Question
Section 43B(h): the 45-day MSME payment rule and when the expense is disallowed
Answer
Bottom line: If you do not pay a registered micro or small supplier within the MSME time limit, that expense is disallowed until you actually pay it.
1. The time limit
Under Section 15 of the MSMED Act, pay within 15 days where there is no written agreement, or within the agreed period up to a maximum of 45 days.
2. The disallowance
Miss it, and the amount is added back to your income for that year under Section 43B(h) (effective from AY 2024-25), and allowed only in the year of actual payment.
3. Scope
It applies only to suppliers registered as micro or small enterprises — not medium enterprises.
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This answer is general information based on the law as it stood when written and is not professional advice on your specific situation. Verify the current position and consult a qualified professional before acting. See our disclaimer.