Must Attention required and Most Important for Balance Sheet and Income tax Return for FY 23-24 onwards. 


Must to read this complete otherwise there may be huge Income Tax Liability in the Balance sheet for FY 23-24 onwards


Please Note that From FY 23-24 onwards


If any creditor in your balance sheet who is registered under MSME in unpaid as on 31-3-2024, then the corresponding Purchase from such creditors shall be disallowed and Income tax will be required to be paid on such purchase amount.


There is no question on Genuineness of Purchase in this case. Disallowance is due to non payment.


Hence must to check that any creditor who is registered under MSME as Micro OR Small category, must not be outstanding for more than 15 /45 days 


Hence please ensure that payment to all such creditors is made in time else full tax would be payable on such unpaid amount resulting in huge additional tax liability.


Tax auditors will have to compulsorily report the same in audit report. 


As per the insertion of clause (h) to section 43B,  from 1-4-2023 onwards,  any amount remaining unpaid as at year end  (say 31st March, 2024)  to any creditors  being  any  micro or small enterprise,  whether for goods or services,  beyond  45 days or lesser period if so agreed or 15 days if nothing specifically agreed, shall be added to your taxable Income and would be allowed as deduction in the year of  payment thereof.


Thus keeping such creditors unpaid is a ticking tax bomb.


Definition of Micro Enterprise 


Micro Enterprises are the enterprises having 1. Turnover <= 5 Crores AND 2. Investment in Plant and Machinery <= 1 Crore. (Both the conditions have to be satisfied) 


Definition of Small Enterprise 


Small Enterprises are the enterprises having 1. Turnover <= 50 Crores and 2. Investment in Plant and Machinery <= 10 Crore. (Both the conditions have to be satisfied)


Medium Enterprises are not covered in this clause. 


If any further clarification required in this regard, you may contact in our office at 011-47603624


Thank You

CA Sohrabh Jindal
9810216640