UPSC Current Affairs
SECTION 43 B (H) OF INCOME TAX ACT
Companies, Sole Proprietorships or Limited Liability Partnerships (LLP) are required to settle the payments for any goods or service purchased from any MSME (registered under MSME Development Act) within 45 days. There has to be a formal agreement, in absence of which, the payment has to be settled in 15 days. Also, the buyer can claim deduction in his/her taxable income only if the payment has been settled.
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Companies, Sole Proprietorships or Limited Liability Partnerships (LLP) are required to settle the payments for any goods or service purchased from any MSME (registered under MSME Development Act) within 45 days. There has to be a formal agreement, in absence of which, the payment has to be settled in 15 days. Also, the buyer can claim deduction in his/her taxable income only if the payment has been settled.
HOW WILL IT STREAMLINE PAYMENTS?
- Companies, Sole Proprietorships or Limited Liability Partnerships (LLP) are required to settle the payments for any goods or service purchased from any MSME (registered under MSME Development Act) within 45 days.
- There has to be a formal agreement, in absence of which, the payment has to be settled in 15 days.
Also, the buyer can claim deduction in his/her taxable income only if the payment has been settled.
BENEFITS
- It is beneficial for MSME’s sustainability & growth as it resolves the cash crunch problem.
- It ensures better bargaining power for the MSMEs during any deal.
- The disputes will be reduced.
- Tax planning can be streamlined.
CONCERNS
Traders’s body have appealed to the Finance Minister to
implement this clause from 2025 onwards as the Indian market largely operates on Credit.
How much is the credit cycle?
90-120 days. It gets extended to
180 days also.
Hence the expectation from the trader to adjust its cycle to 45 days immediately is of concern.
- Hence the new rule has led the retailers to cancel orders they had placed with MSMEs & have turned towards non MSME players.
- Return of unsold articles to the MSMEs is also getting witnessed.
- Prelims: Key facts, institutions, locations and terminology in the article.
- Mains: Connect the topic with Economy, International Relations, Polity & Governance.
- Revision: Use the article headings to prepare concise notes and answer-writing points.
Test your understanding
Questions from this article
Prelims practiceWith reference to SECTION 43 B (H) OF INCOME TAX ACT, consider the following statements:
- Companies, Sole Proprietorships or Limited Liability Partnerships (LLP) are required to settle the payments for any goods or service purchased from any MSME (registered under MSME Development Act) within 45 days.
- There has to be a formal agreement, in absence of which, the payment has to be settled in 15 days.
- It is beneficial for MSME’s sustainability & growth as it resolves the cash crunch problem.
Which of the statements given above are correct?
- 1 and 2 only
- 2 and 3 only
- 1 and 3 only
- 1, 2 and 3
View answer
Answer: (d) 1, 2 and 3. All three statements are drawn from the article.
Mains practiceDiscuss the background, key issues and significance of SECTION 43 B (H) OF INCOME TAX ACT for India.
Answer in 250 words.
View answer approach
- HOW WILL IT STREAMLINE PAYMENTS?
- BENEFITS
- CONCERNS
- How much is the credit cycle?
Frequently asked questionsFrequently asked questions
Why is Section 43 B (H) Of Income Tax Act in the news?
Companies, Sole Proprietorships or Limited Liability Partnerships (LLP) are required to settle the payments for any goods or service purchased from any MSME (registered under MSME Development Act) within 45 days. There has to be a formal agreement, in absence of which, the payment has to be settled in 15 days.
What are the key facts about Section 43 B (H) Of Income Tax Act?
Also, the buyer can claim deduction in his/her taxable income only if the payment has been settled. BENEFITS It is beneficial for MSME’s sustainability & growth as it resolves the cash crunch problem. It ensures better bargaining power for the MSMEs during any deal.
Why is Section 43 B (H) Of Income Tax Act important for UPSC preparation?
The topic connects current developments with Economy, International Relations, Polity & Governance and is relevant for both objective revision and analytical answer writing.