Bulk MSME Status Verification
Upload your vendor list in one Excel file and get the MSME (Udyam) status and category of every vendor back, instead of checking one vendor at a time.
MSME compliance, automated
MSME Verification and Bulk Status Check for Section 43B(h) Compliance
Know which of your vendors are micro or small enterprises, pay them on time and protect your tax deductions. Figment bulk-checks your vendor master to verify Udyam registrations and MSME categories.
Bulk MSME status check across your entire vendor master.
Built for the Companies Act and the Income-tax Act.
Trusted by Leading Banks & Businesses Across India
Why Your Vendors' MSME Status Now Matters
Four sets of rules now depend on knowing exactly which vendors are micro or small enterprises.
Income-Tax: Section 43B(h) / 37(2)(g)
From FY 2023-24, an amount owed to a micro or small enterprise is deductible only in the year it is actually paid if it is paid after the time limit in Section 15 of the MSMED Act. A late payment at year end moves the expense into the next year. From tax year 2026-27 the same rule is Section 37(2)(g) of the Income-tax Act, 2025.
Tax Audit: Form 3CD Clause 22 / Form 26
CBDT Notification No. 23/2025 expanded Clause 22 from AY 2025-26. Auditors now report total dues to micro and small enterprises, the amounts paid within and beyond the time limit, and the amount disallowed under Section 43B(h). From tax year 2026-27 the tax audit report is Form No. 26 under Section 63 of the Income-tax Act, 2025.
Companies Act: MSME Form 1
Companies with payments to micro or small enterprises outstanding for more than 45 days file MSME Form 1 with the MCA every half-year: by 31 October for April–September and by 30 April for October–March.
Accounts: MSME Dues Disclosure
Financial statements must disclose the principal and interest due to micro and small enterprises, as required by Section 22 of the MSMED Act and Schedule III. The MSMED (Amendment) Act, 2026 adds graded penalties for buyers who fail to disclose these dues.
MSME Classification (from 1 April 2025)
| Category | Investment in plant & machinery / equipment | Annual turnover |
|---|---|---|
| Micro | Up to ₹2.5 crore | Up to ₹10 crore |
| Small | Up to ₹25 crore | Up to ₹100 crore |
| Medium | Up to ₹125 crore | Up to ₹500 crore |
Applies to manufacturing and service enterprises; an enterprise must be within both limits.
The MSME Payment Rule at a Glance
| Situation | Time limit to pay a micro or small vendor |
|---|---|
| No written agreement on payment terms | 15 Days from the day goods or services are accepted (or deemed accepted) |
| Written agreement exists | As agreed, but never more than 45 Days |
| Paid late | Compound interest at three times the RBI bank rate, with monthly rests (Section 16). This interest is not tax-deductible (Section 23). |
Applies only to vendors classified as micro or small. Medium enterprises are not covered by Section 43B(h), and traders registered on Udyam are outside the MSMED Act's delayed-payment provisions.
Which year is the expense allowed? Examples
| Invoice date | Payment terms | Due by | Paid on | Deduction allowed in |
|---|---|---|---|---|
| 01 Apr 2025 | 45 days (agreement) | 16 May 2025 | 10 May 2025 | FY 2025-26paid on time |
| 20 Mar 2025 | 45 days (agreement) | 04 May 2025 | 25 Mar 2025 | FY 2024-25paid on time |
| 01 Mar 2025 | No agreement (15 days) | 16 Mar 2025 | 10 Apr 2025 | FY 2025-26paid late, after year end |
| 10 Jan 2025 | No agreement (15 days) | 25 Jan 2025 | 20 Feb 2025 | FY 2024-25late but paid in the same year; interest still payable |
MSMED (Amendment) Act, 2026: What Changes for Buyers
Parliament amended the MSMED Act in August 2026 to make MSME payments faster and disclosure stricter. These are the changes that affect companies buying from micro and small enterprises.
