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MSMEs Year End Payments u/s 43B(h): 10 Point Checklist

VIVEK JALAN , Last updated: 04 March 2024  
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Section 43B(h): Compliances for All (including traders and MSE buyers)

1. Send a letter to all vendors to ascertain their MSME status and get their RCs for FY 2023–24.

1A. In case no reply is received, then scrutinize their invoices, POs, etc where they might have mentioned their MSME status.

2. Ascertain whether they are small or micro enterprises or not. If they are 'Medium', 43B(h) is not applicable.

MSMEs Year End Payments u/s 43B(h): 10 Point Checklist

3. Ascertain whether they are traders, manufacturers, or service providers. In case they are 'traders', 43B(h) is not applicable.

4. Ascertain whether the payments made to them are "Capex" items or not. If the payments are for 'capex items', 43B(h) is not applicable.

5. Ascertain whether there is any written contract with them or not regarding payment. If 'not', then it is better to have a written contract with them regarding payment terms.

6. Find out the due date, i.e., the date of delivery of goods or services, the date of acceptance, or the date of deemed acceptance. The 'due date' of 15/45 days is calculated from'such date' only.

 

7. Handover a check on the 'due date' at least. It would be accepted as the 'date of payment'

8. See the 'advance payments' made to MSEs. Take the same as a deduction under Sec 43B, even if they are not debited to P/L A/c.

 

9. Ensure that you're not liable to pay any interest to MSMEs. Such interest is disallowable.

10. In case you falter, then ascertain whether you're a trust, tax is payable under MAT, or you are under presumptive taxation under 44AD, 44ADA, 44AE, 44BBB, and 115VA. In such cases, you're exempt from the rigors of Sec 43B(h).


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VIVEK JALAN
(DESIGNATED PARTNER)
Category Income Tax   Report

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