Section 43B(h) of Income Tax Act | Payment to Micro & Small Enterprises outstanding as on 31.03.2024
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- Опубліковано 26 січ 2024
- First time implementation of Section 43B(h) of Income Tax Act for the Assessment Year 2024-25 | Treatment of Payments to be made to Micro & Small Enterprises outstanding as on 31.03.2024
Query No. 1: Please clarify whether dues pertaining to SME “Traders” are also liable to be disallowed?
“Traders” were not envisaged by law for Payments Protection and Late Payment Interest. Hence, dues payable to the “Traders” registered as ‘Micro or Small Enterprises’ under MSMED Act, will not be disallowed u/s 43B(h).
Please read, MSME-Office Memorandum dated 02.07.2021 which states “The Government has received various representations and it has been decided to include Retail and wholesale trades as MSMEs and they are allowed to be registered on Udyam Registration Portal. However, benefits to Retail and Wholesale trade MSMEs are to be restricted to Priority Sector Lending only.”
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Query No. 2: Delayed Payment to MSE Creditors for purchase of Fixed Asset/ Capex.
Reply: Let’s read the opening clause of Section 43B- “43B. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of-“
The above means Section 43B applies only to the expenditure which is to be claimed as a deduction in the Computation of the Total Income. Therefore, Section 43B(h) should not apply to the payments made which are capitalized and are not charged to the Profit and Loss Account.
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In the views of the Author, 2 Complete months i.e. February and March 2024 are still there for the taxpayers and Auditors or Tax Auditors to take stock of legal provisions which are applicable for the current financial year and that would have significant impact in determination of total income of the Assessment Year 2024-25. This stock taking or review shall provide all leverages for avoiding legally any harsh legal provisions which may be waiting to get triggered if such due diligence is not done now. One of such harsh provisions is Section 43B(h) inserted last year whose first time implementation shall now be seen or done on March-31-2024.
Section 43B(h) inserted by Finance Act, 2023 w.e.f. Assessment Year 2024-25 reads as under-
“Any sum payable by the Assessee to a micro or small enterprise beyond the time limit specified in Section 15 of the Micro, Small and Medium Enterprises Development Act, 2006″
The (Buyer) Assessees have to take precautionary measures to avoid disallowance those sums of Creditors which may be outstanding to Micro and Small Enterprises as per MSMED Act, 2006 as on March-31-2024 representing the expenditures of the financial year 2023-24.
Any liability which was outstanding in respect of the period prior to 01.04.2023 would not be hit by clause (h) of section 43B even if it is outstanding as on March-31-2024 or even subsequent periods. Such outstanding amounts may be due to pending disputes with respect to those supplies or services between the parties and agreed for settlement of dues upon resolution of dispute or any other issue between them.
NOTE: The proviso to section 43B which extends the time limit for allowance of deduction if actual payments are made up to the ‘due date’ for furnishing the return under section 139(1), would not apply in respect of the payment referred to in clause (h) of section 43B.
For more information or in case of queries please write to OFFICE@SHARKAUDITORS.COM
Suresh Wadhwa, LL.B., FCA
Office Tele: +91- 9717 00 2510 | 87006-04006 | Email: office@sharkauditors.com
Office No: C-307, Noida One Building, Plot No. B-8
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Online Prompt verification of Udyam Registration of your Suppliers-
You can now online verify the exact activity and year-wise category (whether micro/ small/ or medium) of your MSME Suppliers directly from the website of MSME by punching the 19-digit Udyam Registration No. of your Supplier for ensuring your compliance with Section 15 of the MSMED read with Section 43B(h) of the Income Tax Act, 1961.
udyamregistration.gov.in/udyam_verify.aspx
Best Regards
Suresh Wadhwa, LL.B., FCA
43(h) पर कई वीडियो देखे , पर आपने जिस तरीके से तथ्यों को स्पष्ट किया है , वह अत्यंत सराहनीय है । आपको हार्दिक साधुवाद ।
Very good information ✅
“Traders” were not envisaged by law for Payments Protection and Late Payment Interest. Hence, dues payable to the “Traders” registered as ‘Micro or Small Enterprises’ under MSMED Act, WILL NOT BE DISALLOWED u/s 43B(h).
Please read, MSME-Office Memorandum dated 02.07.2021 which states “The Government has received various representations and it has been decided to include Retail and wholesale trades as MSMEs and they are allowed to be registered on Udyam Registration Portal. However, benefits to Retail and Wholesale trade MSMEs are to be restricted to Priority Sector Lending only.”
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Query: Delayed Payment to MSE Creditors for purchase of Fixed Asset/ Capex.
Reply: Let’s read the opening clause of Section 43B-
“43B. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of-“
The above means Section 43B applies only to the expenditure which is to be claimed as a deduction in the Computation of the Total Income. Therefore, Section 43B(h) should not apply to the payments made which are capitalized and are not charged to the Profit and Loss Account.
