{"id":6541,"date":"2024-01-14T17:35:29","date_gmt":"2024-01-14T17:35:29","guid":{"rendered":"https:\/\/www.caindelhiindia.com\/blog\/?p=6541"},"modified":"2025-03-26T18:09:17","modified_gmt":"2025-03-26T18:09:17","slug":"msme-payment-deductions","status":"publish","type":"post","link":"https:\/\/www.caindelhiindia.com\/blog\/msme-payment-deductions\/","title":{"rendered":"MSME Payment Deductions &#038; Budget 2023"},"content":{"rendered":"<h2><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-6542\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/43B.png\" alt=\"section 43B\" width=\"1200\" height=\"506\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/43B.png 1200w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/43B-300x127.png 300w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/43B-1024x432.png 1024w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/43B-768x324.png 768w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/43B-800x337.png 800w\" sizes=\"(max-width: 1200px) 100vw, 1200px\" \/><\/h2>\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_58 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-69dd21be6bbc7\" class=\"ez-toc-cssicon-toggle-label\"><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><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-69dd21be6bbc7\"  aria-label=\"Toggle\" \/><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.caindelhiindia.com\/blog\/msme-payment-deductions\/#MSME_Payment_Deductions_Union_Budget_2023_Demystifying_Sec_43B\" title=\"MSME Payment Deductions &amp; Union Budget 2023: Demystifying Sec 43B\">MSME Payment Deductions &amp; Union Budget 2023: Demystifying Sec 43B<\/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.caindelhiindia.com\/blog\/msme-payment-deductions\/#New_Income_tax_Alert\" title=\"New Income tax Alert\">New Income tax Alert<\/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.caindelhiindia.com\/blog\/msme-payment-deductions\/#Key_points_for_Considerations_for_purpose_of_Section_43B_of_income_Tax_amendment\" title=\"Key points for Considerations for purpose of Section 43B of income Tax amendment: \">Key points for Considerations for purpose of Section 43B of income Tax amendment: <\/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.caindelhiindia.com\/blog\/msme-payment-deductions\/#Definition_Micro_Small_Enterprises\" title=\"Definition Micro &amp; Small Enterprises:\">Definition Micro &amp; Small Enterprises:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/www.caindelhiindia.com\/blog\/msme-payment-deductions\/#Medium_Enterprises_Excluded\" title=\"Medium Enterprises Excluded: \">Medium Enterprises Excluded: <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/www.caindelhiindia.com\/blog\/msme-payment-deductions\/#Proviso_for_Filing_Return_US_1391_Not_Applicable\" title=\"Proviso for Filing Return U\/S 139(1) Not Applicable: \">Proviso for Filing Return U\/S 139(1) Not Applicable: <\/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.caindelhiindia.com\/blog\/msme-payment-deductions\/#Payment_Time_Limits_According_to_the_Micro_Small_and_Medium_Enterprise_Development_Act_2006\" title=\"Payment Time Limits According to the Micro, Small, and Medium Enterprise Development Act, 2006:\">Payment Time Limits According to the Micro, Small, and Medium Enterprise Development Act, 2006:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/www.caindelhiindia.com\/blog\/msme-payment-deductions\/#Date_of_Acceptance_Deemed_Acceptance\" title=\"Date of Acceptance &amp; Deemed Acceptance:\">Date of Acceptance &amp; Deemed Acceptance:<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/www.caindelhiindia.com\/blog\/msme-payment-deductions\/#Final_analysis_on_section_43BH\" title=\"Final analysis on section 43B(H)\">Final analysis on section 43B(H)<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/www.caindelhiindia.com\/blog\/msme-payment-deductions\/#Provisions_related_to_creditor_payment\" title=\"Provisions related to creditor payment-\">Provisions related to creditor payment-<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/www.caindelhiindia.com\/blog\/msme-payment-deductions\/#Revised_definition_of_MSME_wef_142025\" title=\"Revised definition of MSME w.e.f 1.4.2025\">Revised definition of MSME w.e.f 1.4.2025<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2><span class=\"ez-toc-section\" id=\"MSME_Payment_Deductions_Union_Budget_2023_Demystifying_Sec_43B\"><\/span><span style=\"color: #000080;\"><strong>MSME Payment Deductions &amp; Union Budget 2023: Demystifying Sec 43B<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Income tax Sec 43B is a new income tax provision governing the deduction of certain amount sums when we are computing income tax liability. This change holds particular importance when it comes to payments made to MSMEs.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"New_Income_tax_Alert\"><\/span><span style=\"color: #000080;\"><strong>New Income tax Alert<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Income tax Section 43B- In the Union Budget 2023, a new Clause in the Income tax act &#8220;h&#8221; is added to Section 43B, effective from Financial Year 2023-24. This clause pertains to &#8220;Any sum payable by the income tax Assessee to a Micro or Small Enterprise beyond the time limit specified in Section 15 of the Micro, Small, and Medium Enterprise Development Act, 2006.