| Area | What changes |
|---|---|
| Not disclosing MSME dues in the accounts (Section 22) | Warning for the first default, a penalty of ₹10,000 – ₹50,000 for the second, and a fine of ₹50,000 – ₹1 lakh from the third. Minimum amounts rise 10% every three years. |
| Paying MSME invoices through TReDS | Central PSUs must settle MSME invoices on an RBI-authorised TReDS platform (already required by the MSME Ministry notification of 30 June 2026, with statutory auditor certification). The Centre and States can extend this to other entities. |
| Payment disputes before the MSE Facilitation Council | Mediation within 90 days, reference to arbitration within 30 days of a failed mediation, and the award within 90 days of pleadings. The case is heard where the supplier is registered, and can run online. |
| Challenging an award | Deposit 75% of the award. If the challenge is pending for more than six months, the court must release at least 50% to the supplier. Awards are recoverable as arrears of land revenue. |
| Classification and registration | Investment and turnover are now written into the Act as the classification test; the limits from 1 April 2025 continue until new ones are notified. Registration becomes free and voluntary on a national digital platform, with optional State platforms. |
The Act received Presidential assent on 13 August 2026. Its provisions take effect on dates the Central Government notifies; until then the existing rules apply. The 15/45-day payment limit and Section 43B(h) are unchanged.
How Figment Handles MSME Compliance
Stay ahead of MSME compliance with automation, reminders, and complete visibility.
Status for the Companies Act and Income-tax Act
Know which vendors are micro or small enterprises, the vendors that the 43B(h) payment rule, MSME Form 1 and your MSME dues disclosure apply to.
MSME Check at Vendor Onboarding
VenCPC validates GSTIN, PAN and MSME details when a vendor is registered, so the vendor master starts clean.
MSME Verification API
Check a vendor’s Udyam registration status and category from your own ERP or portal through Figment’s MSME verification API.
MSME validation is part of
VenCPC - Figment's Vendor Compliance Software
How It Works
Verify vendors, track MSME status, and manage payments with ease.
Upload Your Vendor List in Excel
Upload your vendor list in Excel with PAN or Udyam numbers for quick verification.
Bulk Verification of Vendor MSME Status
Figment verifies the MSME status and category of every vendor in bulk, quickly and accurately.
Act on Micro & Small Vendor Payments
Prioritise payments to micro and small vendors and keep the status on record for audit.
Stay Compliant, without
Thinking About Security
Automate compliance with built-in security that keeps your data protected, processes secure, and risks under control.
GSP-Authorized, Direct to GSTN
Every byte Encrypted, Secure at Every Layer
ISO 9001 : 2015
Quality Management System
ISO 27001 : 2022
Information Security
SOC 2 Type II
Operational Trust Center
AES-256 Encryption
Multi Factor Authentication
Who Can Benefit from MSME Compliance?
For businesses managing vendors, MSME status, payments, and compliance with ease.
Large and Mid-size Corporates
Manage thousands of vendors across multiple plants, branches, and GSTINs with ease.
Banks, PSUs, and Insurance Companies
High-volume vendor payments requiring close compliance tracking and audit readiness.
CA Firms & Auditors for MSME Compliance
Verify MSME status and 43B(h) compliance for clients during tax audits and reviews.
SMEs and Growing Businesses
Validate vendor MSME status to plan payments and ensure compliance.
MSME Compliance. Smart & Simple. Verified. Audit-Ready.
Verify vendors. Track status. Stay fully audit-ready always.
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Figment aligned with our compliance timelines from day one, and support has been consistently responsive.
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DM, HIMACHAL PRADESH GRAMIN BANK
We're happy with our association with FIGMENT. It's a great combination of tech aspects as well as tax knowledge.
Mr. Rajesh Kumar
GM, BANK OF INDIA
No organization can be stopped when it's built on values like Figment's. The team constantly strives to deliver its very best.
Mr. B. Satyanarayana Rao
DGM, UNION BANK OF INDIA
We appreciate your degree of service orientation and find it truly satisfying and further hope for the same warmth.
