Micro, Small and Medium Enterprises (MSME) sector is a very important sector of the Indian economy. MSMEs not only play a key role in providing large employment opportunities at comparatively lower capital cost than large industries. MSME Sector also helps in industrialization. MSMEs are complementary to large industries as ancillary units and this sector contributes enormously to the socio-economic development of the country. Government of India also focuses more on MSME due to this reason.
As per Section 15 of The Micro Small and Medium Enterprises Development Act, 2006 The buyer has to make the payment to Micro and Small Enterprises supplier on or before the date agreed by both of them in writing and this date should not exceed 45 days from the date of acceptance. In short maximum 45-day credit period is allowed for making payment to Micro and Small Enterprises. This protects the interest of the Micro and Small Enterprises businesses. If the buyer fails to make the payment on or before due date than buyer is liable to pay compound interest with monthly rests to the supplier on the amount due at three times of the bank rate notified by the Reserve Bank of India which is presently 6.75% p.a. (w.e.f. 8th February, 2023) RBI circular RBI/2022-23/174 DOR.RET.REC.101/12.01.001/2022-23 dated 8th February 2023.
Following clause (h) has been inserted after clause (g) of section 43B by the Finance Act, 2023, w.e.f. 1-4-2024
(h) any sum payable by the assessee to a micro or small enterprise beyond the time limit specified in section 15 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006),
shall be allowed (irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him) only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him.
So now there are two points which the Large Organizations need to look after while dealing with Micro and Small Enterprises.
Presently MSME Portal do not provide feature of MSME Search on the basis of either Income Tax PAN (Permanent Account Number) or on the basis of GSTN (Goods and Service Tax Registration Number).
Ease of MSME search on the basis of PAN or GSTN will help the Large Organization to comply with these requirements in a better way.
With this article would like to make humble suggestion for the Policy Makers:
Suggestion:
1. A separate field may be created in GST Tax Invoice to mention the “Udyam Registration Number “of the seller (if any). The data of MSME can further be used to analyze sales-sector wise, category wise i.e. Micro, Small and Medium.
2. MSME Portal should have a search option on the basis of Income Tax PAN or GST Number
3. The data of MSME sales can be further used to form policies considering the various sectors in the MSME.
Conclusion: Enhancing compliance with MSME regulations is crucial for fostering a conducive business environment. By implementing suggestions such as incorporating Udyam Registration Numbers in GST invoices and improving MSME Portal search functionalities, policymakers can streamline compliance processes and support the sustainable growth of MSMEs. These initiatives will not only benefit MSMEs but also contribute to the overall economic development of the nation.
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