MSME Payment Sec.43B (h)

This query is : Open

seeta (Querist)
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25 January 2024 I am a trader not registered under MSME

I have purchase material from manufacturing unit who is registered under MSME as Small Enterprises.

Is rule of 45 days payment is applicable to me as I am a trader and not registered under MSME

Please clarify the same

CA Rashmi Gandhi

CA Rashmi Gandhi (Expert)
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09 February 2024 Not applicable on you Everything about Section 43B(h) Section 43B(h)-Payment based deduction for amount payable to micro and small enterprise 👉Applicable from AY 2024-25 onwards -Not Applicable for Transaction pertaining to on or before 31/03/2023 👉Due Date for Payments -15 Days from Date of Acceptance if No Written Agreement -45 Days from Date of Acceptance if Written Agreement is there 👉Applicable for Amount payable to micro and Small Enterprise (MSE) who are manufacturers or service providers -Not Applicable for amount payable to medium enterprises -Not Applicable for amount payable to unregistered MSEs -Not Applicable for amount payable to traders because their registration on UDYAM portal is for the purpose of priority sector lending only 👉Applicable for the amount payable for Goods & Services -Not Applicable for actionable claims and money -Not Applicable on Interest on Loans as it is not goods nor services -Not Applicable on Salary as it is not goods nor services -Not Applicable on Amount Payable for Capital Goods as it was not claimed as Expense 👉Definitions -Buyer means whoever buys any goods or receives any services from a supplier for consideration -Supplier means a micro or small enterprise, which has filed a memorandum with the authority referred to as u/s 8(1) -Manufacture means processing of raw material or inputs in any manner that results in emergence of a new product having a distinct name, character and use 👉Not Applicable for Buyer filing ITR u/s 44AD/44ADA/44AE (Presumptive Taxation) -These sections have overriding effect over section 28 to 43C, so section 43B(h) not applicable -If buyers turnover below 10 Crore and Cash transactions is below 5% then audit u/s 44AB is not applicable but Books of Accounts are required to be maintain, in such cases section 43B(h) is Applicable 👉If Amount payable to MSE is liable to TDS and that TDS is also not paid to government then dis-allowance will be u/s 43B(h) only and not under section 40(a)(ia) 👉If Amount payable to MSE is inclusive of GST then dis-allowance will be limited to the amount exclusive of GST because GST was never claimed as expenses so it can't be dis-allowed as expenses 👉Form 3CD for FY 23-24 are yet to be notified by Income Tax Department so what to be reported in Form 3CD will be known once the notification of Form 3CD by Departments