Exporters seek exemption from 45-day payment rule for supplies from MSEs
micro and small enterprises (MSEs) as it will impact their businesses. In a letter to Prime Minister Narendra Modi, chiefs of major export promotion councils and federation of Indian export organisations have appealed to waive the export companies from section 43B(h) of the Income Tax law.
The new rule, Section 43B(h) of the Income Tax Act, introduced in the Finance Act 2023, is designed to make sure small businesses get paid on time. It allows companies to get tax breaks if they pay their small business suppliers within the time limits set by the MSMED (Micro, Small and Medium Enterprises Development) Act, 2006.
Especially, companies must pay within 45 days if there is an agreement, and within 15 days in the absence of such a pact. If they do not meet these deadlines, they can not deduct these expenses for tax purposes.
«Our humble request is to consider the export community separately for domestic supplies as our challenges and situations are very different. Exporters who receive supplies from micro and small units have been affected as it has impacted their liquidity,» according to the letter dated February 16.
It said that for exports, payment is received with an average time lag of 120 days, although the RBI allows a nine-month period to realise export proceeds as sometimes it takes even longer.
«The average lead time for an export consignment is about 90 days compared to a maximum of 14 days for domestic consignments within India. Buyers generally pay after receiving the goods, which, with an additional
