law including the ‘Delayed Payments Act’ or ‘MSME SAMADHAAN’ has brought desired relief to MSMEs” informed FCIK, adding that “even the orders passed by MSME Facilitation Council in some cases does not get any compliance unless MSMEs are forced to seek relief in courts of law”. Whereas the industry expected more stringent rules to compel government departments and PSUs to release timely payments to MSMEs, no such initiative has found place in recently amended Finance Act-2023.
FCIK has raised alarm that the new rules might adversely impact the supply chain of various manufactured and processed goods from MSMEs of J&K to wholesale or retail traders. “While such supplies are currently affected on diverse timelines for different products, the new rules may force the buyers to reduce their intake and stocks which eventually will impact marketing of MSMEs”, suspects FCIK.
FCIK has solicited support from the UT government in recommending deferment of the new rules till comprehensive deliberations took place between the Finance Ministry and stakeholders and a viable timeline adjustment for different types of industry was incorporated in the rules.
