Section 43B(h) of the Income Tax Act, 1961, has become the single most disruptive regulatory shift for D2C supply chains. It mandates that any payment to a registered Micro or Small Enterprise (MSE) must be cleared within 15 days (or 45 days if a formal contract exists).

The Cost of Non-Compliance

• Tax Disallowance: Unpaid dues to MSMEs by March 31 are disallowed as deductions, artificially inflating taxable profits.
• Working Capital Compression: Brands can no longer use suppliers as interest-free credit lines for 90+ days.
• Interest Penalties: Delays attract compound interest at 3x the RBI rate.