MSME dues: 73% decline seen in YoY disposal of delayed payment applications in FY23

Credit and finance for MSMEs: Overall 29,252 delayed payment applications involving Rs 7,093 crore were filed by MSEs against central ministries, departments, public sector units and others in FY23.

Written by Sandeep Soni

April 16, 2023 19:05 IST

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Out of total applications filed in FY23, only 3.5 per cent were disposed.

Credit and finance for MSMEs: The number of delayed payment applications by micro and small enterprises (MSEs) disposed in the financial year 2022-23 dropped by a significant 73.5 per cent year-on-year vis-a-vis 50 per cent decline in FY22, as per the official data. 1,043 applications involving Rs 182 crore were disposed by the facilitation councils across India in FY23 in comparison to 3,937 applications involving Rs 441 crore disposed in FY22 and 7,879 applications involving Rs 1,599 crore disposed in FY21.

Overall, data from the delayed payment monitoring system of the MSME Ministry – MSME Samadhaan showed 29,252 applications involving Rs 7,093 crore were filed by MSEs against central ministries, departments, public sector units and others in FY23, indicating only 3.5 per cent of applications disposed by facilitation councils during the year.

Also read: Delayed payments to MSMEs: How to file online complaint against govt departments, PSUs, other buyers

The total applications filed in FY23 were down 15 per cent from 34,515 applications involving Rs 7,656 crore filed in FY22. The share of applications disposed in total applications in FY22 was relatively better at 11 per cent.

The government had launched the Samadhaan portal back in October 2017 to help small businesses with the easy filing application process and tracking them. Since then, 1.38 applications have been filed so far, of which 26,445 cases were disposed while 36,200 applications were rejected.

In order to expedite payment of MSME dues within 45 days of acceptance of goods by buyers, the government in the budget this year had announced amending section 43B of the Income Tax Act. The amendment will allow buyers to claim a tax deduction for payments made to MSMEs only after they actually make the payment to their MSME sellers otherwise they would be liable to pay income tax on it.

Also read: Union Budget 2023: Solving MSMEs delayed payment issue cleverly

Apart from the tax amendment, buyer, who fails to pay MSEs within 45 days, are liable to pay compound interest with the monthly rests to the supplier on the amount at three times the bank rate notified by the Reserve Bank of India (RBI) as per Section 16 of the Micro, Small and Medium Enterprise Development (MSMED) Act.