&#8221; So that any amount remains unpaid on year end to creditors, being Micro,\u00a0Small\u00a0&amp; Medium Enterprises, beyond forty-Five days or less, as agreed or Fifteen Days if no agmt, shall be added to taxable Income resulting in huge additional tax liability. Keeping such creditors unpaid is risky.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Key_points_for_Considerations_for_purpose_of_Section_43B_of_income_Tax_amendment\"><\/span><strong><span style=\"color: #000080;\">Key points for Considerations for purpose of <a href=\"https:\/\/carajput.com\/archives\/all-about-amendment-section-43b-of-income-tax-act.pdf\">Section 43B of income Tax amendment<\/a>:<\/span> <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>It&#8217;s imperative to grasp many main points with reference Section 43B in the Income tax amendment 2023:<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-6543\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/Income-tax-alrert-.jpg\" alt=\"Income tax alert .\" width=\"898\" height=\"1252\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/Income-tax-alrert-.jpg 608w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/Income-tax-alrert--215x300.jpg 215w\" sizes=\"(max-width: 898px) 100vw, 898px\" \/><\/p>\n<p>&nbsp;<\/p>\n<ol>\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Definition_Micro_Small_Enterprises\"><\/span><span style=\"color: #000080;\"><strong>Definition Micro &amp; Small Enterprises<\/strong>:<\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ol>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>Small Enterprises must also satisfy two conditions: Turnover less than or equal to 50 Cr &amp; Investment in P&amp;M less than or equal to 10 Cr..<\/li>\n<li>Micro Enterprises must meet two criteria: Sale less than or equal to 5 Cr Investment in P&amp;M less than or equal to 1 Cr.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ol start=\"2\">\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Medium_Enterprises_Excluded\"><\/span><span style=\"color: #000080;\"><strong>Medium Enterprises Excluded<\/strong>: <\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ol>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>Notably, this clause does not cover Medium Enterprises.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ol start=\"2\">\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Proviso_for_Filing_Return_US_1391_Not_Applicable\"><\/span><span style=\"color: #000080;\"><strong>Proviso for Filing Return U\/S 139(1) Not Applicable<\/strong>: <\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ol>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>The income tax provision allowing deductions if payments are made within the time line date for filing returns u\/s 139(1) does not apply in this case.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ol start=\"2\">\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Payment_Time_Limits_According_to_the_Micro_Small_and_Medium_Enterprise_Development_Act_2006\"><\/span><span style=\"color: #000080;\"><strong>Payment Time Limits According to the Micro, Small, and Medium Enterprise Development Act, 2006:<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ol>\n<p style=\"padding-left: 40px;\">\u00a0&#8211; According to Sec 15 of the Micro, Small, and Medium Enterprise Development Act, 2006, the purchaser must make payments for the supply of services &amp; goods within:<\/p>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>The appointed day in the absence of an MSME Agreement, where the appointed day is day following expiry of 15 days from acceptance or deemed acceptance.<\/li>\n<li>Date agreed upon in case of a written agreement, which must not exceed 45 days from acceptance.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<ol start=\"5\">\n<li>\n<h3><span class=\"ez-toc-section\" id=\"Date_of_Acceptance_Deemed_Acceptance\"><\/span><span style=\"color: #000080;\"><strong>Date of Acceptance &amp; Deemed Acceptance:<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<\/li>\n<\/ol>\n<ul>\n<li style=\"list-style-type: none;\">\n<ul>\n<li>Deemed Acceptance occurs when NOC are raised within 15 days of delivery.<\/li>\n<li>Date of Acceptance refers to the actual delivery of goods or services.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-6871\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/43h.jpg\" alt=\"43B(h)\" width=\"905\" height=\"707\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/43h.jpg 905w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/43h-300x234.jpg 300w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/43h-768x600.jpg 768w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/43h-800x625.jpg 800w\" sizes=\"(max-width: 905px) 100vw, 905px\" \/><\/p>\n<h3><span class=\"ez-toc-section\" id=\"Final_analysis_on_section_43BH\"><\/span><span style=\"color: #000080;\"><strong>Final analysis on section 43B(H)<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-8670\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/Applicability-of-Section-43B-Clause-h.jpg\" alt=\"Applicability of Section 43B Clause (h)\" width=\"1102\" height=\"1199\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/Applicability-of-Section-43B-Clause-h.jpg 