Income Tax--Business Disallowances

FAQs on Clause (h) of Section 43B of Income Tax Act, 1961

D.K. Saxena

The Finance Act, 2023 has introduced new clause (h) under section 43B of Income Tax Act, 1961 so as to provide that any sum payable by the assessee to a micro or small enterprise would be allowable in the previous year in which payment is actually made. In other word, where the expenditure in respect of goods and services which are supplied by a micro or small enterprises remains unpaid beyond the specified time limit as on 31st March, it would be added in the total income of the assessee. The learned author seeks to make analytical study of the new provision with help of some Frequently Asked Questions (FAQs).

Question 1: What is section 43B(h) of the Income Tax Act, 1961?

Answer: Section 43B(h) of Income Tax Act, 1961 has been inserted by The Finance Act, 2023.

Section 43B allows specific deduction on the basis of actual payment of expenditure on the specific date as per Income Tax Act or other relevant act.