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MSME Settings

The Government of India introduced the Micro, Small, and Medium Enterprises (MSME) framework under the MSMED Act, 2006, to support and promote small businesses. This provides benefits to businesses based on their size, investment in machinery or equipment, and revenue.

To ensure timely payments to MSMEs, the Government of India has added a new clause, clause (h), in section 43B of the Income Tax Act of the Finance Act in 2023. This clause states that if you purchase goods or services from a MSME-registered vendor, the tax treatment depends on when you make the payment.

  • If you make the payment within 45 days from the bill date, you can claim the purchase amount as a tax deduction on an accrual basis.
  • If you pay after 45 days, you can claim the deduction only on the cash basis.
  • If the payment happens in the next financial year, your tax liability for the current year increases.

In Zoho ERP, if your business is registered as an MSME, you can add those details. You can also enter the MSME/Udyam registration number in your organisation’s address to stay compliant with section 43B(h) of the Finance Act, 2023. Next, you can add the MSME details of your vendors to view your unpaid bills.

Add MSME Details

To add your MSME details in your Zoho ERP organisation:

  • Go to Settings.
  • Under Organization Settings, select MSME Settings under Taxes & Compliance.
  • In the next page, enable the toggle next to Is your business MSME registered?, and fill in the following fields:
    • MSME/Udyam Registration Type: Choose whether your business is registered as a Micro, Small, or Medium one.
    • MSME/Udyam Registration Number: Enter your MSME registration number and ensure that it is in the format UDYAM-XX-00-0000000.
  • Click Save.

The MSME settings will now be configured for your organisation. Once done, it is mandatory to add the MSME registration number in your organisation address to stay compliant with section 43B(h) of the Finance Act, 2023. To do this:

  • Go to Settings.
  • Under Module Settings, select General under Setup & Configurations.
  • In the next page, scroll down to Organization Address Format section.
  • Click the Insert Placeholders dropdown, and select MSME/Udyam No Label and MSME/Udyam No.
  • Click Save.

Your organisation address will be updated.

Add MSME Details For Your Vendors

It’ll be a time consuming process to update each vendor with their MSME details. So, we’ve made it easier for you by letting you export vendors, add the MSME details in the export file, and importing it again into Zoho ERP. Here’s how:

  • Go to Purchases on the left sidebar.
  • In the next page, select Vendors in the module bar.
  • Click Update MSME Details in the top right corner.
  • In the next page, click Skip and Proceed if you’ve entered your organisation’s MSME details previously. If not, provide them here, and click Save and Proceed.
  • In the next page, click Export Vendors. The records will be downloaded in the CSV format.
  • Click Next.
  • Edit the export file manually, add the MSME details in the respective columns, and save the file.
  • Now, go back to your Zoho ERP organisation, click Upload File and select the updated file.
  • Click Import.

The MSME details for your vendors will be updated. If you want to add a new MSME-registered vendor:

  • Go to Purchases on the left sidebar.
  • In the next page, select Vendors in the module bar.
  • Click + New in the top right corner.
  • In the New Vendor page, fill in the required details. In the Other Details section, fill in the vendor’s MSME details.
  • Click Save.

The vendor will be created.

View Unpaid Bills

To view the outstanding bills for your MSME vendors:

  • Go to Purchases on the left sidebar.
  • In the next page, click the Bills dropdown in the module bar, and select Bills.
  • Click the All Bills filter at the top of the page, and select MSME Vendor Bills Unpaid for 40+ Days from the dropdown.

The list of outstanding bills will be displayed.

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