The Finance Ministry is contemplating a deferment of the enforcement of Rule 43B (h) under the Income Tax Act, which mandates payments to micro, small, and medium enterprises (MSMEs) within 45 days, sources informed CNBC-TV18.
The proposed postponement is expected to span a full financial year, with the rule anticipated to take effect from April 1, 2025, sources said.
The Finance Act of 2023, which amended the Income Tax Act, introduced clause (h) in Section 43B to ensure timely payments to MSMEs.
This amendment set as 45 day limit or the assessee to fulfill payments.
Failure to adhere to this timeline would result in pending payments being treated as income and subject to taxation.
The decision to reconsider the implementation timeline comes in the wake of numerous industry representations submitted to the finance ministry.
various sectors expressed apprehensions about the shorter payment cycle, asserting that it challenges traditional practices and has already led to order cancellations.
Industry bodies, in their proposals to the finance ministry have suggested potential tweaks to the act or a temporary postponement to provide businesses with the necessary adjustment period.
Source: cnbctv18.com
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