Micro Business – Turnover less than or equal to 5 crores & Investment in assets less then or equal to 1 Crore
Small Business – Turnover more than 5 crores but less than or equal to 50 crores & investment in assests more than 1 Crore but less than or equal to 10 Crore.
Starting April 1, 2023, there’s a new rule that affects how small businesses like yours handle payments for tax purposes. It’s called Section 43B(h) of the Income Tax Act, and it’s something you need to know about as we get closer to the end of the year.
This new rule says that small businesses can now deduct expenses for things they’ve actually paid for, instead of just when they were billed for them. But there are some conditions you need to follow to avoid getting in trouble with the tax authorities..
One important thing to remember is that you should pay your bills on time. If you buy goods or services from another small business, like yours, you’re supposed to pay them within a certain number of days. If you don’t, you might have to pay extra in interest.
The rules say that if you agree in writing, you can have up to 45 days to pay. If you don’t agree in writing, you only have 15 days. If you miss these deadlines, you could be charged extra interest.
Also, there are different categories for small businesses based on how much money they make and how much they’ve invested in things like machinery. It’s important to know which category your business falls into because it affects how you’re taxed.
If you don’t follow these rules and fail to pay on time, you might have to pay fines and your expenses might not be counted as business costs when you file your taxes. But if you miss payments this year, you might still be able to claim them next year as long as you pay them by then.
To avoid any problems, make sure to get certificates from the small businesses you buy from, keep track of when you pay your bills, and include all the necessary information when you report your taxes.