MSME-tax audit report

Tax audit Report for Section 43B(h)

 

This amendment in Clause 26 of Form 3CD was made consequential to new clause (h) inserted by the Finance Act, 2023, in Section 43B, with effect from the assessment year 2024-25, to disallow on an accrual basis sums payable to micro or small enterprises if these are not paid within the time allowed under Section 15 of MSMED Act, 2006. The amendment incorporated a reference to Clause (h) in Clause 26 of Form 3CD.

 

Clause 26 will continue to deal with payments/amounts covered by clauses (a) to (g) of Section 43B. Delayed payments to the Micro and Small Enterprises (MSEs), which are liable to be disallowed under Section 43B(h), will not be covered by Clause 26 but by Clause 22. Thus, amended Clause 22 requires the tax auditor to report all amounts disallowable due to delayed payments to MSEs, be it the amount disallowable under Section 43B(h) of the ‘principal amount’ due to MSE Supplier for goods or services or the amount inadmissible under Section 23 of MSMED Act in respect of interest on delayed payment payable under Section 16 of MSMED Act

 

Delayed payments made on or before 31-03-2024: There is no question of reporting in Clause 22 as these amounts paid on or before 31-03-2024, even if paid after the due date specified under the MSMED Act, can be claimed on an actual payment basis. However, interest on such delayed payments under Section 16 of the MSMED Act will have to be calculated, and such interest will have to be reported under Clause 22 as amounts inadmissible under Section 23 of the MSMED Act.