CA Rahul Mittal
Quick Summary
Today everyone is talking about section 43B (h) of Income Tax Act which is related to MSME Enterprises. Everything is curious to know when this will be applicable. What will happen if it becomes applicable? Will it be applicable on everyone? Today I will explain everything about this section in this
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FAQ :
Section 43B(h) states that any sum payable by a business to a micro or small enterprise, if paid beyond the time limits specified in Section 15 of the MSMED Act, 2006, will only be allowed as a tax deduction in the financial year the payment is actually made.
If there's a written agreement, payment must be made by the agreed date, not exceeding 45 days from acceptance. Without an agreement, payment is due within 15 days from the date of acceptance or deemed acceptance.
A supplier is a micro or small enterprise registered under the MSMED Act, including entities like the National Small Industries Corporation, State Small Industries Development Corporations, and registered companies, co-operative societies, trusts, or bodies selling goods or services produced by MSMEs.
This section does not apply if the supplier is not registered under the MSMED Act, if the supplier is classified as a medium enterprise, if the supplier is registered as a trader, or if the buyer files their income tax return under presumptive taxation schemes like sections 44AD, 44ADA, or 44AE.
A business can verify a supplier's Udyam Registration Number on the official Udyam Registration portal at udyamregistration.gov.in/Udyam_Verify.aspx.
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