Introduction of a New Provision: Disallowance of Expenses on Delayed Payments to the Micro or Small Enterprises under Section 43B(h) of the Income-tax Act, 1961 – Applicable from the Financial Year 2023-24
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About the Author: CA Deepak Jain has an experience of 13+ years. He has rich experience in Direct Taxation advisory and litigation matters having worked with M/s Bansi S. Mehta & Co in his early years. He further strengthened his grip over taxation and corporate matters during his time with the Reliance ADA Group. Deepak leads the Direct Tax, International Tax and Transfer Pricing practice of the firm - Khanna & Panchmia.
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Posted on: February 2nd, 2024
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In this article nothing has been discussed about its applicability on traders registered under MSMED Act after 2020 as per notification allowing NIC codes 45,46,47 to register for PLS benefits offered by banks. Whether such registered traders also fall in the definition of Enterprise when definition has not been changed in the operative Act? this is leading to confusion and clarification is needed in this regard. Further some one doing manufacturing X thing and trading ABC things but has NIC code both as manufacturer as well as trader. In such case how the Outstandings for ABC will be treated assuming traders are out of definition of MSE.
The traders though registered under MSMED Act having UDYAM Certificate do not fall in the definition of Supplier Enterprises under MSMED Act. Hence any payment due to traders are our of ambit of Section 43B(h) of Income Tax Act. In case an MSE is manufacture and trader both and registered for both activities, only outstanding related to goods manufactured by him, arrived after analysis of pending bills, will be covered under Section 43B(h)