Mr. Mahendra Kumar
GM, UTTAR BIHAR GRAMIN BANK, MUZAFFARPUR
Figment's hardworking and professional team has achieved remarkable milestones through dedication and sincerity.
Mr. Nandkumar
AGM, PUNJAB NATIONAL BANK
The Figment team has a deep understanding of client needs and extensive expertise in banking and tax technology systems.
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AGM, STATE BANK OF INDIA
Figment aligned with our compliance timelines from day one, and support has been consistently responsive.
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DM, HIMACHAL PRADESH GRAMIN BANK
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Frequently Asked Questions
Something not covered here?
Ask us directly.Section 43B(h) says that an amount a business owes to a micro or small enterprise is deductible only in the year it is actually paid, unless it is paid within the time limit in Section 15 of the MSMED Act. It applies from assessment year 2024-25 (financial year 2023-24) onwards. From tax year 2026-27, the same rule is in Section 37(2)(g) of the Income-tax Act, 2025.
It is the new home of the Section 43B(h) rule. The Income-tax Act, 2025 replaced the 1961 Act from 1 April 2026, and Section 37(2)(g) carries over the rule that a sum owed to a micro or small enterprise is deductible only when paid, unless it is paid within the MSMED Act time limit. The audit of FY 2025-26 still cites Section 43B(h).
Under Section 15 of the MSMED Act, a buyer must pay a micro or small supplier within the agreed period, which cannot exceed 45 days from acceptance of the goods or services. If there is no written agreement, the limit is 15 days.
No. Section 43B(h) covers only micro and small enterprises. Payments to medium enterprises are not affected, which is why knowing the exact category of each vendor matters.
From AY 2025-26 (CBDT Notification No. 23/2025), tax auditors report the total dues to micro and small enterprises, the amounts paid within and beyond the Section 15 time limit, and the amount disallowed under Section 43B(h). From tax year 2026-27, Form 3CA, 3CB and 3CD are replaced by a single Form No. 26 under Section 63 of the Income-tax Act, 2025, which carries the same MSME reporting.
It adds graded penalties for not disclosing dues to micro and small suppliers in the accounts (warning, then ₹10,000 to ₹50,000, then a fine of ₹50,000 to ₹1 lakh), requires Central PSUs to settle MSME invoices through TReDS, sets 90-day limits for mediation and arbitration of payment disputes, and makes awards recoverable as arrears of land revenue. It received assent on 13 August 2026 and takes effect on dates the Central Government notifies.
For Central PSUs, yes. An MSME Ministry notification of 30 June 2026 requires every operating CPSE to settle MSME invoices through an RBI-authorised TReDS platform and to obtain a statutory auditor certificate of compliance; the 2026 amendment puts this into the MSMED Act. The Centre and States can extend it to other entities. The MSME supplier still chooses whether to discount the invoice.
Companies that have payments outstanding to micro or small enterprises for more than 45 days. It is a half-yearly return to the MCA, due by 31 October (for April to September) and 30 April (for October to March).
MSME verification is checking whether a vendor holds a valid Udyam Registration and whether it is a micro, small or medium enterprise. The category matters because the 45-day payment rule and Section 43B(h) apply only to micro and small enterprises, and the same status feeds Form 3CD Clause 22 and MSME Form 1.
Ask the vendor for its Udyam Registration Number and verify it on the Udyam Registration portal (udyamregistration.gov.in), or scan the QR code on its Udyam certificate. Compare the enterprise name, category and major activity shown with your vendor record, and note the date you checked.
Check at vendor onboarding and again at least every quarter, and after 1 April each year, because enterprises are re-classified annually from their income tax return and GST data. A vendor can also register as MSME after you onboard it.
Every registered enterprise has a Udyam Registration Number showing its category. Figment verifies the MSME status of your whole vendor list in bulk from an Excel upload, and the MSME verification API lets you check a vendor from your own ERP or portal.
