New Enroll in RBI Grade B New Batch - Starts on May 21

    Question

    What was the significant change made to Section 43B of

    the Income-tax Act 1961 in April 2024 this year?
    A Introduction of a higher tax rate for delayed payments to MSEs. Correct Answer Incorrect Answer
    B Insertion of a clause allowing deductions for payments to MSEs only if paid within 45 days. Correct Answer Incorrect Answer
    C Abolishment of tax benefits for big companies dealing with MSEs. Correct Answer Incorrect Answer
    D Mandatory government oversight on all transactions with MSEs. Correct Answer Incorrect Answer
    E A complete exemption from tax for micro and small enterprises. Correct Answer Incorrect Answer

    Solution

    In April, a new clause (h) was added to Section 43B of the Income-tax Act 1961. This clause specifies that any payment due to micro or small enterprises beyond a 45-day period will be allowed as a tax deduction only when the payment is actually made . This change was aimed at ensuring timely payments to MSEs, addressing their cash flow issues, and encouraging prompt settlement of dues by buyers, thereby supporting the financial health of small businesses.  

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