CA Piyush Agarwal
Quick Summary
Section 43B (h) of Income Tax Act, 1961
Definition of MSME Enterprises
|
Particulars |
MICRO |
SMALL |
MEDIUM |
|
Turnover |
<=5 Crore |
<=50 Crore |
<=250 Crore |
|
Investment in Plant & Machinery |
<=1 Crore |
<=10 Crore |
<=50 Crore |
Non-Applicability of New Clause (h) of Section 43B
Other Points
Examples
|
Particulars |
Invoice Date |
Payment Due (45 Days) |
Actual Payment |
Deduction Allowed (FY) |
|
Example-1 |
01-Feb-2024 |
16-Mar-2024 |
29-Mar-2024 |
2023-24 |
|
Example-2 |
01-Feb-2024 |
16-Mar-2024 |
03-Apr-2024 |
2024-25 |
|
Example-3 |
17-Feb-2024 |
02-Apr-2024 |
01-Apr-2024 |
2023-24 |
|
Example-4 |
17-Feb-2024 |
02-Apr-2024 |
04-Apr-2024 |
2024-25 |
|
Example-5 |
01-Mar-2024 |
14-Apr-2024 |
11-Apr-2024 |
2023-24 |
|
Example-6 |
01-Mar-2024 |
14-Apr-2024 |
22-Apr-2024 |
2024-25 |
|
Example-7 |
15-Nov-2023 |
29-Dec-2023 |
06-Apr-2024 |
2024-25 |
|
Example-8 |
15-Nov-2023 |
29-Dec-2023 |
28-Mar-2024 |
2023-24 |
|
Example-9 |
16-Feb-2024 |
31-Mar-2024 |
01-Apr-2024 |
2024-25 |
|
Example-10 |
15-Sept-2023 |
29-Oct-2023 |
02-Apr-2024 |
2024-25 |
|
Example-11 |
15-Sept-2023 |
29-Oct-2023 |
01-Oct-2023 |
2023-24 |
FAQ :
Section 43B(h) of the Income Tax Act, 1961, states that any sum payable to a Micro or Small Enterprise beyond the time limit specified in Section 15 of the MSMED Act, 2006, shall be allowed as a deduction only in the financial year in which such sum is actually paid.
MSMEs are classified based on their investment in plant and machinery and annual turnover. Micro enterprises have turnover up to ₹5 crore and investment up to ₹1 crore. Small enterprises have turnover up to ₹50 crore and investment up to ₹10 crore. Medium enterprises have turnover up to ₹250 crore and investment up to ₹50 crore.
The payment must be made within 45 days from the date of acceptance of goods or services, or as agreed upon in writing, not exceeding 45 days. If not agreed, it's 15 days.
If a payment to an MSME is made after the specified due date (typically 45 days), the expense will be disallowed as a deduction in the financial year it was incurred and will only be allowed in the financial year the payment is actually made.
No, the new clause (h) of Section 43B, concerning disallowances for delayed payments, specifically applies to Micro and Small Enterprises, not Medium Enterprises.
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