As per the new provisions, payment to MSME will be allowed as deduction for Income Tax purpose in the year in which payment is made, if the payment is made beyond due date.
As per the new provisions, payment to MSME will be allowed as deduction for Income Tax purpose in the year in which payment is made, if the payment is made beyond due date.
Steps to be followed to check if you have to make payment by 31st March 2024.
1) Login into this portal and enter the Udhayam number of your supplier https://udyamregistration.gov.in/Udyam_Verify.aspx
2) After entering the udhaym number and submit, details of the enterprise will be displayed. Check in the Section ‘Enterprise Type’, if the Enterprise Type is Micro or Small. If yes, then this section is applicable. However if the “Major Activity” mentions ‘trade’, then this section is not applicable.
3) Check the due date of your payment. Has it crossed 45 days (if you have agreement / PO /invoice that mentions payment due date). If no agreement / PO / Invoice mentions due date for payment, check if the payment is due more than 15 days.
4) If answer to questions in step (3) is a yes, then payment has to be made by 31st March 2024. If payment is not made, the amount that is due will not be allowed as deduction in FY 2023-24 and the due amount will be added to your profits to calculate income tax.