Compliance
How to Enforce MSME 45-Day Payment Terms Under Section 43B(h)
Section 43B(h) gives registered MSMEs powerful legal leverage: buyers must pay within 45 days or lose income tax deductions on those expenses. Here is how to enforce it.
What you will need before starting:
- Udyam Registration Certificate (Micro or Small enterprise)
- Written agreement with client
Step-by-step instructions
Print Your Udyam Registration Number on Every Invoice
To claim Section 43B(h) protection, your buyer must be on notice of your MSME status. VoyceBook automatically embeds your Udyam Registration Number in invoice headers.
Define Written Payment Agreements Up to 45 Days
If a written contract or proposal specifies payment within 45 days, that deadline governs. Without a written agreement, the statutory deadline drops to 15 days.
Track Aging with VoyceBook's MSME Countdown
VoyceBook flags all outstanding invoices approaching Day 30 and Day 40, reminding buyers of Section 43B(h) tax consequences.
Calculate Compound Penal Interest
If payment exceeds 45 days, Section 16 of the MSMED Act mandates penal interest at three times the RBI bank rate compounded monthly.
Best practices & compliance notes
Got questions?
Frequently Asked Questions
What happens if a buyer does not pay an MSME within 45 days?
The buyer cannot claim the expense as a tax deduction in that financial year, increasing their taxable profit and tax liability, and must pay compound interest to the supplier at 3x the RBI repo rate.
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