Amendment of section 43B.
13. In section 43B of the Income-tax Act, with effect from the 1st day of April, 2024,––
(i) in clause (da), for the words “a deposit taking nonbanking financial company or systemically important non-deposit taking non-banking financial company”, the words “such class of non-banking financial companies as may be notified by the Central Government in the Official Gazette in this behalf” shall be substituted;
(ii) in clause (g), after the word “assets,”, the word “or” shall be inserted;
(iii) after clause (g), the following clause shall be inserted, namely:––
“(h) any sum payable by the assessee to a micro or small enterprise beyond the time limit specified in section 15 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006.),”
(iv) in the proviso, after the words “nothing contained in this section”, the brackets, words and letter “[except the provisions of clause (h)]” shall be inserted;
(v) in Explanation 4,––
(I) for clause (e), the following clause shall be substituted, namely:––
‘(e) “micro enterprise” shall have the meaning assigned to it in clause (h) of section 2 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006.);’
(II) for clause (g), the following clause shall be substituted, namely:––
‘(g) “small enterprise” shall have the meaning assigned to it in clause (m) of section 2 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006.).’
Notes on Clauses:
Clause 13 of the Bill seeks to amend section 43B of the Income-tax Act relating to certain deductions to be only on actual payment.
It is proposed to amend clause (da) of the said section, to substitute the expression “a deposit taking non-banking financial company or systemically important non-deposit taking non-banking financial company” with “such class of non-banking financial companies as may be notified by the Central Government in the Official Gazette in this behalf”.
It is further proposed to insert a new clause (h) to the said section so as to provide that any sum payable by the assessee to a micro or small enterprise beyond the time limit specified in section 15 of the Micro, Small and Medium Enterprises Development Act, 2006 shall be allowed as deduction only on actual payment.
It is also proposed to amend the proviso to the said section so as to not allow the deduction on accrual basis, if the amount is paid by due date of furnishing the return of income in the case of micro or small enterprises.
It is also proposed to substitute clause (e) and clause (g) of Explanation 4 to define the expressions “micro enterprise” and “small enterprise” for the purposes of the said section.
These amendments will take effect from 1st April, 2024 and will, accordingly, apply in relation to the assessment year 2024-2025 and subsequent assessment years.
