In the Rajya Sabha, the Minister of State for Micro, Small and Medium Enterprises, Sushri Shobha Karandlaje, on 20 July 2026, informed that Section 43B(h) of the Income-tax Act, 1961 has been introduced to strengthen payment discipline and improve liquidity for micro and small enterprises.
The information was provided in a written reply to Rajya Sabha Unstarred Question No. 159, titled “Impact of Section 43B(h) (Finance Act 2023) on MSMEs.”
The Minister stated that clause (h) was inserted in Section 43B through the Finance Act, 2023. The provision disallows a tax deduction to buyers until they actually make payment to a micro or small supplier, thereby enforcing the payment timeline of up to 45 days prescribed under Section 15 of the Micro, Small and Medium Enterprises Development Act, 2006.
The Ministry informed the House that several stakeholders, including MSME associations, have endorsed the intervention as beneficial to micro and small enterprises facing delayed payments, cash-flow constraints and the risk of business closure due to financial difficulties.
The provision is intended to improve payment discipline, ensure timely settlement of dues and strengthen the liquidity position of micro and small enterprises.
The Minister further informed that the Ministry of MSME launched the Udyam Registration Portal on 1 July 2020. As of 30 June 2026, 8.84 crore enterprises had registered on the portal.
Enterprises may deregister for various reasons, including a change in ownership, duplication of registration or the certificate no longer being required. The number of deregistered MSMEs represents only 0.60 per cent of the total enterprises registered on the Udyam portal.
The Unstarred Question can be accessed at: https://a2ztaxcorp.net/wp-content/uploads/2026/07/RS-IMPACT-OF-SECTION-43Bh-FINANCE-ACT-2023-ON-MSMEs-21.07.2026.pdf
