In India, the amended Section 43B of the Income-tax Act, effective April 1, 2024, mandates timely payments to micro and small enterprises (MSMEs). Failure to comply subjects outstanding dues to taxation as business income, potentially increasing taxes for companies in the Assessment Year 2024-25. This necessitates a shift in business operations to expedite cash flow and mitigate tax liabilities. While some vendors are waiving interest for delayed payments, businesses are reassessing bulk purchases and payment timelines to avoid higher taxes. Compliance challenges and potential penalties underscore the need for careful navigation of the new regulations.
