New Income tax law for purchases
from MSME (Only Micro and Small MSME)
Any sum owed by an assessee to a
micro or small enterprise that is outstanding beyond the time limit specified
in section 15 of the MSMED Act, 2006, shall be allowed as expense in the income
tax return only in the financial year in which such sum is paid.
However interest payable under
the MSME Act for late payment is disallowed forever. It is compound interest at
three times the bank rate.
Definition of Micro, Small and
Medium:
(i) a micro enterprise, where
BOTH the investment in plant and machinery or equipment does not exceed one
crore rupees and turnover does not exceed five crore rupees; COVERED
(ii) a small enterprise, where
BOTH the investment in plant and machinery or equipment does not exceed ten
crore rupees and turnover does not exceed fifty crore rupees; COVERED
and
(iii) a medium enterprise, where BOTH the investment in plant and machinery or equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees. NOT COVERED