45-day payment rule: New fund will work with banks to help MSME units, says FM Sitharaman

Finance Minister Nirmala Sitharaman announced a new rule requiring companies to pay MSMEs within 45 days to ensure timely payments. This regulation, effective from April 1, 2024, stipulates that overdue payments to MSMEs will incur tax liabilities and interest charges. The rule aims to improve cash flow, reduce payment disputes, and enhance the financial stability of MSMEs. Businesses failing to comply will face increased tax burdens as they cannot claim these overdue payments as tax-deductible expenses until settled. This initiative is part of broader efforts to support MSMEs, a vital sector employing over 123 million individuals in India