Section 43B(h) MSME Payment Disallowance Calculator in Tally Prime (2026 Audit SOP)
Section 43B(h) MSME Payment Disallowance Calculator in Tally Prime (2026 Audit SOP)
Learn how Section 43B(h) impacts year-end tax deductions in Tally Prime. Calculate MSME payment timelines, track Udyam registrations, and automate purchase bill posting.
Who is this for: Tax Compliance
Section 43B(h) of the Income Tax Act has reshaped accounts payable workflows for businesses, accountants, and Chartered Accountants across India. Under this provision, deduction for expenses incurred on purchases from registered Micro and Small Enterprises (MSEs) is allowed only in the financial year in which actual payment is made, provided payment is cleared within statutory timelines.
Quick Answer: How Does Section 43B(h) Disallowance Work in Tally Prime?
TrulyInvoice automates vendor purchase bill entry into Tally Prime so accountants never miss MSME payment due dates. Section 43B(h) mandates that payments to registered Micro & Small Enterprises must be made within 15 days (without agreement) or 45 days (with written agreement). Unpaid supplier bills as of March 31 are disallowed in Tally's tax calculation until actual payment.
- 15-Day Limit: Applies when no written agreement exists with the supplier.
- 45-Day Limit: Maximum permissible period under written agreement.
- Disallowance Impact: Unpaid MSME purchase expenses are added back to net taxable income.
- TrulyInvoice auto-posts vendor purchase invoices (F9) in 15 seconds to ensure clean due date tracking.
Statutory Timelines: 15-Day vs 45-Day Rule
To determine whether a purchase invoice falls under Section 43B(h) disallowance, accountants must verify two primary parameters: supplier MSME classification and agreement terms.
| Agreement Type | Statutory Credit Limit | Disallowance Trigger Condition |
|---|---|---|
| No Written Agreement | 15 Days from Invoice Date | Unpaid on 16th day and outstanding on March 31 |
| Written Agreement (e.g. 30 Days) | 30 Days (Agreed Credit Period) | Unpaid on 31st day and outstanding on March 31 |
| Written Agreement (e.g. 60 Days) | 45 Days (Statutory Max Cap) | Unpaid on 46th day and outstanding on March 31 |
Step-by-Step SOP: Managing MSME Vendors in Tally Prime
- Configure Supplier Ledgers: Go to
Gateway of Tally > Alter > Ledger, select your supplier ledger under Sundry Creditors, and set MSME Registration Type to Micro or Small. Enter the 16-digit Udyam Registration Number. - Maintain Bill-by-Bill Balances: Ensure Maintain balances bill-by-bill is set to Yes for all purchase supplier accounts.
- Generate Overdue Reports: Go to
Display More Reports > Statements of Accounts > Outstandings > Payables. PressF6 (Age-wise)to filter dues by 15-day and 45-day slabs.
Automating Purchase Bill Entry with TrulyInvoice
Manual entry of vendor purchase bills often delays due date tracking, causing accounting teams to miss 15-day or 45-day payment windows. With TrulyInvoice, purchase invoices received as PDFs, scanned bills, or WhatsApp photos are automatically parsed using AI.
TrulyInvoice extracts invoice dates, party GSTINs, line items, and payment terms, posting verified F9 Purchase Vouchers directly into Tally Prime via the local Port 9000 connector in just 15 seconds.
Eliminate Purchase Data Entry Delays:
Stop keying in vendor bills manually. Upload your supplier invoices to TrulyInvoice and sync clean purchase vouchers to Tally Prime automatically for a flat ₹599/month.
Tax Lawyer & GST Compliance Expert