The Clothing Manufacturers Association of India (CMAI) has expressed appreciation for the Government of India’s efforts in introducing the MSME Payment amendment to the Income Tax under Section 43 (b) (h) to tackle issues of delayed and non-payment faced by the MSME sector.
However, the amendment has led to significant adverse consequences for the domestic garment industry, according to a press release issued on Tuesday.
Rajesh Masand, President, CMAI said, “Issues such as the cancellation of orders from retailers have started to emerge, raising concerns within the industry.”
In response to these challenges, CMAI has submitted recommendations to Finance and Corporate Affairs Minister Nirmala Sitharaman, urging a delay in the immediate implementation of the amendment.
The association proposes the mandatory reduction of credit periods over three years: a maximum period of 90 days by March 31, 2025; a maximum period of 60 days by March 31, 2026; and a maximum period of 45 days by March 31, 2027.
CMAI also advocates for the exemption of payments between MSME members from the scope of the amendment.
Additionally, it suggests a reformulation of the credit structure, reducing the period from 90 to 120 days to a fixed 45 days. This approach aims to enhance efficiency and financial stability while preventing the closure of small units.
“Genuine and reliable buyers, with positive intentions, may gradually adapt their business models to the shortened credit period, fostering a more transparent and compliant business environment under Section 43(B)(h),” CMAI added.
