26 March 2024
I have payment due of rs 25000 since fy 2021-22, supplier is a trader of chips . Supplier fulfils criteria of msme . In this case do i need to make payment before31-3-2024.
And in case supplier has closed down business how can i make payment . To that msme if it is required to be paid
26 March 2024
Clause h to the Section 43 was introduced in the Finance bill 2023 and accordingly the same will be applicable from the FY 2023-24 and hence, the same will not be applicable for the outstanding balances that prevail before 01st April 2023. However, the same does not mean that there is no obligation to pay as there is obligation to pay as per MSMED Act, 2006. However, disallowance will not be attracted.
However, if the other person had closed the business, and if there is no obligation to pay at present and in future, then it might be better to treat is as income and offer as income in the profit and loss account
26 March 2024
its a strange chain of responses. Since expense pertains to a previous year, the question of disallowance does not arise anyway for the current AY.
What you need to account for is the following:
1. if the MSME has already closed down and you are sure that there is no claimant to this debt, the write back the amounts in your P&L. This would result in increase of taxable income;
2. regardless of treatment under income-tax act, the provisions of MSME act apply. So, you need to account for your liabilities under MSME Act. Specially if the owner of files complaint for recovery of dues.
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