PPBM Flags Compliance Challenges for Small Businesses
The Punjab Pradesh Beopar Mandal (PPBM) has raised serious concerns over the Central Government's new Income Tax Rule 46(8), which mandates daily electronic ledger backup and storage for traders and the MSME sector. In a communique addressed to Finance Minister Nirmala Sitharaman, the trade body urged a reconsideration of the provision, emphasizing the need for a simpler compliance mechanism to support small enterprises.
According to the rule, effective from April 1, 2026, all traders with an annual turnover exceeding Rs 25 lakh must maintain daily backups of their electronic account data on Indian servers. The PPBM argues that this requirement imposes an excessive financial and administrative burden on small and medium-sized businesses, many of which lack dedicated IT departments or the necessary technical infrastructure for data transfer, cloud storage, cybersecurity, and server management.
Call for Practical Compliance Mechanism
PPBM president Piara Lal Seth stated, “The country’s business community has always supported transparency, digitisation and tax compliance. However, the mandatory daily backup and storage of electronic account data on Indian servers for traders with a turnover exceeding Rs 25 lakh under this provision, implemented from April 1, 2026, is proving extremely difficult and costly for small and medium-sized businesses.” He highlighted that small businesses and MSMEs often lack the technical resources to manage complex daily processes, leading to unnecessary financial strain.
The organization has called for the creation of a simple and practical compliance mechanism tailored to small businesses, aiming to promote ease of doing business and enable continued contribution to the national economy without added burden.
Data Privacy and Security Concerns
PPBM general secretary Sameer Jain raised additional concerns regarding data privacy and security. He noted that business accounts contain highly sensitive information, including customer and supplier details, pricing structures, profit margins, and business strategies. “Mandatory daily transfer of complete data could increase the risk of data breaches, privacy concerns and cyber misuse,” Jain warned.
The PPBM's appeal underscores the tension between the government's push for digitization and tax compliance and the practical challenges faced by small enterprises. The trade body hopes that the Finance Minister will consider these concerns and provide relief to the MSME sector, which forms the backbone of the Indian economy.
