The Tamilnadu Spinning Mills Association (TASMA) has expressed concerns regarding a new clause introduced in the Income Tax Act, 1961, through the Finance Act 2023. The Finance Ministry has introduced Section 43B(H), which mandates payment for goods supplied by Micro and Small Enterprises (MSMEs) within 45 days. This aligns with the provisions under Section 15 of the MSMED Act, 2006, aimed at ensuring prompt payments to prevent MSMEs from facing delays in fund flow.
TASMA has written to the Finance and MSME ministries, highlighting the industry's apprehension about the new clause. According to TASMA, the introduction of Section 43B(H) has caused panic among suppliers and buyers in the textile value chain. Many buyers, who were accustomed to flexible payment periods as agreed upon between parties, are now hesitant to accept goods with the limited payment terms of 45 days.
In certain segments of the textile industry, a payment period of 90 days has been widely accepted by both suppliers and buyers. Transactions have been proceeding smoothly under these terms. TASMA and industry participants argue that a 90-day period is necessary, considering the nature of the goods involved, which undergo further value-addition through additional processes.
TASMA has urged the MSME Ministry to amend the clause, allowing a 90-day period for the settlement of payments with micro, small, and medium enterprises. The association suggests that if a general amendment to the Act is not possible, a restrictive consideration for the textile industry alone should be entertained, taking into account the established business practices in the sector.
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