The South India Garment Association (SIGA) expressed its concern about the new payment rule for MSMEs, describing it as detrimental to the growth of the garment industry.
SIGA, which represents a number of textile units throughout the nation, wrote to Prime Minister Narendra Modi requesting the repeal of the new law, namely Income Tax Act law 43B(H).
Clause (h) of Section 43B of the Income Tax Act stipulates that any sum payable to the assessed, pertaining to a micro or small enterprise, beyond the time limit specified in Section 15 of the MSMEs Development Act, 2006, shall be allowed only in the previous year in which such sum is actually paid. The clause makes it mandatory to make payments to micro and small manufacturers and traders within 15 to 45 days for the goods bought from them before 31st March 2024.
The new rule makes it clear that if this deadline is missed, the outstanding contribution would be treated as income and subject to taxation. SIGA has voiced concerns, claiming that many clothing companies will suffer as a result of the new rule’s adoption. This is due to the fact that clothing stores and dealers normally don’t get paid until after 90 days.
“It will be a big blow to the garment industry which is already in trouble due to competition from corporate companies. I appeal to the Prime Minister to repeal the new rule in the interest of the garment industry that provides jobs to lakhs of people,’’ said SIGA president Anurag Singhla.
Former SIGA president Kundan Jain made an appeal to the Government to refrain from enforcing the new rule, citing concerns among clothing suppliers regarding retailer cancellations of orders.
