SIGA raises concerns on IT clause over new payment norms

SIGA Raises Concerns On IT Clause Over New Payment Norms

The South India Garment Association (SIGA) has raised concern over a recent payment rule impacting Micro, Small, and Medium Enterprises (MSMEs) and its potential harm to the apparel sector’s future.

SIGA has expressed the concern in a letter to Prime Minister Narendra Modi and urged him to repeal Rule 43B (H) in the Income Tax Act, which can massively affect the Indian garment production sector.

Rule 43B (H) mandates payments to MSME’s within 15 to 45 days for goods purchased from them before March 31, 2024.

“Failure to adhere to this timeline results in pending payments will be deemed as taxable income,” Bangalore Times reported.

According to SIGA, implementation of this clause will unfavourably impact many apparel factories, as industry norms typically involve payments after a 90-day period.

SIGA President Anurag Singhla emphasised the potential blow to an industry already grappling with challenges and appealed to the Prime Minister for the rule’s repeal in the interest of preserving jobs.

Despite the government’s intention to protect MSMEs, garment factories are facing cancellations from retailers, leading to what SIGA Vice President Naresh Lakhanpal describes as the industry’s worst crisis in 50 years.

BC Shivakumar, Managing Director of BS Channabasappa & Sons, requested a phased implementation to mitigate its impact.

Former SIGA President Kundan Jain appealed to the government not to enforce the new rule, expressing concerns over order cancellations from retailers.

He emphasised the industry norm of making payments between 75 and 90 days and anticipates challenges in meeting a 45-day payment requirement.

Image Credit: Reuters