Understanding Section 43B(h) MSME 45-Day Payment Protection Rules in India
Author: Aman Thakur, Head of Operations | Published by: VelloxBiz Editorial Desk | 1 min read
The introduction of Section 43B(h) to the Income Tax Act has fundamentally transformed working capital dynamics between large corporations and registered micro and small enterprises (MSMEs) in India.
1. The 45-Day Statutory Payment Mandate
Corporate buyers purchasing goods or services from Udyam-registered micro and small suppliers must settle invoices within 15 days (or up to 45 days if a written agreement exists). Failure to do so results in the deduction being disallowed for corporate income tax calculation in that financial year.
2. Mandatory Verification on VelloxBiz
Suppliers listed on VelloxBiz prominently display their Udyam registration status, enabling corporate procurement officers to verify MSME eligibility instantly and maintain 100% tax compliance.
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