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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: тАв Ensure timely payments to MSEs, тАв Address cash flow challenges faced by small businesses, and тАв 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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