The 45-day rule and section 43B(h)

The payment deadline (MSMED Act, s.15)

A buyer must pay a micro or small supplier by the date agreed in writing, and that period can't be more than 45 days from acceptance (delivery). With nothing in writing, the buyer must pay within 15 days.

The tax rule

Section 43B(h) of the Income-tax Act, 1961, in force from FY 2023-24, says that any sum payable to a micro or small enterprise beyond the time limit in section 15 is deductible only in the year it is actually paid. The usual relief for paying by the return due date does not apply. Under the Income-tax Act, 2025, from tax year 2026-27, the same rule is section 37(2)(g).

The interest under section 16 of the MSMED Act is never deductible for the buyer (section 23).

What about traders?

Purchases from traders are commonly understood to be outside 43B(h) / 37(2)(g), because traders don't get the s.15 benefit. We haven't found a CBDT circular on it; confirm with your CA.

A sample note for the buyer's accountant

Suppliers: the calculator makes this note from your own invoices, ready to print or share.

Note for your accounts team: payments to a micro enterprise

From: Asha Fabricators
Plot 14, MIDC Bhosari, Pune 411026
Udyam registration no. UDYAM-MH-26-0012345
Micro enterprise, manufacturing

To: XYZ Engineering Pvt Ltd
Chakan, Pune 410501

Date: 12 Oct 2026

The invoices below are past the time limit in section 15 of the MSMED Act, 2006 (the agreed period, at most 45 days from acceptance, or 15 days where nothing was agreed in writing).

Invoice no.	Accepted on	Pay by (s.15)	Outstanding
A-101	4 May 2026	19 May 2026	40,000.00
A-114	20 Jun 2026	4 Aug 2026	60,000.00
A-131	28 Aug 2026	12 Sep 2026	25,000.00

Under section 43B(h) of the Income-tax Act, 1961 (FY 2025-26 and earlier) and section 37(2)(g) of the Income-tax Act, 2025 (tax year 2026-27 onward), these amounts are deductible only in the year they are actually paid. The relief for paying by the return due date does not apply to them. Interest under section 16 of the MSMED Act is never deductible (section 23).

Paying before 31 March keeps the expense in this year's accounts.

Prepared by the supplier for information. Not tax advice; confirm with your CA.