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Disallowance u/s 43B for msme payment

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CA Kamlesh Kukreja

Own Business

342 Points Posted on 12 January 2024

Bill of msme dated 1.1.24
Payment made on 30.4.24

As payment to msme not made within 45 days is disallowed u/s 43B. It can be claimed only in year of Payment. But as we pay before filing ITR. Can we take deduction in A.Y 24-25 or we have take in only A.Y 25-26?

Replies (3)

Quick Summary

This discussion clarifies the implications of Section 43B(h) of the Income Tax Act regarding payments to MSME suppliers. If a payment to a registered MSME is not made within 45 days, it's disallowed in the current financial year and can only be claimed in the year of actual payment. Even if paid before filing the Income Tax Return (ITR), the deduction for payments made after the 45-day limit in the previous financial year can only be claimed in the subsequent assessment year (AY 2025-26). It's crucial to verify if your vendor is registered on the Udyam portal, as Section 43B(h) specifically applies to them.

V SUBRAMANIAM

Tax consultant

375 Points Posted on 13 January 2024

Only in the year 25.26

CA Rashmi Gandhi

Chartered Accountant

44442 Points Posted on 09 February 2024

You can claim in AY 25-26

Tax Garden

Tax Consultant

2036 Points Posted on 14 May 2026

Section 43B(h) applies only to payments to suppliers who are registered as MSMEs on the Udyam portal, if your vendor does not have a Udyam number, the 45-day rule does not apply (though this is not a reason to delay payment). For payments that crossed 45 days and were not paid by March 31, 2026, the expense is disallowed for FY 2025-26 and will be allowed in the year of actual payment. Keep a payment trail: bank statements, date of invoice acceptance, and confirmation that the supplier is Udyam-registered. If you have significant MSME payables outstanding at year-end, your CA needs to flag this in the tax computation before filing ITR.