{"id":46,"date":"2024-01-29T21:10:43","date_gmt":"2024-01-29T15:40:43","guid":{"rendered":"https:\/\/cajdshah.com\/blog\/?p=46"},"modified":"2024-07-18T12:18:08","modified_gmt":"2024-07-18T06:48:08","slug":"disallowance-of-payment-to-msme-beyond-the-due-date","status":"publish","type":"post","link":"https:\/\/cajdshah.com\/blog\/disallowance-of-payment-to-msme-beyond-the-due-date\/","title":{"rendered":"Disallowance of payment to MSME &#8211;  Beyond the due date"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/cajdshah.com\/blog\/disallowance-of-payment-to-msme-beyond-the-due-date\/#Legal_provision_%E2%80%93_Section_43Bh\" >Legal provision \u2013 Section 43B(h)<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/cajdshah.com\/blog\/disallowance-of-payment-to-msme-beyond-the-due-date\/#Our_Analysis\" >Our Analysis<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/cajdshah.com\/blog\/disallowance-of-payment-to-msme-beyond-the-due-date\/#Our_Recommendation\" >Our Recommendation<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h3><span class=\"ez-toc-section\" id=\"Legal_provision_%E2%80%93_Section_43Bh\"><\/span>Legal provision \u2013 Section 43B(h)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>43B(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 <em>(27 of 2006)<\/em>,shall be allowed <em>(irrespective of the previous year in which the liability to pay such sum was incurred by the assessee according to the method of accounting regularly employed by him)<\/em> only in computing the income referred to in section 28 of that previous year in which such sum is actually paid by him<\/p>\n<h4><span class=\"ez-toc-section\" id=\"Our_Analysis\"><\/span><a href=\"https:\/\/cajdshah.com\/Team.html\" target=\"_blank\" rel=\"noopener\">Our Analysis<\/a><span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-90 alignnone\" src=\"https:\/\/cajdshah.com\/blog\/wp-content\/uploads\/2024\/01\/MSME-300x187.jpg\" alt=\"\" width=\"542\" height=\"338\" title=\"\" srcset=\"https:\/\/cajdshah.com\/blog\/wp-content\/uploads\/2024\/01\/MSME-300x187.jpg 300w, https:\/\/cajdshah.com\/blog\/wp-content\/uploads\/2024\/01\/MSME.jpg 641w\" sizes=\"auto, (max-width: 542px) 100vw, 542px\" \/><\/p>\n<ol>\n<li>This clause is applicable on all types of Purchases \/expenses made from the enterprise which has been registered under <a href=\"https:\/\/samadhaan.msme.gov.in\/WriteReadData\/DocumentFile\/MSMED2006act.pdf\" target=\"_blank\" rel=\"noopener\">MSMED Act,2006<\/a>.<\/li>\n<li>This clause is applicable to <strong>Micro &amp; Small Enterprises<\/strong>. Medium Scale Enterprises are outside the ambit of this clause.<\/li>\n<li>Section 15 of the MSMED Act mandates payments to micro and small enterprises within the time as per the written agreement, which cannot be more than 45 days. If there is no such written agreement, the section mandates that the payment shall be made within 15 days.<\/li>\n<li>Section 43B<em>(h)<\/em> states that any sum payable by the assessee to a micro &amp; small enterprises beyond the time limit specified in Section 15 of Micro, Small and Medium Enterprises Development Act 2006 shall be allowed only in computing the income referred in Section 28 of that previous year in which sum has been actually paid <em>(irrespective of the previous year in which liability to pay sum was incurred by assessee according to the method of accounting regularly employed)<\/em><\/li>\n<li>If payment to Micro &amp; Small Enterprises has not been made in specified time, then that amount shall be added to the taxable income of assessee in Previous Year on account of Non payment to MSME &amp; assessee has to<a href=\"https:\/\/www.instagram.com\/p\/CzGS36rSctE\/\" target=\"_blank\" rel=\"noopener\"> bear the tax liability<\/a> on such amount.