Sec 43b(h) msme payment

This query is : Open

uma sharma (Querist)
Follow

26 March 2024 I have payment due of rs 25000 since fy 2021-22, supplier is a trader of chips . Supplier fulfils criteria of msme . In this case do i need to make payment before31-3-2024.

And in case supplier has closed down business how can i make payment . To that msme if it is required to be paid

CA Ankit R Momaya

CA Ankit R Momaya (Expert)
Follow

26 March 2024 Section 43B is Applicable only w.e.f. 01/04/2023. Hence 43B cannot be trigerred for Opening Balances.

CA Kushwanth AVSR

CA Kushwanth AVSR (Expert)
Follow

26 March 2024 Clause h to the Section 43 was introduced in the Finance bill 2023 and accordingly the same will be applicable from the FY 2023-24 and hence, the same will not be applicable for the outstanding balances that prevail before 01st April 2023. However, the same does not mean that there is no obligation to pay as there is obligation to pay as per MSMED Act, 2006. However, disallowance will not be attracted.

However, if the other person had closed the business, and if there is no obligation to pay at present and in future, then it might be better to treat is as income and offer as income in the profit and loss account

Upgrade to CAclubindia Pro. Subscribe Now!

Nikhil Kaushik

Nikhil Kaushik (Expert)
Follow

26 March 2024 its a strange chain of responses. Since expense pertains to a previous year, the question of disallowance does not arise anyway for the current AY.

What you need to account for is the following:

1. if the MSME has already closed down and you are sure that there is no claimant to this debt, the write back the amounts in your P&L. This would result in increase of taxable income;

2. regardless of treatment under income-tax act, the provisions of MSME act apply. So, you need to account for your liabilities under MSME Act. Specially if the owner of files complaint for recovery of dues.

RAJA P M

RAJA P M (Expert)
Follow

27 March 2024 Yes, I agreed Mr. Nikhil Kaushik sir reply. & the Supplier is a trader then the Act not applicable. So, no issues about the outstanding.