The Supreme Court (SC) on Monday (6 May 2024) refused to hear a plea filed by Micro and Small Enterprises (MSEs) challenging the 45-day payment rule under Section 43B(h) of the Income Tax Act.
The SC directed the MSEs to approach the High Court (HC) to seek any relief.
The SC granted permission for the withdrawal of the petition and provided the MSEs with the liberty to pursue their case in the HC.
This decision comes in response to a petition filed by the Federation of All India Vyapar Mandal, representing the interests of MSEs across the country.
Section 43B(h) of the Income Tax Act imposes guidelines on the credit extension practices of MSEs, prohibiting them from providing credit to buyers for more than 45 days.
Furthermore, it mandates that dues owed to MSEs must be settled within this timeframe.
Under this provision, failure to clear dues within the stipulated 45-day period incurs penalties.
Buyers who are unable to settle their debts with MSEs within the prescribed time frame face the imposition of compound interest at a rate three times the bank rate prescribed by the Reserve Bank of India (RBI).
Additionally, buyers risk being denied the ability to deduct payments to MSEs from their taxable income.
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MSE rules with IT is worst and small and big business get effected and Small scale may collapse.