<\/li>\n<li>The assessee gets deduction of such expense \/ purchase in Year in which payment has been made.<\/li>\n<\/ol>\n<h4><span class=\"ez-toc-section\" id=\"Our_Recommendation\"><\/span>Our Recommendation<span class=\"ez-toc-section-end\"><\/span><\/h4>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"wp-image-88 alignnone\" src=\"https:\/\/cajdshah.com\/blog\/wp-content\/uploads\/2024\/01\/micro-small-and-medium-enterprises-development-act-300x169.jpg\" alt=\"\" width=\"515\" height=\"290\" title=\"\" srcset=\"https:\/\/cajdshah.com\/blog\/wp-content\/uploads\/2024\/01\/micro-small-and-medium-enterprises-development-act-300x169.jpg 300w, https:\/\/cajdshah.com\/blog\/wp-content\/uploads\/2024\/01\/micro-small-and-medium-enterprises-development-act-1024x576.jpg 1024w, https:\/\/cajdshah.com\/blog\/wp-content\/uploads\/2024\/01\/micro-small-and-medium-enterprises-development-act-768x432.jpg 768w, https:\/\/cajdshah.com\/blog\/wp-content\/uploads\/2024\/01\/micro-small-and-medium-enterprises-development-act-1536x864.jpg 1536w, https:\/\/cajdshah.com\/blog\/wp-content\/uploads\/2024\/01\/micro-small-and-medium-enterprises-development-act-570x320.jpg 570w, https:\/\/cajdshah.com\/blog\/wp-content\/uploads\/2024\/01\/micro-small-and-medium-enterprises-development-act.jpg 1920w\" sizes=\"auto, (max-width: 515px) 100vw, 515px\" \/><\/p>\n<ol>\n<li>Check with the vendor \/ bills for confirmation whether vendor is <a href=\"https:\/\/www.cajdshah.com\/\" target=\"_blank\" rel=\"noopener\">registered with the MSME<\/a> or not<\/li>\n<li>Categorized the Vendor as MSME in the accounting system<\/li>\n<li>Check the outstanding bills of the MSME vendor<\/li>\n<li>Make the payment of the outstanding bills of the MSME vendor within due date from the bill date or before 31\/03\/2024 to avoid the disallowance<\/li>\n<li>Take special precaution for payment of the bills which is received after 15\/02\/2024 as due date for payment may fall after 31\/03\/2024.<\/li>\n<\/ol>\n<p><strong>Thus, this amendment to section 43B of the Act allows the payment as deduction only on payment basis. It can be allowed on accrual basis only if the payment is within the time mandated under section 15 of the MSMED Act.<\/strong><\/p>\n<div class=\"pvc_clear\"><\/div>\n<p id=\"pvc_stats_46\" class=\"pvc_stats all  \" data-element-id=\"46\" style=\"\"><i class=\"pvc-stats-icon medium\" aria-hidden=\"true\"><svg aria-hidden=\"true\" focusable=\"false\" data-prefix=\"far\" data-icon=\"chart-bar\" role=\"img\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 512 512\" class=\"svg-inline--fa fa-chart-bar fa-w-16 fa-2x\"><path fill=\"currentColor\" d=\"M396.8 352h22.4c6.4 0 12.8-6.4 12.8-12.8V108.8c0-6.4-6.4-12.8-12.8-12.8h-22.4c-6.4 0-12.8 6.4-12.8 12.8v230.4c0 6.4 6.4 12.8 12.8 12.8zm-192 0h22.4c6.4 0 12.8-6.4 12.8-12.8V140.8c0-6.4-6.4-12.8-12.8-12.8h-22.4c-6.4 0-12.8 6.4-12.8 12.8v198.4c0 6.4 6.4 12.8 12.8 12.8zm96 0h22.4c6.4 0 12.8-6.4 12.8-12.8V204.8c0-6.4-6.4-12.8-12.8-12.8h-22.4c-6.4 