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Section 43B(h) of the Income Tax Act Deductions for MSME Payments

Section 43B(h) of the Income Tax Act is relevant to the MSME (Micro, Small, and Medium Enterprises) sector and deals with the deduction of certain payments made to MSMEs.<br>

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Section 43B(h) of the Income Tax Act Deductions for MSME Payments

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  1. SECTION 43B(H) OF THE INCOME TAX ACT: DEDUCTIONS FOR MSME PAYMENTS

  2. Table of Content Deduction Rules under Section 43B(h) About Us What Is Udyam Registration Impact of Section 43B(h) on MSMEs Overview of Section 43B(h) MSME Payment Due Dates What Does Section 43B(h) Cover? Conclusion

  3. About Us UDYAMREGISTRATIONS.CO.IN Website Is A Property Of A Consultancy Firm, Providing Consultancy Services. We are a B2B Consulting Firm. We have served more than 2 lac happy & satisfied clients.

  4. What Is Udyam Registration Udyam Registration is a process introduced by the Government of India to simplify the registration process for Micro, Small, and Medium Enterprises (MSMEs). This registration enables MSMEs to access various benefits and schemes offered by the government, such as financial assistance, subsidies, and easier access to loans.

  5. Overview of Section 43B(h) Section 43B(h) of the Income Tax Act, 1961 deals with the deductibility of certain expenses in the case of businesses and professionals. The section specifically allows for the deduction of payment-related expenses only when the actual payment is made. It addresses the timing of claiming a deduction for certain liabilities or expenses in a business's profit and loss account.

  6. What Does Section 43B(h) Cover? • Payment to MSMEs: Specifies the allowable deduction of certain expenses when paid to MSMEs. • Conditions for Deduction: • Payment must be made within the due date specified under the MSME Development Act, 2006. • Deduction will only be allowed if the payment is made before the due date of filing the income tax return.

  7. Deduction Rules under Section 43B(h) • Timely Payment: • Allowable Deduction: Payments made to MSMEs should be recorded and paid before the return filing deadline. • Non-Compliance: If payments are not made to MSMEs on time, the deduction is denied in the year of accrual. • Also Read:How to Print MSME (Udyam) Registration Certificate

  8. Impact of Section 43B(h) on MSMEs • Ensures Timely Payments: Helps MSMEs receive timely payments, improving liquidity. • Increases Cash Flow: MSMEs benefit from faster payments, helping them to sustain operations without delays. • Legal Protection: Strengthens MSMEs' legal standing by mandating businesses to settle dues within prescribed timelines.

  9. MSME Payment Due Dates • MSME Development Act, 2006: Defines the maximum time limit for payments to MSMEs. • 180 days: Businesses are required to clear dues to MSMEs within 180 days from the date of acceptance or deemed acceptance of the goods/services. • For Deduction: Payment must be made before the due date of filing the income tax return.

  10. Conclusion • Encouraging MSME Payments: Section 43B(h) supports the financial stability of MSMEs by enforcing timely payments. • Ensure Compliance: Timely payments will not only ensure tax deductions but will also strengthen business relationships and legal compliance.

  11. THANK YOU

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