Government benefits · MSME
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Finance Act 2023 inserted Sec 43B(h): payments to MSMEs are deductible only in the year they are actually paid (not in the year they're due). If a large company buys from an MSME and doesn't pay within 45 days (or the agreed period, whichever is shorter), the expense is disallowed in that year's P&L.
IT Act, Sec 43B(h) | MSMED Act 2006, Sec 15, 16
Impact on large buyers: If your company buys from registered MSMEs (Udyam), track payment timelines. Any outstanding beyond 45 days on March 31 = that purchase disallowed. This is a significant change, incentivises timely MSME payment. For MSMEs: Get your Udyam registration. Ensure buyers know you're registered. Your payment protection under MSMED Act is real, send reminder at day 30 and escalate to MSME Samadhaan portal if not paid.
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