According to the delayed payment monitoring method MSME Samadhaan, out of 65,435 applications filed by MSEs, only 5,691 applications involving Rs 858.60 crore have been disposed of by MSEFCs so far.
Union Budget 2021-22 Expectations for MSMEs: The MSME Development Act, 2006, which includes provisions connected to the problem of delayed payment to compact corporations, and the Micro and Small Enterprise Facilitation Councils (MSEFC) that have been set-up for settlement of disputes have no teeth to resolve the delayed payment problem, according to Manguirish Pai Raikar, Chairman at Assocham’s National Council for MSME. “There is the Act for delayed payments, you can go to facilitation councils as well, but they don’t have teeth. There has to be a strong deterrent against businesses delaying payments to MSMEs. In 80 per cent of the cases, they delay it deliberately while MSMEs have to continue pay interest on the bank loan. Eventually, MSMEs get defaulted for no fault. There should be some punishment for delayed payment,” Raikar told TheSpuzz Online sharing the business body’s expectations from the price range for MSMEs.
While the Department of Expenditure had issued an Office Memorandum in July final year asking purchasers to spend a penal interest of 1 per cent per month for delayed payments beyond the prescribed duration of 45 days from the day of acceptance of goods, “businesses are not interested in paying on time. This is the major problem to be looked at,” he mentioned. According to the delayed payment monitoring method MSME Samadhaan, out of 65,435 applications filed by MSEs, only 5,691 applications involving Rs 858.60 crore have been disposed of by MSEFCs so far. According to the Act, state governments have to assure that the MSEFC hold meetings often and make a decision on the delayed payment circumstances inside a period of 90 days from the date they are brought below the consideration of the respective MSEFC.
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Assocham has also sought collection of GST payments from MSMEs on a money basis alternatively of accrual or bill basis to aid corporations rapidly track their post-Covid recovery. Businesses are presently liable to spend GST on point of taxation that precedes the payment received for goods sold. This leads to working capital crises for MSMEs ultimately major to slower organization development, job cuts, and more. “What happens if I don’t get payments for two months, but the moment I do the billing then by 31st of the particular month I have to pay GST,” mentioned Raikar. The association has also urged the government to exempt MSMEs from the reverse charge mechanism of GST, let Input Tax Credit below GST on the building of the immovable home, and cut down stamp duty due to financial slowdown. Recently, the Tamil Nadu government had announced stamp duty exemption and lowered registration charges for MSMEs for agreements connected to Deposit of Title Deeds for securing loans till March 31, 2021.