The 45-day rule means that a buyer cannot take more than 45 days from the day of acceptance (or deemed acceptance) to pay a micro or small enterprise, even if the purchase order says 60, 90 or 120 days. From day 46, compound interest at three times the bank rate accrues under Section 16, and since 2024 the buyer also loses the income-tax deduction for that year under Section 43B(h).
How the 45-day rule works in India
The rule has two triggers. The first is acceptance: when the buyer receives the goods or services and does not object in writing within 15 days. The second is the written credit period: if it is 45 days or less, that period applies; if it is longer, 45 days applies. The 45 days are calendar days. A buyer who wants to stay within the rule and the tax law must pay within 45 days of acceptance in the same financial year, or by the due date if it falls in the next year.
Large buyers often respond by asking suppliers to confirm they are not MSMEs or by splitting orders among vendors; neither changes the supplier's legal rights.
Why it matters for getting paid
Since the 2023 Finance Act added clause (h) to Section 43B of the Income-tax Act, corporate buyers' finance teams track 45-day compliance closely, because a missed deadline moves the deduction to the next year. Suppliers who quote the rule in a reminder or a legal notice find it gets attention from the CFO, not just the purchase manager. The rule is also the basis of the interest claim on MSME Samadhaan.
How FundRaksha uses it
FundRaksha's notices to buyers of MSME clients cite the 45-day rule and the tax consequence together, which is one reason about 60% of cases close without a filing. The company has worked on ₹50 Cr+ of invoices, a large share of them MSME supplies on 60 to 90 day terms that the law shortens to 45. A free consultation will tell you which of your invoices are already past the statutory date.
Worked example (hypothetical)
A small Ahmedabad chemicals supplier delivers ₹5,00,000 of goods on 1 July under a PO stating "net 90". No objection is raised, so acceptance is deemed on 1 July and the Section 15 due date is 15 August (day 45). The buyer pays on 29 September (day 90). It is 45 days late. Assuming a 6.5% bank rate (19.5% a year, 1.625% a month), interest for 1.5 months on ₹5,00,000 is approximately ₹12,250. The buyer's ₹5,00,000 expense is also deductible only in the year of payment under Section 43B(h) if that falls in a later financial year.
Last reviewed: 2026-10-08. Information for Indian businesses; not legal advice.