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      Question

      What was the key amendment made to Section 43B of the

      Income-tax Act, 1961 in April 2024?
      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 large 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 2024, a new clause (h) was added to Section 43B of the Income-tax Act, 1961. This clause mandates that any payment due to micro or small enterprises (MSEs) beyond 45 days will be allowed as a tax deduction only when the payment is actually made. The purpose of this change is to: • Ensure timely payments to MSEs, • Address cash flow challenges faced by small businesses, and • Encourage buyers to settle dues promptly, thereby improving the overall financial health of the sector. This move strengthens compliance and offers a safeguard for MSEs against delayed receivables.

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