Ahmedabad: As the new rule for payments to micro and small enterprises (MSEs) has affected several sectors, experts said the central govt should allow buyers to make payments till the filing of returns like all the other clauses of Section 43B of the Income Tax Act. Textiles and chemicals sectors have seen the maximum impact of the rule and experts believe it may impact their growth because many buyers may prefer to buy goods from large industries to avoid the compulsory 45-day payment rule.
Senior advocate Tushar Hemani said, “According to clause ‘h’ of Section 43(B), any buyer must make payment within 45 days to micro and small units after delivering the goods else they cannot claim the deduction for the assessment year 2024-25. The new clause aims to protect MSEs but there are challenges and there are fears about loss of business for these units. It is causing more problems than anticipated. Section 43 was introduced in 1983 and since then, many clauses have been added. In clauses ‘a’ to ‘g’, the department allows time up to filing of returns to claim payments from the previous year. Similarly, it should allow the mechanism for the new clause.”
With many sectors facing issues pertaining to orders and delivery of goods, Gujarat Chamber of Commerce and Industry and the Ahmedabad branch of the Institute of Chartered Accountants of India (ICAI) jointly organized a session where Tushar Hemani analyzed the new section.
Addressing the traders and accountants, he said, “The section is applicable to manufacturing MSEs only and traders registered under the MSMEs are not going to be the beneficiaries because they are entitled only for priority sector lending. Buyers should make all the pending payments before March end to their suppliers registered under MSMEs, otherwise they cannot claim deduction of those payments in this year. If an entity is not registered under MSME, then the issue does not arise.”
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Senior advocate Tushar Hemani said, “According to clause ‘h’ of Section 43(B), any buyer must make payment within 45 days to micro and small units after delivering the goods else they cannot claim the deduction for the assessment year 2024-25. The new clause aims to protect MSEs but there are challenges and there are fears about loss of business for these units. It is causing more problems than anticipated. Section 43 was introduced in 1983 and since then, many clauses have been added. In clauses ‘a’ to ‘g’, the department allows time up to filing of returns to claim payments from the previous year. Similarly, it should allow the mechanism for the new clause.”
With many sectors facing issues pertaining to orders and delivery of goods, Gujarat Chamber of Commerce and Industry and the Ahmedabad branch of the Institute of Chartered Accountants of India (ICAI) jointly organized a session where Tushar Hemani analyzed the new section.
Addressing the traders and accountants, he said, “The section is applicable to manufacturing MSEs only and traders registered under the MSMEs are not going to be the beneficiaries because they are entitled only for priority sector lending. Buyers should make all the pending payments before March end to their suppliers registered under MSMEs, otherwise they cannot claim deduction of those payments in this year. If an entity is not registered under MSME, then the issue does not arise.”
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The central government introduces a new rule on payments to micro and small enterprises (MSEs) within 15 or 45 days. The Gujarat Chamber of Commerce and Industry (GCCI) demands the deferment of Section 43B (h) implementation. GCCI seeks clarification on the status of MSEs and recommends a one-year extension for better understanding, preparation, and smoother implementation.