Fri Mar 28 06:30:00 UTC 2025: ## New Tax Rule Forces Faster Payments to MSMEs: Deadline Looms

**New Delhi, [Date]** – Businesses face a looming deadline for payments to Micro, Small, and Medium Enterprises (MSMEs), with new tax regulations coming into effect. According to Section 43B(h) of the Income Tax Act, payments to registered MSMEs must be made within 45 days of goods or services acceptance, starting Assessment Year (AY) 2024-25. Failure to comply will result in the expense becoming non-deductible for that financial year, increasing taxable income. This measure aims to boost cash flow for MSMEs, a vital sector driving economic growth and job creation.

The government’s focus on MSMEs is further highlighted by the upcoming Union Budget 2025-26, which is expected to include further support for the sector. The MSMED Act of 2006 governs the classification of MSMEs based on investment and turnover, facilitated through the Udyam Registration process. Businesses are urged to verify supplier registrations and implement robust payment processes to ensure compliance.

For contracts without specified payment terms, the deadline is 15 days, with all outstanding payments due by March 31, 2025. To avoid penalties and tax complications, businesses are advised to maintain clear contracts, organized invoice management, automated payment reminders, and thorough documentation of all transactions. The new rules underscore the importance of prompt payment to MSMEs and the government’s commitment to supporting this critical segment of the Indian economy.

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