CAIT representatives meet FM, demand deferment of IT Act clause related to MSMEs

New Delhi: Representatives of traders' body CAIT on Wednesday met Finance Minister Nirmala Sitharaman and demanded that implementation of a clause in the Income Tax Act related to MSMEs payment rule be deferred by a year to April 2025.

In a release, the Confederation of All India Traders (CAIT) said a delegation led by its Secretary General Praveen Khandelwal conveyed the traders' concerns to the finance minister and suggested a solution during the meeting.

In its memorandum, CAIT welcomed the government's decision, highlighting the significance of ensuring timely payments to the MSME sector within 45 days to maintain uninterrupted cash flow for traders.

However, given the "lack of clarity" surrounding the applicability of the law to traders and other related provisions, CAIT called for the suspension of the implementation of Section 43 (b)h of the Income Tax Act until sufficient clarification and information dissemination are achieved nationwide.

"CAIT further appealed to the government to postpone the implementation of this law from April 1, 2024, to April 1, 2025, to provide traders with a one-year deferral period," the release said.

The clause in the Income Tax Act added through the Finance Act 2023 is aimed at addressing the issue of working capital scarcity in the MSME industry and promoting prompt payments to micro and small businesses.

This clause is applicable when an enterprise is buying goods or taking services from an enterprise registered under the MSMED Act, 2006. CAIT has reiterated the importance of addressing the financial challenges faced by the MSME sector.

It emphasised the need to clarify ambiguous provisions and enhance awareness among traders through collaborative efforts involving the Income Tax Department, Ministry of MSMEs, and trade organizations.