MSE payment deadline checker

What the rule does

When you owe money to a micro or small enterprise and the payment is overdue under the MSMED Act, the expense stops being deductible for the year if it is still unpaid on the last day of that year. You can deduct it in the year you actually pay. Nothing is lost permanently, but the tax on that amount moves forward a year, which for a business owing several lakh at year end is a real cash cost.

For financial years up to 2025-26 this is section 43B(h) of the Income-tax Act 1961. The Income-tax Act 2025 took effect on 1 April 2026 and keeps the rule as section 37(2)(g), applying from tax year 2026-27. The wording moved; the effect did not.

Three inputs decide every result

Who the supplier is. Only micro and small enterprises are covered. Ask new suppliers for their Udyam registration certificate and record the classification, because it decides whether the rule touches the invoice at all.

Whether terms were agreed in writing. Without a written agreement the deadline is 15 days from acceptance. With one, it is the agreed period, capped at 45 days. A purchase order that says 90 days does not buy 90 days.

When it was paid. Paid on time is fine. Paid late but before year end keeps the deduction this year, though statutory interest may still be owed to the supplier. Unpaid and overdue at year end is the case that costs you.

The invoice that is not due yet

An invoice accepted on 25 March is not overdue on 31 March. The widely held reading is that it stays deductible in the current year if you pay it within its deadline. If it is then paid late, advisers differ on the treatment, which is why the checker marks those as conditional rather than safe. The practical answer is simple: pay them on time and the question never arises.

What to do with the result

Run this in February, not April. Anything marked at risk can still be fixed by paying before year end. After 31 March the only remaining choice is which year the deduction lands in. If you are the supplier rather than the buyer, the same arithmetic is why larger customers pay faster in the last quarter, and the late payment interest calculator shows what you are owed on the invoices they did not pay.

Common questions

Is section 43B(h) still in force?

The rule continues under a new number. Section 43B(h) of the Income-tax Act 1961 governs financial years up to 2025-26. The Income-tax Act 2025 took effect on 1 April 2026 and carries the same rule as section 37(2)(g), which governs tax year 2026-27 onward. The checker picks the right one from the year-end date you enter.

Does paying before I file my return save the deduction?

No. The usual relief that lets certain unpaid expenses be deducted if paid before the return due date does not apply to this rule. What counts is whether the overdue amount was still unpaid on the last day of the financial year.

Which suppliers does this apply to?

Micro and small enterprises, as classified under the MSMED Act and usually evidenced by Udyam registration. Medium enterprises are outside it. Retail and wholesale traders are generally treated as outside the delayed-payment provisions. The buyer’s own size does not matter.

What is the deadline for each invoice?

It comes from section 15 of the MSMED Act: 15 days from acceptance where payment terms were not agreed in writing, and the agreed period where they were, but never more than 45 days. Acceptance includes deemed acceptance, which happens if no written objection is raised within 15 days of delivery.

Is anything I type stored or sent anywhere?

No. The checker runs entirely in your browser. Supplier names and amounts never leave your device, and nothing is kept after you close the tab.