New IT Rule For Timely Payments To MSEs To Come In Force From 1st April

New Delhi, Jan 18 (KNN) From 1 April 2024, companies failing to make payments to MSMEs during the current fiscal will have to wait for a year for deductions under the Income Tax Act.

The amendment was proposed by Finance Minister Nirmala Sitharaman while presenting the Union Budget 2023-  to address the longstanding issue of delayed payments to MSMEs.

The amendment inserted a new clause (h) in section 43B of the Act, making any sum payable to a micro or small enterprise beyond the time limit specified in Section 15 of the MSME Development Act 2006 deductible only upon actual payment.

This move aims to promote timely payments and ensure a healthy cash flow for MSMEs.

The initiative responds to the significant challenge faced by MSMEs, estimated to deal with delayed payments totalling Rs 10.7 lakh crore annually, providing a potential boost to the sector.

Experts acknowledge the government's effort but stress the need for careful identification and examination of payments by taxpayers and auditors to avoid disallowance of deductions. The alteration specifically impacts small and medium enterprises, defining micro enterprises as units with an investment not exceeding one crore rupees and turnover below Rs 5 crore rupees. For small enterprises, the figures are Rs 10 crore and Rs 50 crore, respectively.

(KNN Bureau)