Understanding applicability of Section 43B(h) to MSMEs
- Year of Publication: 2024
- ISBN: 978-81-97056-08-6
- No.of Pages: 105
Over the last few years, the MSME sector has grown and today it forms the backbone of the Indian economy. Statistics reveal that MSMEs contribute about 1/3rd of the India’s manufacturing output. MSMEs account for nearly half of India’s exports. Naturally, the Government is focused on encouraging and protecting the MSMEs. It has taken innumerable measures to strengthen the financial accessibility of MSMEs. Finance Act, 2023 aims to make an attempt to try and ensure MSMEs get their payments in time so that their creditworthiness is not affected. Finance Act, 2023 thus inserted a new clause (h) to section 43B, with effect from 1 April, 2024 (assessment year 2024-2025) so as to provide that any sum payable by the assessee to a micro or small enterprise beyond the time limit specified in section 15 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 shall be allowed as deduction only on actual payment. Thus, the amendment to section 43B of the Act will allow the payment as deduction only on payment basis if paid beyond the due date under the MSMED Act, 2006.
This provision has raised a lot of doubts as to the interpretation and applicability. It has further faced resistance from the business sector dealing with the MSMEs as it is likely to put pressure on their working capital requirements and disturb their normal business work environment. A lot of questions have been raised about the due date under the MSMED Act, 2006 and its applicability to the new clause inserted under section 43B. A few innovative suggestions have also been seen in an attempt to circumvent the new provisions.
This book is written with the objective to discuss, with the professionals, the amendments in Income Tax Act as well as the applicable sections of the MSMED Act, 2006 (relevant extracts of the Bare Act have been given), the applicable notifications and interpretational issues have also been addressed with FAQs and opinions and suggestions. The author has also tried to simplify the dates with charts and illustrations for further clarity. Further, there is some discussion on possible safeguards suppliers and buyers could take.
CA Arvind Tuli is a Tax Educator, Author, Consultant, EdTech Entrepreneur for over 22 years. He is a fellow member of the Institute of Chartered Accountants of India and has been an expert member of the Direct Tax Committee of ICAI for the year 2023-24. He has authored many books for students of CA Intermediate, CA Final and Professionals. He has also been a TEDx youth speaker on ‘Changes needed in the education system’. He is a consultant on taxation opinions for corporations and individuals and has been a speaker & judge at various events organised by ICAI regional centres, in the northern region.
He pioneered CA Education in north India and is also a leading faculty for Direct & Indirect taxation, in India. He is also associated with one of India’s largest education platforms, Unacademy, as an educator.
Bharat is a 'trade-name' for a group of concerns, popularly known as Bharat Law House and Bharat Law House Pvt. Ltd. Bharat is one of the most reputed publishers of law books with an experience of over six decades. It possess a very diverse range of publications covering not only the area of taxation - direct and indirect - but also company law, insolvency capital market, finance, industrial law, foreign exchange, commercial, civil and criminal laws. The students publications for CA, CS, CMA, CFA, MBA, graduate and post-graduate studies have carved out a niche for themselves. The Publication House has a professionally qualified team with strong in-house capabilities. Their strength lies in the patronage of legal luminaries in every field. They strive for accuracy, authenticity and sincerity.
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- Year of Publication: 2024
- ISBN: 978-81-97056-08-6
- No.of Pages: 105
Over the last few years, the MSME sector has grown and today it forms the backbone of the Indian economy. Statistics reveal that MSMEs contribute about 1/3rd of the India’s manufacturing output. MSMEs account for nearly half of India’s exports. Naturally, the Government is focused on encouraging and protecting the MSMEs. It has taken innumerable measures to strengthen the financial accessibility of MSMEs. Finance Act, 2023 aims to make an attempt to try and ensure MSMEs get their payments in time so that their creditworthiness is not affected. Finance Act, 2023 thus inserted a new clause (h) to section 43B, with effect from 1 April, 2024 (assessment year 2024-2025) so as to provide that any sum payable by the assessee to a micro or small enterprise beyond the time limit specified in section 15 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 shall be allowed as deduction only on actual payment. Thus, the amendment to section 43B of the Act will allow the payment as deduction only on payment basis if paid beyond the due date under the MSMED Act, 2006.
This provision has raised a lot of doubts as to the interpretation and applicability. It has further faced resistance from the business sector dealing with the MSMEs as it is likely to put pressure on their working capital requirements and disturb their normal business work environment. A lot of questions have been raised about the due date under the MSMED Act, 2006 and its applicability to the new clause inserted under section 43B. A few innovative suggestions have also been seen in an attempt to circumvent the new provisions.
This book is written with the objective to discuss, with the professionals, the amendments in Income Tax Act as well as the applicable sections of the MSMED Act, 2006 (relevant extracts of the Bare Act have been given), the applicable notifications and interpretational issues have also been addressed with FAQs and opinions and suggestions. The author has also tried to simplify the dates with charts and illustrations for further clarity. Further, there is some discussion on possible safeguards suppliers and buyers could take.
CA Arvind Tuli is a Tax Educator, Author, Consultant, EdTech Entrepreneur for over 22 years. He is a fellow member of the Institute of Chartered Accountants of India and has been an expert member of the Direct Tax Committee of ICAI for the year 2023-24. He has authored many books for students of CA Intermediate, CA Final and Professionals. He has also been a TEDx youth speaker on ‘Changes needed in the education system’. He is a consultant on taxation opinions for corporations and individuals and has been a speaker & judge at various events organised by ICAI regional centres, in the northern region.
He pioneered CA Education in north India and is also a leading faculty for Direct & Indirect taxation, in India. He is also associated with one of India’s largest education platforms, Unacademy, as an educator.
Bharat is a 'trade-name' for a group of concerns, popularly known as Bharat Law House and Bharat Law House Pvt. Ltd. Bharat is one of the most reputed publishers of law books with an experience of over six decades. It possess a very diverse range of publications covering not only the area of taxation - direct and indirect - but also company law, insolvency capital market, finance, industrial law, foreign exchange, commercial, civil and criminal laws. The students publications for CA, CS, CMA, CFA, MBA, graduate and post-graduate studies have carved out a niche for themselves. The Publication House has a professionally qualified team with strong in-house capabilities. Their strength lies in the patronage of legal luminaries in every field. They strive for accuracy, authenticity and sincerity.
