In a world where business dynamics are continuously changing, recent amendments to Section 43B of the Income Tax Act are sending shock waves through the channels of trading.
Picture this: As a business owner relying on micro and small enterprises for crucial supplies, you’re facing a ticking time bomb with delayed payments threatening to dent your pocket.
Double-Trouble Alert!
Until recently, enterprises were able to breathe easily, claiming deductions even if payments to MSMEs were paid slightly after the due date but before the filing deadline. Not anymore! The recent amendment in section 43B is here to disrupt the game.
Now, with the new amendment of section 43B(h) any delayed payment to micro or small enterprises beyond the due date under the MSME Act means your deduction is deferred until the actual payment is made. Yes, even if it’s just one day after the 45-day window! (in case of agreement else 15-day window) This shift aims to instill discipline in timely payments but could spell double trouble for your cash flows and working capital.
Time to Act!
As a business, navigating this change is crucial. Here’s your survival guide:
- Obtain MSME registration details from supplies soon!
- Map out payment due dates and set those payment reminders.
- Boost liquidity to ensure you meet those deadlines.
- Negotiate optimal payment terms in new MSME contracts.
But wait, here’s the kicker:
Conclusion: Prioritize Now or Pay Later!
The key to thriving in this new tax landscape lies in your ability to prioritize timely payments to MSMEs. It’s not just about compliance part but it’s about safeguarding your cash flows and avoiding unnecessary interest charges. By embracing robust payment governance and strategic planning, your business can seamlessly adapt to this tax law change.
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