I must say this is the best video I come across on UA-cam on the subject matter of Sec 43B(h). Thank you Sir for enlightening us with an amazing explanation.
Glad it was helpful!
Excellent session explaining the IT Section 43B(H) hi, sir
Very informative 💯 Thank you sir for simplifying and explaining this technical section
Keep watching
Sir very very useful news
Such an amazing and wonderful explanation it is! Thank you Sir
Thank you sir,
Very good explanation given 😊👍
Very informative and insightful video
Really thankful for the updates given. Very helpful and interesting 🙏
Sir it's very helpful for msme for their long term sustainability and financial stability
Very useful
A very detailed video on the issue clarifying various aspects !! . Sir, please also share your views about dues to Traders who are registered as Mirco / Small Enterprises under MSME Act .
“Traders” were not envisaged by law for Payments Protection and Late Payment Interest. Hence, dues payable to the “Traders” registered as ‘Micro or Small Enterprises’ under MSMED Act, WILL NOT BE DISALLOWED u/s 43B(h).
Please read, MSME-Office Memorandum dated 02.07.2021 which states
“The Government has received various representations and it has been decided to include Retail and wholesale trades as MSMEs and they are allowed to be registered on Udyam Registration Portal. However, benefits to Retail and Wholesale trade MSMEs are to be restricted to Priority Sector Lending only.”
Thanks for making it simple to grasp
Very informative video
All doubts cleared.. Thank you for your video. More power to you❤
Great and Informative Video!
Very useful n perfect information
Insightful sir
How to do entry of disallowances in books and how to claim it in next year ???
Good video on Taxation
Sir utilisation certificate ke bare me bhi btayenge bohut Kam jankari hai
❤
In creditors as on 31-3-24 there are amount which are being carried forward from last financial year, whether this amount outstanding as on 31-3-23 is exempted.
Yes, the Balances outstanding as on 31-3-23 are NOT hit the provisions of Section 43B(h).
Sir agar mere creditor ek trader h msme m registered trader h and main un ka is financial year ka sara purchase ka payment clear kardeta hu 31st March se phle pr un k sath Mera Jo last financial year ka balance forward hua tha vo is financial year k end m bhi ree jata h toh kya mujhe us pr tax pay krna padega is rule k under ya nahi
Sir, do we need to add back amount of outstanding towards unsold inventory bought from msme supplier though unsold inventory doesn't form part of COGS?
And what about msme supplier from whom assessee bought fixed assets but remain unpaid beyond 45 days?
Query: Delayed Payment to MSE Creditors for purchase of Fixed Asset/ Capex.
Reply: Let’s read the opening clause of Section 43B
“43B. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of-“
_____________
The above means Section 43B applies only to the expenditure which is to be claimed as a deduction in the Computation of the Total Income. Therefore, Section 43B(h) should not apply to the payments made which are capitalized and are not charged to the Profit and Loss Account.
@@TaxBulls
Thank you very much Sir... I met you once in your office and was very inspired with your dedication and commitment.
May I also request you to advise whether we need to add back that much amount of closing stock for which supplier is not paid beyond 45 days. Because Closing stock nevertheless does not form part of COGS.
Thank you for this informative video on Sec 43B(h) & MSME balances. This breakdown really helped clarify some of the more intricate details. It's great to have resources like this that simplify complex topics like taxation. Looking forward to more insightful content like this 👍👍
Glad it was helpful!
Sir, if we are not registered in msme still we can laible for sec 43 h ? For non pay creditors payment in prescribe time ?
The Answer is Yes. You, as a Buyer, are required to timely pay (as per Section-15, MSMED) to your Micro and Small Enterprises (Creditors) to avoid disallowances u/s 43B(h).
सर,ओपोझीसन पार्टी बनने के लीए कम से कम कीतना पर्सन्टेज सीट चाहीए होती हे?।जरा ये बताईए।
Sir humari ek pvt ltd company and humane ek purchase Kari 350 lakh but payment director ne apni pocket se Kari hai aur ab wo purchase company books me toh es situation me kya kare
Thks for the clarification..
Can u please confirm whether textiles have been exempted from this thru some recent amendment..
I have recd a WhatsApp mes stating that the textile industry is expected from this section 43(b)h
Pls reply
There is no such exemption at all.
Please try to appreciate these provisions timely & thoroughly and plan your SME Creditors accordingly.
Sir , jis enterprise ko payment krna hai , uska turnover dekhna hai kya ?
agar kisi enterprise ka turnover 3 Cr hai ya 5 Cr hai - dono ko MSME ko within 45 days payment krna hai right?
Turnover से भी ज़्यादा ध्यान इस बात पर भी देना है कि आपके Micro या Small Creditors के पास Udhyam Registration Certificate होना चाहिए!
@@TaxBulls If I am an assessee (whose turnover is 3Cr or 6Cr) who has purchase goods from MSME , I have to make payment within 45 days. right?
(any assessee has to pay irrespective of their turnover, sole proprietorship, partnership? )
@khushboomaheshwari05
Yes, Every Taxpayer is independently required to comply with the Provisions of Section 43B(h); even if he himself is a Micro or Small Enterprise.
