The revised payment time limit stipulated in the amended Income Tax Act has had a notable impact on textile production in south Gujarat. Textile traders have refrained from placing orders for cloth due to the 45-day payment window. Conversely, weaving units have expressed support for the new regulations. As per the updated guidelines, buyers are required to settle payments for purchases from Micro, Small, and Medium Enterprises (MSMEs) within 45 days, failing which the unpaid amount will be treated as the buyer’s profit. These amendments took effect from April 2023 that is, from financial year 2023-24.
Chetan Maniya, the president of the Rapier Jacquard Weavers Association, acknowledged the benefits of the rules in expediting payments, but highlighted the delay in receiving orders and the suspension of earlier ones. Market insiders revealed that textile traders in the city typically extend credit to buyers across the country for up to 180 days, making it challenging to fulfill the 45-day payment requirement to cloth manufacturers. Some manufacturers have reported a significant decline in new orders and noted that numerous traders have ceased acquiring greige cloth or are demanding it at significantly reduced prices.
Despite the challenges faced, government ministries maintain that the rule aims to improve the financial conditions of MSMEs and must be adhered to by all parties, emphasising its long-term benefits.
