The Indian government is considering a range of measures to ensure timely payments to micro, small, and medium enterprises (MSMEs). Penalty details Proposed penalties and current regulations The proposed amendments also include a penalty for non-compliance, which would be 2% of the turnover of large buyers. Notably, delayed payments to MSMEs account for nearly ₹9 trillion annually, according to government data. The Finance Act 2023 has also introduced a new tax rule effective from April 1, 2024. Tax implications New tax rule and reporting requirements The new tax rule disallows expenses for payments delayed beyond 45 days to MSME suppliers under Section 43B(h) in that fiscal year.