MSME_Payment_New Rule for the payment audit.pdf

New MSME payment sections

1. Payment to MSME under section 43B(h)

2. Introduction of Section 43B(h)
Section 145 of Income Tax Act-Income computed under Profit and Gains of business or
profession either cash or mercantile system of accounting
Generally Business-Mercantile System Followed
Profession-Cash System Followed
No Hybrid System
Section 43B-Expenses allowed only on payment basis irrespective of accounting followed
Example-1)ESI/PF, GST
2)Interest on loan from financial institution/Bank
Actually paid before the specified datefor furnishing due date of filing return(31
st
July or 31
st
October)

3. Intention of the Introduction of Section 43B(h)
1)Intention of introduction of section 43B(h)-(Page No.12 of Memorandum Explaining the
provisions in the Finance Bill 2023)
(a) In order to promote timely payments to micro and small enterprises, it is proposed to include
payments made to such enterprises within the ambit of section 43Bof the Act-43B(h)
(b)anysumpayabletoaboveenterprisesbeyondthetimelimitspecifiedinsection15oftheMicro,
SmallandMediumEnterprisesDevelopment(MSMED)Act2006shallbeallowedasdeductiononly
onactualpayment.
©Theseamendmentswilltakeeffectfrom01.04.2024andwillaccordinglyapplytotheAssessment
Year2024-25(FY2023-24)andsubsequentassessmentyears
(d)43Bfundaments-Prescribedpaymentsandwithintheduedateoffilingreturnand43B(h)only
withinspecifiedduedateundersection15ofMSMEActorFinancialYearwhicheverislater.

4. NotificationNo. S.O 2119(E) dated 26.06.2020
MSME
a)Micro Enterprises:
Investment in Plant and Machinery or equipment –Up to 1 crore
Turnover-Up to 5 crores
b) Small Enterprises:
Investment in Plant and Machinery or equipment–Up to 10 crores
Turnover-Up to 50 crores
c) Medium Enterprises:
Investment in Plant and Machinery or equipment–up to 50 crores
Turnover-Up to 250 crores

5. NotificationNo. S.O 2119(E) dated
26.06.2020 MSME
d)ItisanManufacturingenterprisesorServiceenterprisesnotTradingconcern
e)NetInvestment(PlantandMachinery)-depreciatedcostasperincometaxreturnofplant
andmachineryorequipmentlesscostofpollutioncontrol,R&DandIndustrysafetydevices.
f)Exportofgoodsorservicesorboth,shallbeexcludedwhilecalculatingtheturnoverofany
enterprises.
g)Iftheenterprisescrosstheceilinglimitsspecifiedforitspresentcategoryineitherofthe
twocriteriaofinvestmentofturnover-placedinthenextcategory.
h)enterprisesshallbeplacedinlowestcategoryifitgoesbelowtheceilinglimitsspecifiedfor
itspresentcategoryinbothcriteriaofinvestmentaswellasturnover.
i)EnterprisehasfiledUdyamRegistration

6. Due date of payment (Section 15 MSMED Act)
b) In no case the period agreed upon between the supplier and buyer in writing shall exceed 45 days
from the day of acceptance or the day of deemed acceptance.
c) Prima facia it appears that 45 days or 15 days is due date but practically in most of sale bill one
condition is give that the bill shall be paid within 7days or 15 days then due date shall be considered as
7 or 15 days only as sale bill will also constitute an agreement.
d) day of acceptance is defined to mean: -
(a) the day of the actual delivery of goods or the rendering of service
(b) where the objection is made in writing by the buyer regarding acceptance of goods or services
within 15 days from the day of the delivery of goods or the rendering of services, the day on which
such objection is removed by the supplier.

7. Due date of payment (Section 15 MSMED Act)
e) If payment is not made within agreed time or on or before the appointed day, then pay
interest as per section 16 of the MSMED Act. ( Three times of the bank rate
notified by the RBI)
3)Traders can get the MSME registration for purpose of Priority sector lending only-
Traders will not be covered under section 43B(h)

8. THANK YOU