KOCHI: The Cochin Chamber of Commerce and Industry expects relaxations in provisions of income tax payments of small and micro enterprises.
These provisions which were expected to ensure that MSMEs are assured of timely cash flow and to develop better bargaining power when negotiating payment terms with larger enterprises has actually pushed such enterprises into more difficulties, says the chamber.
The new provisions under section 43B(h) of the Income Tax Law say that payments due in SMEs, if not paid with 15/45 days of supply, would attract income tax liability at the end of the year.
Further, the SMEs have to pay income tax on the stocks they hold at the year end since most of the outstanding to suppliers at the year end would be the purchases in March and the sales realisation would be only in April. The disallowance provisions are applicable even in transactions between two SMEs.
There are also unfair trade practices like asking the SMEs to surrender the registration for continued business since the provisions do not apply to units which do not have UDYAM registration, says the chamber.