07/02/2024
๐๐ก๐ฒ ๐ข๐ฌ ๐๐๐๐ญ๐ข๐จ๐ง 43๐(๐ก) ๐๐ฎ๐๐๐๐ง๐ฅ๐ฒ ๐จ๐ง ๐๐ฏ๐๐ซ๐ฒ๐จ๐ง๐'๐ฌ ๐๐๐๐๐ซ?
Section 43B(h) was introduced in Finance Act, 2023. But as FY end is near, consultants are constantly getting calls from clients & their accountants. Everybody wants to understand the section and want to know how to finalize accounts under this new rule.
๐๐ก๐๐ญ ๐๐จ๐๐ฌ ๐ฌ๐๐๐ญ๐ข๐จ๐ง 43๐(๐ก) ๐ฌ๐๐ฒ?
Any sum owed by an assessee to a micro or small enterprise that is outstanding beyond the time limit specified in section 15 of the MSMED Act, 2006, shall be allowed only in the previous year in which such sum is paid.
๐๐ก๐๐ญ ๐ข๐ฌ ๐ญ๐ก๐ ๐ญ๐ข๐ฆ๐ ๐ฅ๐ข๐ฆ๐ข๐ญ ๐ฉ๐ซ๐๐ฌ๐๐ซ๐ข๐๐๐ ๐ข๐ง ๐ฌ๐๐๐ญ๐ข๐จ๐ง 15 ๐จ๐ ๐๐๐๐๐ ๐๐๐ญ?
1. When there is no agreement between the buyer and the seller; payment to be done within 15 days of purchase.
2. When there is an agreement; Payment to be done within the time-limit decided by buyer and seller which can be maximum 45 days.
๐๐๐ญโ๐ฌ ๐ฎ๐ง๐๐๐ซ๐ฌ๐ญ๐๐ง๐ ๐ฐ๐ข๐ญ๐ก ๐๐ฑ๐๐ฆ๐ฉ๐ฅ๐๐ฌ:
1. Purchases done from MSE seller on 01.03.2024. No agreement regarding credit period. Time allowed for payment will be 15 days.
๐If amount is o/s as on 31.03.2024, purchases will be disallowed
๐If not paid within 15 days but paid before 31.03.2024, purchases will be allowed.
2. Purchases done from MSE seller on 01.03.2024. Seller and buyer agreed for a credit period of 40 days. The expense will be allowed even if payment is o/s as on 31.03.2024
3. Purchases done from MSE seller on 01.02.2024. Seller and buyer agreed for a credit period of 90 days. As per MSMED Act payment must be made within 45 days. If the amount is o/s as on 31.03.2024, expense will be disallowed.
๐๐๐ฒ ๐๐ฅ๐๐ซ๐ข๐๐ข๐๐๐ญ๐ข๐จ๐ง๐ฌ:
๐The provision is applicable from AY 2024-25. Purchases done in FY 2023-24 will be covered.
๐Purchases from Medium Enterprises not covered.
๐Applies only to purchases from manufacturers and service providers.
๐Does not apply to purchases before 01.04.2023, no disallowance even if unpaid by 31.03.2024.
๐Even if payment is made before ITR filing, it will be allowed only in the year of payment.
๐In case of any dispute, the timeline starts post dispute resolution.
๐Not applicable to the buyers opting for presumptive taxation.
๐Applicable for all the buyers whether MSME or non-MSME.
๐๐๐ญ๐ข๐จ๐ง ๐๐จ๐ข๐ง๐ญ๐ฌ ๐๐จ๐ซ ๐๐ฎ๐ฒ๐๐ซ๐ฌ
๐Send a letter to verify your suppliersโ MSE statusโ. Ask for their Udyam Certificate.
๐Maintain a separate MSE supplier database, tracking due dates and payments.
๐no MSE creditor's outstanding exceeds 15/45 days as on 31.03.2024.
๐Pre-agree on payment terms for purchases.
๐Regularly monitor payments and outstanding to MSE suppliers.
๐๐ฎ๐ข๐๐๐ฅ๐ข๐ง๐๐ฌ ๐๐จ๐ซ ๐๐๐ฅ๐ฅ๐๐ซ๐ฌ
๐Display Udyam registration on invoices; inform buyers of your MSE status.
๐Specify a credit period (up to 45 days) on invoices.
๐If not Udyam registered, seek assistance from your MSME consultant.
CA HImanshu Khurana
M: 099964 03038
