[Opinion] “The Big Buzz on Small Business Payments Delays” | Decoding of Section 43B(h)

  • Blog|News|Income Tax|
  • 2 Min Read
  • By Taxmann
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  • Last Updated on 1 March, 2024

Section 43B(h)

MS Venu Gopal – [2024] 159 taxmann.com 736 (Article)

1. Introduction

Finance Act 2023 inserted section 43 B(h) of Income Tax Act 1961, is a significant move towards fostering economic growth, emphasizing the need for fair business practices. This guide is here to help individuals better understand and comply with this section, ensuring prompt payments o Micro, Small and Medium enter prises (MSME’s) registered under UDAYAM AADHAR Scheme

This amendment aims to address the issue of working capital scarcity in this industry and promote prompt payments to micro and small businesses. This amendment is applicable w.e.f.01.04.2024 (The assessment year 2024–2025).

2. What is MSME

Type of Enterprises Investment in Rs. Turnover in Rs.
MICRO Rs. 1 Crores Rs.5 Crores
SMALL Rs.10 Crores Rs.50 Crores
MEDIUM Rs.50 Crores Rs.250 Crores

3. How to identify the MSME Vendor/Service Providers/Professionals

The MSME Should mentioned their Registration certificate number in Invoices/Bills/Letter heads etc., This is mandatory vide office Memorandum No 2(18)/2007-MSME9pol) Dated 26.08.2008. Buyer can verify the same from MSME Portal.
However we have to get declaration from vendor on every year whether they have covered under MSME or Not.

4. Time Limits for making Payments to MSME

If Agreement is There between the Buyer and Seller/Service Provider Buyers has to Pay with in the due date or maximum by 45 days from the date of acceptance or date of deemed acceptance.
If Agreement is not there between the Buyer and Seller/Service Provider With in 15 Days.
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