Tax tweak that hurt MSMEs likely to get a relook in budget Adani Green taps Europe funds for up to $500 mn
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Achange introduced last year in the Income Tax Act to help small businesses receive timely payments might have had the unexpected effect of putting off buyers of their goods and services altogether. According to two people aware of discussions in the government, the Centre may amend the Act again in the full budget for 2024-25 in July.
What is unclear, though, is the exact change that could be made. One of the two persons said, “It is highly likely that Clause H of Section 43B may be dropped.” The second person said it was too early to speak about the specific amendments that may be brought out. Both of them spoke on the condition of anonymity.
In a bid to address liquidity issues of MSMEs (micro, small and medium enterprises), Clause H was added in Section 43B of the Income Tax Act. Introduced in the Finance Act 2023, it says payments to small businesses that are delayed beyond a specified period can be claimed as an expenditure (deduction from taxable income) only in the fiscal year in which the payments are made, not in the year when the liability to pay arose.
“However, there is apprehension among small businesses that as an unintended consequence, large procurers would avoid buying from small firms to avoid this provision in the law,” the first person said. “This concern would be addressed in the Finance Bill to be presented as part of the fullyear budget for 2024-25.”
Tax expert Ved Jain, who is also a former president of the Institute of Chartered Accountants of India (ICAI), strongly pitched for the provision to be dropped. “The Income Tax Act should only sparingly be used for larger social objectives, for which there are other laws,” he said.
Adani Green Energy Ltd is close to raising $400-500 million from at least two Europebased funds, two people aware of the deal said.
Billionaire Gautam Adani’s family members and associates hold 53.67% in Adani Green, the group’s second-largest subsidiary with a market value of over ₹2.8 trillion. The company will need to sell new shares worth about 1.5% stake to raise the amount, going by its current market price.
“The group is negotiating with at least two large funds based out of Europe. One is an energy-sector fund and the other is a large hedge fund. Funds are keen to invest in the company after it emerged as the fastest and the largest renewables firm in India with about 11GW operational capacity. The deal to raise the capital via stake sale in Adani Green is likely to be announced in May,” one of the two people said on the condition of anonymity.
The company has so far raised around $3 billion, mostly from the promoters or
Farm growth at five-year high, to ease rural pressure: Chand Agricultural output growth in 2024-25 is likely to come in at a five-year high of over 6%, aided by normal monsoon and a lowbase effect, and may help ease demand for guaranteed rural jobs, said Niti Aayog member Ramesh Chand.
Direct tax collections surge 17.7% to ₹19.58 tn in 2023-24
The central government has collected ₹19.58 trillion in direct tax revenue in 2023-24 after adjusting for refunds, showing a 17.7% growth annually, the CBDT said on Sunday. One highlight of the mop-up is the growth in personal income tax collection.
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