Ludhiana Traders to Challenge New Income Tax Rule in High Court Business owners in Ludhiana are preparing to contest the enforcement of Section 43-B of the Income Tax Act. Headed by the Punjab Dyers’ Association, these entrepreneurs will submit a petition to the Punjab and Haryana High Court in opposition to the amendment.
Micro and small enterprises in the city are expressing concerns about the potential repercussions of the new income tax regulations. They fear possible financial losses and anticipate a shift in procurement practices, as they believe buyers and dealers may favor medium and large enterprises exempt from this section.
The recent directive by the central government mandates buyers to settle payments within 45 days of purchasing goods from micro and small enterprises (MSEs) under Section 43-B of the Income Tax Act, 1961, as introduced in the Finance Act 2023. Notably, this rule solely pertains to manufacturing MSEs.
Failure to adhere to this requirement would result in the unpaid amount being considered as the buyer’s profit, albeit factored into their income tax calculations, according to the affected businessmen.
Bobby Jindal, secretary of the Punjab Dyers’ Association, has alleged that the government’s assertion of Section 43-B being advantageous to MSEs is disputed. He contends that the amendment was made to financially burden manufacturers rather than support them. Jindal emphasized that the government missed an opportunity to assist MSEs, suggesting that provisions for interests on late payments should have been established instead of a method to generate income tax revenue.
Rajesh Bansal, a member of the association, emphasized the absence of viable alternatives for the industry but to seek recourse through the high court. Despite the enforcement of the model code of conduct, the government retains the authority to withdraw it. Consequently, the income tax department is expected to review buyers’ balance sheets before March 31. As a result, the petition is scheduled to be filed in the Punjab and Haryana High Court next week.