MSME — Udyam, benefits & 45-day rule

Section 43B(h) of the Income-tax Act (inserted by Finance Act 2023, effective FY 2023-24) disallows any expenditure paid to a Micro or Small Enterprise beyond the timeline specified under Section 15 of the MSMED Act — 45 days if there is a written agreement, or 15 days otherwise. The disallowance is added back to the buyer's income in the year the payment is not made within timeline, and only allowed as deduction in the year of actual payment.

Impact — every corporate buying from a Micro/Small enterprise now has a hard cash flow reason to pay within 45 days. The seller doesn't need to invoke MSME Samadhaan; the buyer's own tax auditor flags 43B(h) non-compliance during tax audit. This has moved billions of working capital back to the MSME sector.

1. Collateral-free credit up to ₹2 crore via CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises). 2. 358 items exclusively reserved for procurement from MSMEs by central PSUs. 3. 25% procurement mandate — 25% of every PSU's annual procurement must be from MSMEs. 4. Interest subvention — 2% for GST-registered MSMEs on incremental loans up to ₹1 crore. 5. 50% subsidy on patent registration and 25% on trademark under IPR schemes.

6. ZED (Zero Defect Zero Effect) certification for manufacturing quality, with graded subsidies. 7. Priority-sector lending — RBI mandates every scheduled commercial bank allocate 7.5% of net bank credit to MSMEs. 8. Presumptive taxation under 44AD, no audit up to ₹2 crore turnover (₹75 lakh for services).