Section 43B(h) states that any sum payable by the assessee to a Micro & Small Enterprise beyond the time limit specified in Section 15 of the MSMED Act shall be allowed only in computing the income of the previous year in which the sum has been actually paid. This is irrespective of the previous year in which the liability to pay the sum was incurred, as per the accounting method regularly employed.

With effect from April 1, 2023, this section imposes disallowances for delayed payments, impacting the taxable income of the assessee. This clause is applicable when an enterprise is buying goods or taking services from an enterprise which has been registered under MSMED Act 2006.