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What measure has the government taken to support MSMEs in cases of delayed payments?
- a)Providing interest-free loans.
- b)Offering tax exemptions.
- c)Implementing interest on delayed payments Act.
- d)Offering grants for technological upgrades.
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
What measure has the government taken to support MSMEs in cases of del...
The government has enacted the "interest on delayed Payments Act," which requires customers of MSMEs to make payments within a specified period. Delays beyond this period attract interest to support MSMEs in cases of late payments.
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What measure has the government taken to support MSMEs in cases of del...
Government Support for MSMEs: Delayed Payments
Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in economic development, but they often face challenges such as delayed payments from larger companies. To mitigate this issue, the government has implemented specific measures, including the Interest on Delayed Payments Act.
Key Features of the Interest on Delayed Payments Act
- Timely Payments: The Act mandates that payments to MSMEs must be made within a stipulated period. If a business fails to pay on time, it incurs an interest penalty.
- Interest Rate: The interest rate for delayed payments is set at three times the bank rate, providing a strong incentive for timely payments from buyers.
- Applicability: The Act applies to all MSMEs registered under the MSME Development Act, ensuring that they are protected against late payments.
Benefits for MSMEs
- Financial Relief: The provision of interest on delayed payments helps MSMEs alleviate cash flow problems caused by late payments, allowing them to operate more smoothly.
- Encouragement for Compliance: By imposing penalties on delayed payments, larger companies are encouraged to prioritize timely transactions with MSMEs, fostering a healthier business ecosystem.
- Legal Recourse: MSMEs have a legal framework to seek redressal for delayed payments, empowering them to take action against defaulters.
Conclusion
The implementation of the Interest on Delayed Payments Act is a significant measure taken by the government to support MSMEs. By ensuring timely payments and providing financial relief through interest penalties, the Act helps create a more equitable business environment for small enterprises.
Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in economic development, but they often face challenges such as delayed payments from larger companies. To mitigate this issue, the government has implemented specific measures, including the Interest on Delayed Payments Act.
Key Features of the Interest on Delayed Payments Act
- Timely Payments: The Act mandates that payments to MSMEs must be made within a stipulated period. If a business fails to pay on time, it incurs an interest penalty.
- Interest Rate: The interest rate for delayed payments is set at three times the bank rate, providing a strong incentive for timely payments from buyers.
- Applicability: The Act applies to all MSMEs registered under the MSME Development Act, ensuring that they are protected against late payments.
Benefits for MSMEs
- Financial Relief: The provision of interest on delayed payments helps MSMEs alleviate cash flow problems caused by late payments, allowing them to operate more smoothly.
- Encouragement for Compliance: By imposing penalties on delayed payments, larger companies are encouraged to prioritize timely transactions with MSMEs, fostering a healthier business ecosystem.
- Legal Recourse: MSMEs have a legal framework to seek redressal for delayed payments, empowering them to take action against defaulters.
Conclusion
The implementation of the Interest on Delayed Payments Act is a significant measure taken by the government to support MSMEs. By ensuring timely payments and providing financial relief through interest penalties, the Act helps create a more equitable business environment for small enterprises.
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What measure has the government taken to support MSMEs in cases of delayed payments?a)Providing interest-free loans.b)Offering tax exemptions.c)Implementing interest on delayed payments Act.d)Offering grants for technological upgrades.Correct answer is option 'C'. Can you explain this answer?
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