New Delhi April 01: The Income Tax rule disallowing businesses from claiming tax deductions for payments beyond 45 days to MSMEs for supply of goods and services will come into effect from today. ( Monday).
According to Section 43B(h) of the Income Tax Act, introduced through Finance Act 2023, if a larger company does not pay an MSME on time — within 45 days in case of written agreements — it cannot deduct that expense from its taxable income, leading to potentially higher taxes.
Some industry bodies have urged the Government to postpone implementation of the new payment rules, the Federation of Indian Micro and Small & Medium Enterprises (FISME) is of the opinion that the new rule has the potential to be a game-changer for MSMEs.
Income Tax rules applicable from April 1, 2024
