Disallowance sec 43 b(H) opting presumptive taxable it persons applicable

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This discussion explores whether Section 43B(H) disallowances, related to payments to MSME suppliers, apply to businesses opting for presumptive taxation under sections 44AD, 44ADA, or 44AE. While presumptive taxation generally avoids disallowances due to simplified profit calculation and no requirement for maintaining detailed books of accounts, the applicability of 43B(H) for payments to MSME creditors remains a point of clarification. The conversation also touches upon whether smaller businesses below tax audit turnover thresholds need to comply with MSME regulations.

Kollipara Sundaraiah

Kollipara Sundaraiah (Querist)

24 January 2024 sir,
Disallowance under sec 43 (b) h can be attracted for assessees opting presumptive taxation of i.e. sec 44ad/sec 44ada/ sec44ae ?

RAJA P M

RAJA P M (Expert)

25 January 2024 Yes, it's applicable.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

25 January 2024 It's not applicable for presumptive taxation.

RAJA P M

RAJA P M (Expert)

25 January 2024 How it's possible Sir... If the supplier is under MSE act then outstanding is payable as per time limit of 43B...

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

25 January 2024 Presumptive taxation is based on 8% profit of turnover. No disallowance as books of accounts not maintained.

RAJA P M

RAJA P M (Expert)

25 January 2024 Yes Sir I agreed. But, what about payment to creditors..? (if creditors under MSE act)

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

25 January 2024 Under presumptive taxation no disallowance as profit computed based fixed rate of profit.

RAJA P M

RAJA P M (Expert)

25 January 2024 Yes Sir... But, I ask what if supplier is under MSE act and what benefits to him if he is under MSE act...?. Means if "A" is opt presumptive scheme and "B" (B is under MSE act) is supply to "A". Then what benefits to "B"...?? If A is escape with presumptive scheme then what is B in this situation...?? Why B wwant MSE act...???

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

26 January 2024 Below tax audit turnover people need not comply with MSME.

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Kollipara Sundaraiah

Kollipara Sundaraiah (Querist)

26 January 2024 sir, creditors applicable for cash creditors and trade creditors

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

26 January 2024 Books of accounts not required to be maintained.

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