OPINION: A good move of the Ministry of MSME

The Ministry of MSME have issued an advisory to all the Micro and Small enterprises to print their Entrepreneur Memorandum Numbers "EM-II" on their , sale orders, letter heads and Sale Invoices.

The reason behind this is that as per 17A after the form No. 3CD of Income tax "Amount of interest inadmissible under section 23 of the MSME Development Act 2006".

For all the buyers it is mandatory to calculate and show the pending amounts alongwith interest amount in the annual balance sheets , and even it is mandatory for the auditors of such companies, department officials to strictly follow this rules, In case of no agreement of payment dues, it is considered to be maximum 45 days.

That means that, if any buyers purchases the material from any Micro or Small units he has to either pay the amount within 45 days or he will have to show the actual amount in his books along with the Interest amount.

But the buyers don’t follow this rule and take undue advantage of non- verification of the status of seller, that whether the seller belongs to Micro-Small or Medium or Large. So they do not add the interest amount alongwith the principal amount in their balance sheets.

It is a good move of the ministry as this will bring a strictness in payments by the buyers to Micro and Small Manufacturers and in any case if there will be a delay the buyers will have to pay the penal interests on the pending amounts to the Micro and Small Units.

(The Author is National President of Federation of Association of Small Industries of India-FASII.)