Promoting timely payments to Micro and Small Enterprises- Budget 2023
Section 43B of the Act provides for certain deductions to be allowed only on actual payment. Further, the proviso of this section allows deduction on accrual basis, if the amount is paid by due date of furnishing of the return of income.
Section 43B of the Act provides for certain deductions to be allowed only on actual payment. Further, the proviso of this section allows deduction on accrual basis, if the amount is paid by due date of furnishing of the return of income.
Section 15 of the MSMED Act mandates payments to micro and small enterprises
within the time as per the written agreement, which cannot be more than 45 days. If there is
no such written agreement, the section mandates that the payment shall be made within 15
days. Thus, the proposed amendment to section 43B of the Act will allow the payment as
deduction only on payment basis. It can be allowed on accrual basis only if the payment is
within the time mandated under section 15 of the MSMED Act.
This amendment will take effect from 1st April, 2024 and will accordingly apply to the
assessment year 2024-25 and subsequent assessment years.
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