As the budget announced by our Hon’ble Finance Minister on 1st February, 2023, everyone is asking what is for MSME in this budget. Here is all that you should know –
1. MSMEs get Rs. 9,000 Crores corpus for revamped credit guarantee scheme.
2. There is common practice by biggest players in industry to made purchases from a small enterprise and not to make payments them within an agreed time. Due to which many small players in industry face financial crunch. However, amendment in section 43B will provide a big relief to MSME.
A new clause inserted in section 43B of the Income Tax Act as follows –
“(h) any sum payable by the assessee to a micro or small enterprise beyond the time limit specified in section 15 of the Micro, Small and Medium Enterprises Development Act, 2006,”;
Which means – if any payment due to a micro or small enterprises is not paid within the time limit specified in section 15 of MSME Act, 2006 (i.e. any agreed date in contract; in the absence of agreed date – 45 days) will not be allowed as expenses and the same is disallowed under income tax.
The important fact to be keep in mind is that the payment due to a micro or small enterprise will be allowed as expenses under Income Tax only if the same is paid within time limit as per section 15 of MSME Act and not before the due date of filing of return of income for the relevant assessment year.
Meaning of Micro Enterprises – Investment in Plant and Machinery or Equipment:
Not more than Rs.1 crore and Annual Turnover ; not more than Rs. 5 crore.
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