Section 43B → Section 48
Certain deductions to be only on actual payment
Quick Answer
Section 43B of the Income Tax Act, 1961 (Certain deductions to be only on actual payment) corresponds to Section 48 of the Income-tax Act, 2025, effective 1st April 2026. Status: Retained.
What changed for Section 43B
Under the Income Tax Act, 1961, Section 43B governs certain deductions to be only on actual payment. Certain expenses (taxes, bank interest, employee dues) are allowed only on actual payment basis before filing ITR.
From 1st April 2026, the same subject sits at Section 48 of the Income-tax Act, 2025 — retained and renumbered as Section 48 of the Income-tax Act, 2025. Retained and Weaponized. The 45-day payment rule for Micro and Small Enterprises (MSMEs) is strictly enforced under Section 43B(h).
For Section 43B, the practical impact is rated Critical. Drastically impacts working capital management and tax audit reporting.
Sec 43B
Provision Summary
Certain expenses (taxes, bank interest, employee dues) are allowed only on actual payment basis before filing ITR.
Sec 48
Provision Summary
Retained and Weaponized. The 45-day payment rule for Micro and Small Enterprises (MSMEs) is strictly enforced under Section 43B(h).
Key Changes & Highlights
- Payments to MSMEs beyond 45 days are completely disallowed in the current year and allowed only in the year of actual payment.
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Frequently Asked Questions
What is Section 43B of the Income Tax Act, 1961 about?
Section 43B of the Income Tax Act, 1961 covers certain deductions to be only on actual payment. Certain expenses (taxes, bank interest, employee dues) are allowed only on actual payment basis before filing ITR.
Which section replaces Section 43B in the Income-tax Act, 2025?
Section 43B of the Income Tax Act, 1961 maps to Section 48 of the Income-tax Act, 2025, effective 1st April 2026 (status: Retained). Retained and Weaponized. The 45-day payment rule for Micro and Small Enterprises (MSMEs) is strictly enforced under Section 43B(h).
What is the impact of the change to Section 43B under the new tax code?
The transition impact for Section 43B is rated Critical. Drastically impacts working capital management and tax audit reporting.
What should I watch out for when Section 43B moves to the 2025 code?
Payments to MSMEs beyond 45 days are completely disallowed in the current year and allowed only in the year of actual payment. These points are specific to Section 43B (Certain deductions to be only on actual payment).
Disclaimer: This mapping of Section 43B (Certain deductions to be only on actual payment) to Section 48 of the Income-tax Act, 2025 is for educational and reference purposes only, based on publicly available drafts and circulars. As Section 43B is currently marked Retained, always confirm its treatment with a qualified Chartered Accountant before filing or making compliance decisions.
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