Is this section applicable to traders also from whom we buy. Even if they are registered unde msme
“Traders” were not envisaged by law for Payments Protection and Late Payment Interest. Hence, dues payable to the “Traders” registered as ‘Micro or Small Enterprises’ under MSMED Act, WILL NOT BE DISALLOWED u/s 43B(h).
Please read, MSME-Office Memorandum dated 02.07.2021 which states-
Quote-
“The Government has received various representations and it has been decided to include Retail and wholesale trades as MSMEs and they are allowed to be registered on Udyam Registration Portal. However, benefits to Retail and Wholesale trade MSMEs are to be restricted to Priority Sector Lending only.”
If payment not made within given time limit but before 31st March 2024 then what will be the consequences.. please reply
Reply please
Sir, I want to know that any supplier is required to be registered under MSME Act.
Registration of any Enterprise (be it Micro/ Small or Medium) by applying and obtaining Udhyam Registration Certificate is completely OPTIONAL. It is not at all mandatory.
Whether traders are covered
No, No & No!
Sir I am msme trader and we supply goods in msme manufacturer but wo 45 days me payment nahi karta to wo uske income me add hogi ??
जी हाँ बिलकुल 👍
Sir thank you for the previous reply.
one more small clarification please,
My creditors list of micro and small suppliers as of 31.03.2024 should not be reflecting any of the purchase bills prior to 16.02.2024.
I need get all those previous bill paid anyhow before 31.03.2024. True ?
Secondly for the purchase bills that are reflecting in my creditors list as of 31.03.2024 for example: dated 25.02.2024, 10.03.2024 and 31.03.2024 my payment Dates should be 9.04.2024, 24.04.2024 and 14.05.2024 respectively to be safe from this section (considering 45 days period). True ?
Reply No.#1
The Answer is Yes subject to a very few and rare exceptions. E.g. “A” sold goods worth Rs. 75,000/- on 10.02.2024 to “B”. “B” reports in writing to “A” that goods are not as per the Order or there are few defects within a period of 15 days of receiving the goods (Latest by 25.02.2024). These defects are NOT rectified by “A” upto 31.03.2024. Section 43B(h) will not be applicable on these Rs. 75,000/-.
Yes, Correct subject to the condition that the Agreements/ or Credit Period with the MSE must and must be in writing.
Sir i have a few question..
1) If Udyam Registration number is not mentioned in Purchase invoice then will the creditor be treated as an MSME participant?
2) If all invoices are cleared within the same financial year not following the 15/45 days rule but all payments are cleared then will clause 43 BH be activated inspite of list of Sundry Creditors being totally NIL ?
Reply No. 1:
Mentioning Udyam Registration on the face of Purchase Order (PO) may be one of the sources of informing or knowing that the Supplier is Micro or Small Enterprise (MSE) BUT there are many other ways to do this e.g. a Complete list of KYC Documents is insisted at the time of entering with a Supplier (Supplier Validation Process). A MSE may prefer to report his Udyam Registration Number on his emails and all business Stationaries etc. A suo-moto supply of Udyam Registration Certificate by the MSE is the best way to communicate with your Supplier.
Reply No.# 2
During the FY 2023-2024, it is absolutely okay to pay your SME with the delays of say 50-100-150 days but within the same financial year. The trigger of Section 43B(h) gets invoked mainly and only in respect of Small and Micro Enterprises outstanding as on the last day of the Financial Year i.e. March-31-2024.
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Off. Tele: +91 97170-02510, 87006-04006
No information about traders
“Traders” were not envisaged by law for Payments Protection and Late Payment Interest. Hence, dues payable to the “Traders” registered as ‘Micro or Small Enterprises’ under MSMED Act, WILL NOT BE DISALLOWED u/s 43B(h).
Please read, MSME-Office Memorandum dated 02.07.2021 which states
“The Government has received various representations and it has been decided to include Retail and wholesale trades as MSMEs and they are allowed to be registered on Udyam Registration Portal. However, benefits to Retail and Wholesale trade MSMEs are to be restricted to Priority Sector Lending only.”
If any msme cancell his registation 1/2/2024 than old bill payment before 31 March ???
A very detailed video on the issue clarifying various aspects !! . Sir, please also share your views about dues to Traders who are registered as Mirco / Small Enterprises under MSME Act
“Traders” were not envisaged by law for Payments Protection and Late Payment Interest. Hence, dues payable to the “Traders” registered as ‘Micro or Small Enterprises’ under MSMED Act, WILL NOT BE DISALLOWED u/s 43B(h).
Please read, MSME-Office Memorandum dated 02.07.2021 which states
“The Government has received various representations and it has been decided to include Retail and wholesale trades as MSMEs and they are allowed to be registered on Udyam Registration Portal. However, benefits to Retail and Wholesale trade MSMEs are to be restricted to Priority Sector Lending only.”