The textile sector is expressing concerns over a new clause recently introduced in the Income Tax Act by Finance Minister Nirmala Sitharaman. This clause, which is a part of the interim Budget for the 2024-25 fiscal year, mandates prompt payment for goods supplied by Micro and Small Enterprises (MSME) within 45 days.
The Tamilnadu Spinning Mills Association (TASMA) has written to the Finance and MSME ministries, highlighting the panic caused among suppliers and buyers in the textile value chain due to this clause. According to TASMA, many buyers had previously agreed to a payment period of 90 days, and forcing them to comply with a 45-day settlement period would disrupt the entire industry.
In their letter to the Finance Minister, TASMA urged for an amendment to the clause that allows for a 90-day settlement period with MSMEs, either as a general amendment or specifically for the textile industry. They emphasised the need to balance the interests of both suppliers and buyers to ensure the smooth functioning of the industry.
It remains to be seen how the Finance Ministry will respond to this request and address the concerns raised by the textile sector in a bid to maintain harmony and profitability within the value chain.
