India MSME Supplier Payment Tracker and 43B(h) Checker

About the India MSME Supplier Payment Tracker and 43B(h) Checker

Since every tax audit has to report dues to micro and small suppliers, the question at the year end is no longer “how old is this creditor” but “was it paid inside the time limit of section 15 of the MSMED Act”. If it was not, the purchase is deducted only in the year the money actually goes out — section 37(2)(g) of the Income-tax Act, 2025, and section 43B(h) of the 1961 Act — and there is no relief for paying before the return’s due date.

Drop in the creditors or purchase register you export yourself (CSV, Excel or pasted rows). The tracker reads the columns, works out each invoice’s due date — fifteen days with no written agreement, the agreed period otherwise, never more than forty-five days from acceptance — and then shows, invoice by invoice: what is still unpaid, how far past the limit it is, the section 16 compound interest at three times the Reserve Bank’s bank rate, and whether the deduction moves out of the year. It also builds the half-yearly MSME Form I list and a disallowance working paper for the audit file. Your register is read in your browser and never uploaded.

Without a pass the result stays a free preview: the counts and the first rows of each list are on screen, the totals are hidden, and the exports unlock with a Premium pass.

Common uses

• A tax auditor working out the section 43B(h) or 37(2)(g) disallowance from the client’s own creditors register.
• A finance team seeing, in the middle of the year, which supplier invoices are about to cross their limit.
• Building the half-yearly MSME Form I list for the Registrar of Companies without going through the ledger by hand.
• Checking a supplier’s claim for section 16 interest before it goes to a Facilitation Council.

How the time limit is worked out

• The appointed day is the day after fifteen days from the day of acceptance of the goods or services (MSMED Act s.2(b)). Acceptance is the day of delivery or of the service; if the buyer objected in writing within fifteen days, it is the day the supplier removed the objection.
• Section 15 lets the parties agree a longer period in writing, but never more than forty-five days from acceptance. An agreement for 60 or 90 days is read down to forty-five, and the tool shows the shorter date.
• Section 16 then charges compound interest with monthly rests at three times the bank rate notified by the Reserve Bank of India, whatever the contract says. The tool uses the same rate table and the same monthly-rest arithmetic as the MSME delayed payment interest calculator, so the two always agree.
• Section 22 requires the unpaid principal and interest to be shown in the buyer’s audited accounts, and section 23 denies the interest as a deduction.

When the deduction moves out of the year

For an invoice booked in the year, the tool applies the words of the section, at the position date you choose:

• paid on or before the section 15 due date — an ordinary deduction, nothing to report;
• paid after the due date but on or before 31 March — the sum was actually paid in that year, so the deduction stays in it (the section 16 interest still runs);
• paid after 31 March, beyond the limit — deducted only in the tax year of payment;
• unpaid at 31 March with the limit already expired — not deductible that year, and deductible in the year it is finally paid;
• unpaid at 31 March but the limit falls after it — the payment decides: paid by its due date, the deduction stays in the year; paid after it — or still unpaid when the due date has passed by your position date — it moves to the year of payment. Until that date passes the tool lists the invoice to watch.
• part paid — each part on its own: the part paid by its own date, the rest as unpaid, with the section 16 interest on each part for as long as it was late.
• an invoice of an earlier year paid late in this one — listed separately as deductible this year, the year of payment.

There is no relief for paying before the return’s due date: section 37(3) of the Income-tax Act, 2025 allows the other sums of section 37(2) when they are paid by then but leaves out clause (g), and the proviso to section 43B of the 1961 Act does not cover clause (h) either.

What you get for the audit file

• The invoice working — every row with its acceptance date, the credit period applied, the section 15 due date, what is unpaid, the days late, the section 16 interest and the year the deduction falls in.
• The disallowance working paper — only the invoices whose deduction moves out of the year, with the reason for each, the total, the section 16 interest that is never deductible, the invoices to watch, and the invoices of earlier years paid late this year, which become deductible now.
• The MSME Form I list — for each half-year, the suppliers with dues outstanding at 30 September and 31 March more than forty-five days after acceptance (the test of the Ministry of Corporate Affairs’ order for the form), with the amount, the section 15 date it fell due from, its PAN and the reason for the delay — the particulars the form asks for.
• An Excel workbook with all three as sheets, and a summary you can paste into a note to the client.

The counts and the first rows of each list are on screen in the free preview; the rest of the rows, the totals and the exports unlock with a Premium pass. Your own register, and the sample template, download either way.

What the register needs, and what it does not

The two columns that decide everything are the date of acceptance (the delivery or service date, not the invoice date, where they differ) and the Udyam type. If your ledger has no acceptance date the invoice date is used, and the tool says so.

The Udyam type has to come from your vendor master: the tool cannot look it up, because the Udyam portal publishes no open lookup. Get the Udyam certificate from each supplier, note whether it is micro, small or medium and whether it is registered for trading, and keep the certificate with the vendor file — it is the document the auditor asks for.

Nothing you import is uploaded: the file is read in your browser, and the only things that leave the page are the files you download yourself.

Sources

• MSMED Act, 2006 — sections 2(b), 2(n), 15, 16, 17, 22 and 23
• Income-tax Act, 2025 — section 37(1), (2)(g) and (3); the Income-tax Act, 1961 section 43B(h) for FY 2025-26 and earlier
• MSME Samadhaan — how a supplier refers a delayed payment to the Facilitation Council, and which units the councils admit
• Udyam Registration — the registration certificate that states a supplier’s classification
• Ministry of Corporate Affairs — the Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019 (S.O. 368(E)), which sets MSME Form I and its forty-five-day test
• The bank rate comes from the Reserve Bank’s own monetary policy statements, through the table the MSME delayed payment interest calculator keeps

Limitations

• A working for information, not tax advice. The Udyam classification, the written agreements and the dates have to be verified from the papers before an audit report is signed.
• The tool cannot look up whether a supplier is micro, small or medium: the Udyam portal publishes no open lookup, so the type comes from your vendor master or the supplier’s certificate.
• The date of acceptance is taken from your register; where it is missing the invoice date is used, which can shift a due date by a few days.
• Interest is worked out invoice by invoice. A row holds one payment: a part payment is applied to the invoice it is entered against, and an amount paid needs its date. The tool does not allocate one payment across several invoices.
• The reading applied is that a payment made beyond the section 15 limit is deducted in the year of payment even where the limit itself expires after the year end — a cautious position. Confirm it with your chartered accountant.
• Interest the supplier may claim under section 16 is a civil liability: it is shown as the Act computes it, and only a Facilitation Council or a court can fix it finally.

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