How does the 45-day MSME payment rule (Section 43B(h)) affect textile buyers and traders?

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Under Section 43B(h) of the Income Tax Act, buyers must pay Udyam-registered Micro and Small Enterprise (MSE) textile manufacturers within 45 days (with a written agreement) or 15 days (without one). Unpaid bills at year-end (31 March) are disallowed as tax expenses. Section 43B(h) has transformed credit cycles across Surat, Ahmedabad, Ludhiana, and Tiruppur: Who is protected: Udyam-registered Micro and Small manufacturers (weavers, garment factories, processors). Purely trading firms and Medium enterprises are excluded. Maximum credit limit: 15 days without a written agreement, or up to 45 days when payment terms are printed on the invoice/contract. March 31 penalty: If a buyer does not clear an overdue MSE invoice before March 31, that purchase cost is added back to the buyer's taxable profit for that financial year. Test your textile tax and compliance knowledge on our Textile Trade Quizzes or check rates in the GST & HSN Finder.

How does the 45-day MSME payment rule (Section 43B(h)) affect textile buyers and traders?

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