Breaking: FinMin may postpone Section 43B(h) by 1 year

The Finance Minister Nirmala Sitharaman may postpone Section 43B(h) by 1 year.

Finance Ministry is considering deferring the application of Rule 43B (h) of the Income Tax Act, which requires payments to micro, small, and medium-sized enterprises (MSMEs) within 45 days, according to sources.

The proposed postponement is scheduled to last a full financial year, with the rule set to take effect on April 1, 2025, sources said. The Finance Act of 2023, which revised the Income Tax Act, added clause (h) to Section 43B to ensure timely payments to MSMEs.

The amendment established a 45-day deadline for the assessee to make payments. Failure to comply with this timeframe would result in pending payments being regarded as income and taxed.

The decision to modify the implementation timeframe comes in response to many industry representations filed to the finance ministry. Various sectors raised concern about the shortened payment cycle, claiming that it disrupts customary norms and has already resulted in order cancellations.

In their submissions to the finance ministry, industry associations have suggested potential changes to the act or a short postponement to give firms more time to adjust.

The Ministry of MSME contacted different SME groups to request feedback on this topic on February 16. According to sources, the SME organizations have been requested to submit views by February 19.

Source: CNBCTV