What is the MSME 45-day payment rule?
Under Section 15 of the MSMED Act, 2006, a buyer must pay a Udyam-registered micro or small enterprise by the agreed date, which cannot be more than 45 days from accepting the goods or services. With no agreement, the limit is 15 days. Late payment carries compound interest at three times the RBI bank rate (Section 16). Section 43B(h) of the Income-tax Act, 1961 also stopped buyers from claiming the expense until it was actually paid, from FY 2023-24.
Does the rule apply to every MSME?
The delayed-payment protection applies to micro and small enterprises registered on Udyam. Medium enterprises are not covered by these sections.
What should my purchase orders say?
Put a payment term of 45 days or less in every purchase order and invoice, and mention interest under the MSMED Act for late payment.
Key facts
| Law | Sections 15–18, MSMED Act, 2006 |
|---|---|
| Who is protected | Udyam-registered micro and small enterprises |
| Maximum credit | 45 days with a written agreement; 15 days without |
| Interest on delay | Compound, monthly, at 3 times the RBI bank rate |
| Where to complain | MSME Samadhaan portal / MSE Facilitation Council |
| Tax rule for buyers | Section 43B(h), Income-tax Act, 1961 (check the matching provision of the Income-tax Act, 2025 from 1 April 2026) |
Steps
- Make sure your Udyam registration is current
- Use 45-day payment terms in purchase orders and invoices
- Send a reminder, then a legal notice citing Sections 15 and 16
- File on MSME Samadhaan if still unpaid
Questions
Can I claim interest even if the buyer pays late but in full?
Yes, interest for the delay can be claimed under Section 16.
Does the Samadhaan process cost money?
Filing on the portal is free. Advocate fees apply if you want it drafted and filed for you.
This guide is general information, not legal advice for your situation. Talk to an advocate before acting.