The Central Board of Direct Taxes ( CBDT ) has issued a corrigendum to include Section 43B(h) disallowance under Clause 22 of Form 3CD.
Previously, Notification No. 27/2024 mandated including disclosure of disallowances under Section 43B(h) of the Income Tax Act in Clause 26 of Form 3CD. However, a recent corrigendum, Notification No. 34/2024, clarifies that this disclosure should also be made in Clause 22.
This update ensures taxpayers accurately report any amounts disallowed for deduction due to delayed payments to micro and small enterprises ( MSEs ) as per Section 43B(h) of the Income Tax Act. This provision disallows tax deductions for expenses paid to MSEs beyond the timeframe stipulated in the Micro, Small and Medium Enterprises Development Act (MSMED) Act.
This is relevant for businesses that make payments to micro and small enterprises. They need to ensure their Form 3CD reflects any potential disallowances under Section 43B(h) in both Clause 22 and Clause 26.
Form 3CD form consists of 44 clauses that require the auditor to report on different matters outlined within it. These clauses are categorized into two sections: Part A includes essential factual information about the assessee, while Part B contains details of various compliance requirements under income tax laws that must be provided.
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