Section 43(b)(h) was introduced to help MSME. As per this provision the buyers were oblised to make payment to MSME’s in 45 days. In case of default they were supposed to pay more tax.
As the amount not paid within 45 days will not be allowed as an expenditure.
This was causing a of issues for the MSME’s. Although it was made for their good but was causing problems.
In many industries the normal duration of credit in high. Why a company will pay in 45 days when they have normal credit period for more days. Thus many big corporates stopped dealing with the MSME. They started to ask for a declaration if MSME wants to continue, they will have to cancel their MSME registration.
Many businesses were requesting for removal of this provision. In an announcement the Finance ministary has given a hint that this provision can be postponed.
This has come as a breather for the whole industries.
