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Disallowance u/s 43B(h) – Non-payment of dues to MSME (w.e.f FY 23-24)

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DHRUV

student

109 Points Posted on 12 January 2024

The time limit mentioned in MSME Act is 15/45 days as the case maybe to Micro and Small Units. Now for example the goods were delivered on 1.1.24. Now as per 43B, payment has to made before 15.2.24 to avoid disallowance of such purchase (assuming it is 45 days).
However the person makes the payment in March 24 i.e. before year end.
Now while filing ITR will we have to still disallow such exp although payment was made in the same financial year in which purchase was made?
If yes, in which financial year he will get deduction?

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Quick Summary

This discussion clarifies the implications of Section 43B(h) of the Income Tax Act concerning payments to Micro and Small Enterprises (MSMEs). If goods are purchased and paid for within the same financial year, even if beyond the standard 15 or 45-day limit, the expense is generally not disallowed. The deduction is available in the year of payment, though interest may be applicable if payment exceeds the stipulated timeframes.