Section 43(b)(h): Be careful before payment to your creditors for the month of March
Section 43(b)(h) of Income Tax act,1961 which has already troubled and confused taxpayers last year is also there for the current tax session and this session too taxpayer needs to very careful.
We hereby explaining repercussion of not following this section so that you can save yourself as a taxpayer.
As per this section if any person has made purchase goods or services from MSME, such person has to make payment to such MSME within 15 days. But if taxpayer has contract with MSME regarding payment then credit period will extend to 45 days.
Pending payment to be added to income of taxpayer– If you haven’t made payment to MSME and 45 days has expired then you have an option to make payment on or before 31st march. However, if you have made purchased during March month and 45 days will be completed in next month i.e. April month then you have to make payment on or before 45th day.
But if due to any reason whatsoever failed to make payment on or before 31st march or 45th day, then pending amount will be added to income of the taxpayers.
Exception to the section – this section applicable only on transaction that has been made with MSME. This section is not applicable to medium and large enterprises and those entity who has filed Income Tax return under presumptive tax scheme like section 44AD.
Do follow this section otherwise taxpayer will end up paying handsome amount as tax.