Applicability of Section 43B(h) for MSME Act 2006

Introduction: Section 43B(h) of the Income Tax Act, applicable from April 1, 2023, brings significant implications for micro and small businesses registered under the MSME Act of 2006. However, wholesale and retail traders are exempt. Delve into its applicability and basic conditions for compliance.

Applicability of Section 43B(h)

(A) Applicable

The provision mentioned will take from the effect on 01 April 2023, corresponding to A.Y 2023-24. Basically, these clauses applicable for Micro or Small Business registered under the MSME Act of 2006. But these provisions are not applicable for the wholesale and Retail Traders. In this provision all expenses payment paid within 15 days but if you have agreement between buyer and supplier then 45 days allowed for payment.

Note: (For Applicable)

1. This provision applicable only who are registered in UDYAM Portal

2. Applicable for Manufacturer or service provider

3. Those Manufacturer of services provider fall in the Micro or Small Enterprises (Micro means Business that have investment Rs. 1 crores or turnover less than Rs. 5 Crores or small enterprises means business with Investment up to Rs. 10 crores or Turnover of Less than Rs. 50 Crores.)

Note: (For Not Applicable)

1. This provision not Applicable who are not registered in UDYAM portal.

2. This provision not applicable for wholesaler or Traders

3. A business who falls under the Manufacturer or services provider but business covered under the medium enterprises (Medium enterprises means Business with Investment up to Rs. 50 Crores or Turnover of less than Rs.250 Cores.)

(B) Basic Condition

1. Amount Payable for invoice on or before 31-Mar-2023 this provision not applicable

2. If invoice between 01-Apr-2023 to 15-Feb-2024 were paid before 31-Mar-2024. Then expenses allowed in F.Y-2023-24

3. If invoice between 16-Feb-2024 to 31-Mar-2024 were paid within 45 days then expenses allowed in F.Y-2023-24(Assumed written agreement of 45 Days is there between buyer and supplier)

4. If Expenses amount not paid within due date, then that amount included in the income.

Conclusion: Understanding the nuances of Section43B(h) is crucial for businesses falling under its purview. Compliance requirements vary based on registration status and business classification. Ensure adherence to the basic conditions outlined to avoid income inclusion and maintain fiscal prudence.