1102w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/Applicability-of-Section-43B-Clause-h-276x300.jpg 276w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/Applicability-of-Section-43B-Clause-h-941x1024.jpg 941w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/Applicability-of-Section-43B-Clause-h-768x836.jpg 768w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/Applicability-of-Section-43B-Clause-h-800x870.jpg 800w\" sizes=\"(max-width: 1102px) 100vw, 1102px\" \/><\/p>\n<ul>\n<li>In the final analysis, for efficient financial planning and tax strategies, it is essential to remain aware about Section 43B, the definitions of Micro and Small Enterprises, and the payment schedules specified in the Micro, Small, and Medium Enterprise Development Act, 2006. This information can have a big impact on a company&#8217;s financial efficiency and compliance in the ever-changing Micro, Small, and Medium Enterprise payments market.<\/li>\n<li>MSME has always been suffering from long outstanding dues from the OEs. In order to provide certain reliefs to the MSMEs, the Finance Act, 2023 has made certain amendments in the Income-tax Act, 1961 which are applicable w.e.f. 01\/04\/2023.<\/li>\n<li>These amendments provide for; In the case of any assessee, if he fails to pay the outstanding dues payable to a MSME within the time provided in the Purchase Order (Not exceeding 45 days) or within the time provided in the MSME Act (15 days) from the date it become due, such outstanding shall be deemed to be the income of the assessee and tax shall be computed accordingly.<\/li>\n<li>In case MSME outstanding payment dues is pending for more than 15 days as on 31-03-2024, Income tax Assessee will not get advantages of income tax exemption from expenditure. In this, a written agreement of 45 days can also be made to extend more than 15 days for outstanding payment.<\/li>\n<\/ul>\n<h3><span class=\"ez-toc-section\" id=\"Provisions_related_to_creditor_payment\"><\/span><span style=\"color: #000080;\"><strong>Provisions related to creditor payment-<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p style=\"padding-left: 40px;\">&#8211; 180 days in GST (Reversal of ITC availed)<\/p>\n<p style=\"padding-left: 40px;\">&#8211; 15 \/ 45 days to Micro &amp; Small Ent. (Disallowance u\/s 43B in Income Tax) (Interest under MSMED act)<\/p>\n<p style=\"padding-left: 40px;\">&#8211; Companies Act (Ageing in Financial Statement Notes) (Half yearly MSME 1 form with MCA)<\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-6551\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/43B.jpeg\" alt=\"MSME Payment Deductions 43B\" width=\"903\" height=\"1272\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/43B.jpeg 727w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/43B-213x300.jpeg 213w\" sizes=\"(max-width: 903px) 100vw, 903px\" \/><\/p>\n<p>While these amendments are blessing in disguise for the supplier MSME, at the same time it may turn into a curse for the buyer<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Revised_definition_of_MSME_wef_142025\"><\/span><span style=\"color: #000080;\"><strong>Revised definition of MSME w.e.f 1.4.2025<\/strong><\/span><span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"alignnone size-full wp-image-8854\" src=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/Revised-definition-of-MSME-w.e.f-1.4.2025.jpg\" alt=\"Revised definition of MSME w.e.f 1.4.2025\" width=\"905\" height=\"1280\" srcset=\"https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/Revised-definition-of-MSME-w.e.f-1.4.2025.jpg 905w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/Revised-definition-of-MSME-w.e.f-1.4.2025-212x300.jpg 212w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/Revised-definition-of-MSME-w.e.f-1.4.2025-724x1024.jpg 724w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/Revised-definition-of-MSME-w.e.f-1.4.2025-768x1086.jpg 768w, https:\/\/www.caindelhiindia.com\/blog\/wp-content\/uploads\/2024\/01\/Revised-definition-of-MSME-w.e.f-1.4.2025-800x1131.jpg 800w\" sizes=\"(max-width: 905px) 100vw, 905px\" \/><\/p>\n","protected":false},"excerpt":{"rendered":"<p>MSME Payment Deductions &amp; Union Budget 2023: Demystifying Sec 43B Income tax Sec 43B is a new income tax provision governing the deduction of certain amount sums when we are computing income tax liability. This change holds particular importance when it comes to payments made to MSMEs. New Income tax Alert Income tax Section 43B- &hellip;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_mi_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[142],"tags":[883],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/6541"}],"collection":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/comments?post=6541"}],"version-history":[{"count":5,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/6541\/revisions"}],"predecessor-version":[{"id":8855,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/posts\/6541\/revisions\/8855"}],"wp:attachment":[{"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/media?parent=6541"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/categories?post=6541"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.caindelhiindia.com\/blog\/wp-json\/wp\/v2\/tags?post=6541"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}