MSME Payment 43B(h) Tracker

Check which dues to micro and small enterprises are disallowed for the year under Section 43B(h) / Section 37.

The MSME Payment 43B(h) Tracker checks, invoice by invoice, whether amounts owed to micro and small enterprises are deductible in the year of purchase. Under Section 43B(h) of the Income-tax Act, 1961 (Section 37(2)(g) of the Income-tax Act, 2025 from Tax Year 2026-27), a sum not paid within the time allowed by Section 15 of the MSMED Act, 2006 (15 days without a written agreement, or the agreed period of up to 45 days) is deductible only in the year it is actually paid.

Year being checked

Status as on (for unpaid invoices)

Result for the year

Covered dues deductible this year₹ 0

Covered dues still open (pay by the date shown)₹ 0

Not covered (medium, trader or unregistered)₹ 0

Disallowed this year₹ 0

Add invoices to see which amounts are disallowed.

Interest payable to the supplier for late payment under Section 16 of the MSMED Act is not deductible in any year (Section 23 of that Act). Figures are indicative; check each supplier's Udyam certificate and classification on the date of supply.

List purchases of goods or services from suppliers registered on Udyam as micro or small enterprises. For each invoice, the payment deadline is 15 days from the day of acceptance (or deemed acceptance) where there is no written agreement, or the agreed period, capped at 45 days. An amount paid in the same year is deductible in that year. An amount outstanding at 31 March is deductible in that year only if it is paid by the deadline; otherwise it is deductible in the year of payment. Payment before the return due date does not help for these dues.

Who is covered

Suppliers: micro and small enterprises registered under the MSMED Act (Udyam) that manufacture goods or render services. Medium enterprises are not covered. Wholesale and retail traders registered on Udyam only for priority-sector lending are generally treated as outside Section 15 of the MSMED Act.
Buyers: any business taxpayer claiming the expense, other than one taxed on a presumptive basis, where expenses are not claimed separately.
Start date: Section 43B(h) applies from FY 2023-24 (AY 2024-25). From Tax Year 2026-27 the same rule is in Section 37(2)(g) of the Income-tax Act, 2025.
Tax audit: the amounts inadmissible under Section 43B(h) are reported in the tax audit report (Form 3CD for FY 2025-26).

Important note: This tool provides an indicative output only. It does not factor in every special provision, surcharge, exception, or recent notification. Verify with the firm before acting on any computation.

Frequently Asked Questions

What does Section 43B(h) provide?

Section 43B(h) of the Income-tax Act, 1961, effective from FY 2023-24, allows a deduction for amounts payable to a micro or small enterprise only if they are paid within the time allowed by Section 15 of the MSMED Act, 2006. If an amount outstanding at the year end is paid later than that, the deduction is allowed only in the year of actual payment. From Tax Year 2026-27 the same rule is in Section 37(2)(g) of the Income-tax Act, 2025.

What is the payment deadline under the MSMED Act?

Under Section 15 of the MSMED Act, the buyer must pay on or before the agreed date, but the agreed period cannot exceed 45 days from the day of acceptance or deemed acceptance of the goods or services. Where there is no written agreement, payment is due within 15 days of acceptance. Late payment also carries compound interest at three times the bank rate notified by RBI, which is not deductible for income tax.

Is the deduction allowed if I pay before filing the return?

No. For most items in Section 43B, payment by the return due date is enough to claim the deduction in the earlier year. That relief does not apply to dues to micro and small enterprises. An amount outstanding at 31 March is deductible in that year only if it is paid within the MSMED deadline; otherwise it is deductible in the year it is paid.

Does Section 43B(h) apply to purchases from traders and medium enterprises?

No. It applies only to micro and small enterprises registered under the MSMED Act that manufacture goods or render services. Medium enterprises are not covered, and wholesale and retail traders registered on Udyam only for priority-sector lending are generally treated as outside Section 15 of the MSMED Act. Check the supplier's Udyam certificate and classification.

What happens to an amount paid late but within the same year?

If an invoice is paid after the MSMED deadline but before 31 March of the same year, the deduction is still allowed in that year, because Section 43B allows it in the year of actual payment. The supplier is, however, entitled to interest under Section 16 of the MSMED Act, and that interest is not deductible.

Due in the next 30 days

Income tax

30SepTax Audit Report (Form 3CA/3CB with 3CD for FY 2025-26; Form 26 from Tax Year 2026-27)In 4 days · Income tax
7OctTDS / TCS deposit (e-Pay Tax, Challan ITNS 281) for SeptemberIn 11 days · Income tax

Full compliance calendar → Statutory dates, which can be extended by notification. General information only.

Published by SKAG and Associates, Chartered Accountants, New Delhi · Proprietor CA Gaurav Singh (ICAI M.No. 539050). General information only, not professional advice.

MSME Payment 43B(h) Tracker

Use the MSME Payment 43B(h) Tracker

Result for the year

Who is covered

Frequently Asked Questions

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