Introduction: The Finance Act, 2023, introduces significant changes with the insertion of clause h in section 43B of the Income Tax Act, strengthening the enforcement of MSME payment regulations. This analysis dives into the implications for small businesses, examining the provisions of the Income Tax Act, 1961, and the MSMED Act, 2006. Particularly, section 43B(h) is explored, addressing the disallowance of expenses for payments not made within the specified time limit. The article delves into the definitions of micro, small, and medium enterprises (MSMEs) and the crucial payment periods outlined in the MSMED Act. Section 43B (h): “any sum payable by the assessee to a MICRO or SMALL enterprise beyond the time limit specified in 15 of the Micro, Small and Medium Enterprises Development Act, 2006,” The enterprise category as Micro, Small & Medium as described in the Micro, Small and Medium Enterprises Development Act, 2006 is made for your reference: Micro Enterpri...
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