0-12.8 6.4-12.8 12.8v134.4c0 6.4 6.4 12.8 12.8 12.8zM496 400H48V80c0-8.84-7.16-16-16-16H16C7.16 64 0 71.16 0 80v336c0 17.67 14.33 32 32 32h464c8.84 0 16-7.16 16-16v-16c0-8.84-7.16-16-16-16zm-387.2-48h22.4c6.4 0 12.8-6.4 12.8-12.8v-70.4c0-6.4-6.4-12.8-12.8-12.8h-22.4c-6.4 0-12.8 6.4-12.8 12.8v70.4c0 6.4 6.4 12.8 12.8 12.8z\" class=\"\"><\/path><\/svg><\/i> <img loading=\"lazy\" decoding=\"async\" width=\"16\" height=\"16\" alt=\"Loading\" src=\"https:\/\/cajdshah.com\/blog\/wp-content\/plugins\/page-views-count\/ajax-loader-2x.gif\" =0 title=\"\"><\/p>\n<div class=\"pvc_clear\"><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Legal provision \u2013 Section 43B(h) 43B(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 (27 of 2006),shall be [&hellip;]<\/p>\n<div class=\"pvc_clear\"><\/div>\n<p id=\"pvc_stats_46\" class=\"pvc_stats all  \" data-element-id=\"46\" style=\"\"><i class=\"pvc-stats-icon medium\" aria-hidden=\"true\"><svg aria-hidden=\"true\" focusable=\"false\" data-prefix=\"far\" data-icon=\"chart-bar\" role=\"img\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" viewBox=\"0 0 512 512\" class=\"svg-inline--fa fa-chart-bar fa-w-16 fa-2x\"><path fill=\"currentColor\" d=\"M396.8 352h22.4c6.4 0 12.8-6.4 12.8-12.8V108.8c0-6.4-6.4-12.8-12.8-12.8h-22.4c-6.4 0-12.8 6.4-12.8 12.8v230.4c0 6.4 6.4 12.8 12.8 12.8zm-192 0h22.4c6.4 0 12.8-6.4 12.8-12.8V140.8c0-6.4-6.4-12.8-12.8-12.8h-22.4c-6.4 0-12.8 6.4-12.8 12.8v198.4c0 6.4 6.4 12.8 12.8 12.8zm96 0h22.4c6.4 0 12.8-6.4 12.8-12.8V204.8c0-6.4-6.4-12.8-12.8-12.8h-22.4c-6.4 0-12.8 6.4-12.8 12.8v134.4c0 6.4 6.4 12.8 12.8 12.8zM496 400H48V80c0-8.84-7.16-16-16-16H16C7.16 64 0 71.16 0 80v336c0 17.67 14.33 32 32 32h464c8.84 0 16-7.16 16-16v-16c0-8.84-7.16-16-16-16zm-387.2-48h22.4c6.4 0 12.8-6.4 12.8-12.8v-70.4c0-6.4-6.4-12.8-12.8-12.8h-22.4c-6.4 0-12.8 6.4-12.8 12.8v70.4c0 6.4 6.4 12.8 12.8 12.8z\" class=\"\"><\/path><\/svg><\/i> <img loading=\"lazy\" decoding=\"async\" width=\"16\" height=\"16\" alt=\"Loading\" src=\"https:\/\/cajdshah.com\/blog\/wp-content\/plugins\/page-views-count\/ajax-loader-2x.gif\" border=0 \/><\/p>\n<div class=\"pvc_clear\"><\/div>\n","protected":false},"author":1,"featured_media":47,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-46","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-msme"],"_links":{"self":[{"href":"https:\/\/cajdshah.com\/blog\/wp-json\/wp\/v2\/posts\/46","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cajdshah.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cajdshah.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cajdshah.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/cajdshah.com\/blog\/wp-json\/wp\/v2\/comments?post=46"}],"version-history":[{"count":15,"href":"https:\/\/cajdshah.com\/blog\/wp-json\/wp\/v2\/posts\/46\/revisions"}],"predecessor-version":[{"id":206,"href":"https:\/\/cajdshah.com\/blog\/wp-json\/wp\/v2\/posts\/46\/revisions\/206"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cajdshah.com\/blog\/wp-json\/wp\/v2\/media\/47"}],"wp:attachment":[{"href":"https:\/\/cajdshah.com\/blog\/wp-json\/wp\/v2\/media?parent=46"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cajdshah.com\/blog\/wp-json\/wp\/v2\/categories?post=46"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cajdshah.com\/blog\/wp-json\/wp\/v2\/tags?post=46"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}