Section 43B(h) MSME disallowance checker
Paid a micro/small supplier late? Check whether the expense is disallowed this year under section 43B(h).
MSMED §15 limit: the agreed period capped at 45 days (with a written agreement), else 15 days.
Not paid within the 15-day MSMED limit, so the deduction is disallowed this financial year and allowed only in the year of actual payment (the usual "pay before the ITR due date" relief does not apply to 43B(h)).
This is an estimate from the general statutory rule, not tax or legal advice. Rates, thresholds and due dates change by notification and can vary by case. Confirm the exact amount and date with your CA, CS, or lawyer before acting.
How section 43B(h) works
Under section 43B(h), an expense owed to a registered micro or smallenterprise is deductible in the year it's incurred only if paid within the MSMED Act section 15 time limit — the agreed credit period (capped at 45 days) where there's a written agreement, otherwise 15 days. Crucially, the usual 43B relief of “pay before the ITR due date” does not apply here: miss the §15 window and the deduction is disallowed in that year, allowed only in the year you actually pay.
It applies to registered micro & small enterprises — medium enterprises, unregistered suppliers and (per MCA clarification) traders are outside it. Confirm the supplier's Udyam status and your treatment with your CA.
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A worked example
No written agreement, so the limit is 15 days. You pay a small-enterprise vendor on day 60. The expense is disallowed in this financial year and becomes deductible only in the year of payment.
Frequently asked questions
- What is the 45-day rule under 43B(h)?
- Payments to micro/small suppliers must be made within the MSMED §15 limit — the agreed period capped at 45 days (with a written agreement) or 15 days otherwise — or the deduction is disallowed in the year incurred.
- Does paying before the ITR due date save the deduction?
- No. Unlike the rest of section 43B, that relief doesn't apply to 43B(h). If you miss the §15 limit, the deduction shifts to the year of actual payment.
- Does 43B(h) apply to medium enterprises or traders?
- No — only registered micro and small enterprises. Medium enterprises, unregistered suppliers and traders are outside it.
- Is this definitive?
- It's an indicator of the disallowance position; confirm the supplier's Udyam classification and the tax treatment with your CA.
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