**Executive Summary**
This document is the answer to Unstarred Question No. 2199 in Lok Sabha, concerning financial losses by MSMEs, to be answered on February 12, 2026. It addresses concerns regarding the impact of Section 43B(h) of the Income Tax Act, 1961, on MSMEs and provides data on the MSME SAMADHAAN Portal related to payment resolutions and pending amounts. No immediate action items are explicitly stated.
**Key Points / Main Content**
* **Section 43B(h) and Timely Payments:**
* Finance Act 2023 inserted clause (h) in Section 43B of the Income Tax Act 1961 to ensure timely payments to MSMEs.
* It allows deduction on actual payment for sums payable to MSEs beyond the 45-day limit specified in Section 15 of the MSMED Act, 2006.
* **Monitoring and Stakeholder Feedback:**
* The Ministry is continuously monitoring credit flow and payment delays faced by MSMEs through interactions with stakeholders.
* The provision aims to strengthen payment discipline and improve liquidity for MSEs.
* **Assessment of Impact:**
* No separate assessment has been undertaken by the Ministry linked to the implementation of Section 43B(h).
* MSME associations have endorsed the intervention, deeming it beneficial for addressing delayed payments and cash flow issues.
* **MSME SAMADHAAN Portal Data:**
* Approximately 61.50% of cases registered on the MSME SAMADHAAN Portal have been disposed of.
* The outstanding payment amount pending with States and MSEFCs is Rs. 14209.82 crore, with State/UT-wise details provided in Annexure-A.
**Impact Analysis**
**Micro, Small, and Medium Enterprises (MSMEs)**
* **Impact:** The new provision under Section 43B(h) is intended to improve payment discipline and liquidity, potentially mitigating financial losses from delayed payments.
* **Action Required:** MSMEs should be aware of the 45-day payment limit and utilize the MSME SAMADHAAN Portal for dispute resolution.
**Ministry of Finance**
* **Impact:** The Ministry of Finance is involved in consultations regarding the implementation and potential modifications to Section 43B(h).
* **Action Required:** Continue to collaborate with the Ministry of MSME and stakeholders to monitor and refine the implementation of the provision.
**Large Companies**
* **Impact:** The mandatory payment provision under Section 43B(h) may influence order placement and payment practices with MSMEs.
* **Action Required:** Ensure compliance with the 45-day payment rule to avoid disallowance of expenses and review existing payment practices.
**States and Union Territories**
* **Impact:** Significant outstanding payments pending with States and MSEFCs may impact regional economic activity and the financial health of local MSMEs.
* **Action Required:** Review and expedite the resolution of pending cases on the MSME SAMADHAAN Portal to facilitate timely payments.
Key Entities Referenced
Section 43B(h) of the Income Tax Act, 1961: Mandatory payment provision within 45 days to MSMEs.
MSME SAMADHAAN Portal: Online platform for monitoring the resolution of delayed payments to MSMEs.
Micro, Small and Medium Enterprises (MSMEs): The subject of the policy, specifically addressing financial losses.
Ministry of Micro, Small and Medium Enterprises: The primary ministry addressing the concerns in this policy.
Micro, Small and Medium Enterprises Development Act, 2006: Act specifying the time limit in Section 15 regarding payments.
GOVERNMENT OF INDIA
MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES
LOK SABHA
UNSTARRED QUESTION NO. 2199
TO BE ANSWERED ON: 12.02.2026
FINANCIAL LOSSES BY MSMEs
2199. SHRI SHYAMKUMAR DAULAT BARVE:
Will the Minister of MICRO, SMALL AND MEDIUM ENTERPRISES be pleased to state:
(a) whether the Ministry is aware that, after the enforcement of the mandatory payment provision
within 45 days under Section 43B(h) of the Income Tax Act, 1961, large companies in the country are
reducing the number of orders placed with registered Micro, Small and Medium Enterprises (MSMEs)
units or cancelling orders that were already placed, if so, the details thereof;
(b) whether the Ministry has made any assessment of the business and financial losses being
incurred by MSME units as a result and if so, the key findings thereof;
(c) whether the Ministry has consulted the Ministry of Finance on this matter and considered
making any modifications in the implementation of the said provision or extending the timeline for
compliance and if so, the details thereof; and
(d) the percentage of the total cases registered on the MSME Samadhan Portal that have been
resolved so far and the details of the outstanding payment amount currently pending, State/UT-wise?
ANSWER
MINISTER OF STATE FOR MICRO, SMALL AND MEDIUM ENTERPRISES
(SUSHRI SHOBHA KARANDLAJE)
(a) to (c): To ensure timely payments to Micro, Small and Medium Enterprises (MSMEs) vide
Finance Act 2023, clause (h) was inserted in Section 43B of the Income Tax Act 1961. The clause
provides that any sum payable by the assessee to a Micro and Small Enterprise (MSE) beyond the time
limit specified in section 15 of the Micro, Small and Medium Enterprises Development Act, 2006,
which cannot be more than 45 days, shall be allowed as a deduction only on actual payment.
A number of stakeholders, including MSME associations have endorsed the intervention
introduced to ensure timely payments as being beneficial to the Micro and Small Enterprises, which
were grappling with the issue of delayed payments, cash flow and the risk of business getting closed
due to financial constraints.
The Ministry is continuously monitoring issues relating to credit flow and payment delays faced
by MSMEs through interactions with stakeholders including Ministry of Finance, MSMEs, and MSME
industry associations. The provision is intended to strengthen payment discipline and improve liquidity
for Micro and Small Enterprises. No separate assessment linked to the implementation of Section
43B(h) has been undertaken.
(d): As per data available on the MSME SAMADHAAN Portal, approximately 61.50 % of the total
cases registered have been disposed of so far. The outstanding payment amount currently pending with
States and MSEFCs is Rs. 14209.82 crore. State/UT-wise details of outstanding amount is at
Annexure-A.
*****Annexure- A
State/UT-wise details of amount* currently pending as per SAMADHAAN Portal
from 30.10.2017 till 09.02.2026
S. No. State Amount (Rs. Crore)
1 Andhra Pradesh 241.22
2 Assam 58.83
3 Bihar 57.8
4 Chandigarh 49.92
5 Chhattisgarh 140.81
6 Dadra And Nagar Haveli And 6.08
Daman And Diu
7 Delhi 2893.69
8 Goa 81.02
9 Gujarat 1194.33
10 Haryana 762.58
11 Jammu And Kashmir 117.83
12 Jharkhand 154.13
13 Karnataka 93.47
14 Kerala 151.18
15 Madhya Pradesh 70.84
16 Maharashtra 2717.85
17 Odisha 184.91
18 Puducherry 12.2
19 Punjab 486.47
20 Rajasthan 991.66
21 Sikkim 6.86
22 Tamil Nadu 795.68
23 Telangana 308.9
24 Uttar Pradesh 1123.46
25 Uttarakhand 144.37
26 West Bengal 1363.73
Grand Total 14209.82
* Amount involved in applications converted into case under various stages of hearing.