The Supreme Court refused to entertain a petition submitted by Micro and Small Enterprises ( MSEs ) challenging the 45-day payment rule outlined in Section 43B(h) of the Income Tax Act, during its session on Monday (May 6).
In response to the plea, the SC advised the MSEs to seek recourse through the High Court (HC) if they wished to pursue any relief related to this matter.
The SC not only permitted the withdrawal of the petition but also granted the MSEs the freedom to pursue their legal case in the HC if they so desired.
This decision was prompted by a petition put forth by the Federation of All India Vyapar Mandal, acting as the voice for MSEs nationwide.
Section 43B(h) of the Income Tax Act lays down regulations governing the credit terms that MSEs can offer, explicitly preventing them from extending credit to buyers for durations exceeding 45 days. Moreover, it stipulates that any outstanding amounts owed to MSEs must be settled within this timeframe.
Non-compliance with this provision results in penalties and disallowance of deductions under Section 43B(h) of the Income Tax Act. Furthermore, buyers may risk losing the privilege of deducting payments made to MSEs from their taxable income if they do not adhere to the prescribed timeline.
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