When Section 43B(h) of the Income Tax Act comes into effect, companies have to make payments to MSME vendors within 45 days. If the payment is not made in the specified time, companies will not be allowed to claim the deduction. The buyer will have to pay tax and the overdue amount is subjected to taxation.

An enterprise, engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the Industries (Development and Regulation) Act, 1951, (IDR Act, 1951) is said to be : (a) a micro enterprise, where the investment in Plant and Machinery does not exceed Rs.25 lakhs; (b) a small enterprise, where the investment in Plant and Machinery is more than Rs.25 lakhs but does not exceed Rs.5 crore; (c) a medium enterprise, where investment in Plant and Machinery is more than Rs.5 crore but does not exceed Rs.10 crores. An enterprise, engaged in providing or rendering of services is said to be : (a) a micro enterprise, where the investment in equipment does not exceed Rs.10 lakhs; b) a small enterprise, where the investment in equipment is more than Rs. 10 lakhs but does not exceed Rs.2 crore; (c) a medium enterprise, where the investment in equipment is more than Rs.2 crore but does not exceed Rs.5 crore