{"id":575,"date":"2024-08-23T17:39:15","date_gmt":"2024-08-23T12:09:15","guid":{"rendered":"https:\/\/www.caclubindia.com\/guide\/?p=575"},"modified":"2025-06-26T15:57:03","modified_gmt":"2025-06-26T10:27:03","slug":"section-43bh-of-income-tax-act","status":"publish","type":"post","link":"https:\/\/www.caclubindia.com\/guide\/section-43bh-of-income-tax-act\/","title":{"rendered":"Section 43B(h) of Income Tax Act: How to Report in Form 3CD"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\r\n<div class=\"ez-toc-title-container\">\r\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\r\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\r\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.caclubindia.com\/guide\/section-43bh-of-income-tax-act\/#Section_43Bh_of_Income_Tax_Act\" >Section 43B(h) of Income Tax Act<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.caclubindia.com\/guide\/section-43bh-of-income-tax-act\/#Turnover_limit\" >Turnover limit<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.caclubindia.com\/guide\/section-43bh-of-income-tax-act\/#For_Micro_Enterprises\" >For Micro Enterprises<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/www.caclubindia.com\/guide\/section-43bh-of-income-tax-act\/#For_Micro_Small_Enterprises\" >For Micro Small Enterprises<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.caclubindia.com\/guide\/section-43bh-of-income-tax-act\/#Time_limit_For_payment\" >Time limit For payment<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.caclubindia.com\/guide\/section-43bh-of-income-tax-act\/#If_there_is_no_agreement\" >If there is no agreement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/www.caclubindia.com\/guide\/section-43bh-of-income-tax-act\/#If_there_is_an_agreement\" >If there is an agreement<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.caclubindia.com\/guide\/section-43bh-of-income-tax-act\/#What_happens_if_payment_not_made_within_time_limit\" >What happens if payment not made within time limit?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.caclubindia.com\/guide\/section-43bh-of-income-tax-act\/#Reporting_in_Form_3CD\" >Reporting in Form 3CD<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.caclubindia.com\/guide\/section-43bh-of-income-tax-act\/#Points_To_Remember\" >Points To Remember<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.caclubindia.com\/guide\/section-43bh-of-income-tax-act\/#FAQs\" >FAQs<\/a><\/li><\/ul><\/nav><\/div>\r\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Section_43Bh_of_Income_Tax_Act\"><\/span>Section 43B(h) of Income Tax Act<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Finance Act 2023 inserted a new provision u\/s 43B i.e., clause (h) which states that any sum payable by the assessee to micro or small enterprise beyond the limit specified in section 15 of Micro, Small and Medium Enterprises development Act 2006(27 of 2006)&#8221; shall be allowed as a deduction only in the previous year in which the sum has been actually paid.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"538\" src=\"https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/08\/sec43b-1024x538.jpg\" alt=\"\" class=\"wp-image-577\" srcset=\"https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/08\/sec43b-1024x538.jpg 1024w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/08\/sec43b-300x158.jpg 300w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/08\/sec43b-768x403.jpg 768w, https:\/\/www.caclubindia.com\/guide\/wp-content\/uploads\/2024\/08\/sec43b.jpg 1200w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<p>This amendment is applicable w.e.f 1st April 2023.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Turnover_limit\"><\/span>Turnover limit<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"For_Micro_Enterprises\"><\/span>For Micro Enterprises<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Turnover limit is upto Rs. 5 crore and investment in plant and machinery not exceeding Rs.1 crore.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"For_Micro_Small_Enterprises\"><\/span>For Micro Small Enterprises<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Turnover limit is upto Rs. 50 crore and investment in plant and machinery not exceeding Rs.10 crore.<\/p>\n\n\n\n<p><strong>Note : <\/strong>MSME registered members should mentioned their registration number in invoices\/bills\/letter heads etc.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Time_limit_For_payment\"><\/span>Time limit For payment<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"If_there_is_no_agreement\"><\/span>If there is no agreement<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Payment must be made within 15 days.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"If_there_is_an_agreement\"><\/span>If there is an agreement<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Payment must be made with in due date or maximum of 45 days.<\/p>\n\n\n\n<p><strong>Note : <a href=\"https:\/\/www.caclubindia.com\/articles\/section-43b-h-of-the-income-tax-act-timely-payments-to-msmes-51137.asp\">Section 43B(h) of Income Tax Ac<\/a><\/strong><a href=\"https:\/\/www.caclubindia.com\/articles\/section-43b-h-of-the-income-tax-act-timely-payments-to-msmes-51137.asp\"><strong>t<\/strong><\/a> is not applicable on traders.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_happens_if_payment_not_made_within_time_limit\"><\/span>What happens if payment not made within time limit?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>If payment not made in time limit then dis-allowance attract and while making payment deductions will be allowed.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Reporting_in_Form_3CD\"><\/span>Reporting in Form 3CD<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Disclosure to be made in clause 22 instead of clause 26.<\/p>\n\n\n\n<p>Clause 22 is now contains both principal dis-allowance u\/s 43B(h) and interest dis-allowance under MSMED Act.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Points_To_Remember\"><\/span>Points To Remember<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong><a href=\"https:\/\/www.caclubindia.com\/articles\/section-43bh-disallowance-and-precautions-to-be-taken-while-making-payment-to-msmes-before-31st-march-2024-51295.asp\">Section 43B(h)<\/a><\/strong> is not applicable on taxpayers opt for presumptive taxation. <\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Its applicable only for those business who prepares books of accounts and file ITR 3 or have tax audit.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Its not mandatory that creditor should be registered in MSME.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Provision is not applicable on opening balance on 01-04-2023. <\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>It is not applicable on depreciation and purchase of capital asset.<\/li>\n<\/ul>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Interest paid by buyer for delayed payment should not be deductible under the IT Act.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"FAQs\"><\/span>FAQs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"schema-faq wp-block-yoast-faq-block\"><div class=\"schema-faq-section\" id=\"faq-question-1724414463312\"><strong class=\"schema-faq-question\">What is the new update of 43B(h)?<\/strong> <p class=\"schema-faq-answer\">The new update under Section 43B(h) is that if a company doesn&#8217;t pay an MSME within 45 days it cannot deduct that unpaid expense from its taxable income, potentially increasing its tax liability.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1724414477064\"><strong class=\"schema-faq-question\">Is 43B\/h applicable to 44AD?<\/strong> <p class=\"schema-faq-answer\">No, Section 43B\/h is not applicable to 44AD.<\/p> <\/div> <div class=\"schema-faq-section\" id=\"faq-question-1724414488232\"><strong class=\"schema-faq-question\">Is 43B\/h applicable to traders?<\/strong> <p class=\"schema-faq-answer\">No, Section 43B(h) is not applicable to traders.<\/p> <\/div> <\/div>\n","protected":false},"excerpt":{"rendered":"<p>Section 43B(h) of Income Tax Act Finance Act 2023 inserted a new provision u\/s 43B i.e., clause (h) which states [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":577,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"var(--ast-global-color-4)","background-image":"","background-repeat":"repeat","background-position":"center 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center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[4],"tags":[],"class_list":["post-575","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-income-tax"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\r\n<title>Section 43B(h) of Income Tax Act: How to Report in Form 3CD - Tax Guide<\/title>\r\n<meta name=\"description\" content=\"Section 43b(h) of income tax act states that any payment due to a Micro or Small Enterprise must be paid within 45 days as per the MSMED Act.\" \/>\r\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\r\n<link rel=\"canonical\" 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