Right to payment in 45 days
Section 15: payment by the agreed date, never later than 45 days from acceptance; 15 days if there is no agreement.
Micro and small enterprises have strong statutory rights: payment within 45 days, compound interest, a fast dispute forum, procurement support and easier credit. Here they are in plain English, from the team led by Adv. Amarendra Kumar Dubey and Adv. Kanhaiya Lal Mishra.
Pick a category to see the rights that matter most to you. Rights marked as payment rights apply to registered micro and small suppliers; see who is eligible to file.
Section 15: payment by the agreed date, never later than 45 days from acceptance; 15 days if there is no agreement.
Section 16: three times the RBI bank rate, compounded monthly, whatever the contract says. Try our interest calculator.
Section 18: refer the dispute to the MSME Facilitation Council through the ODR portal for conciliation, then arbitration.
Section 19: the buyer must deposit 75% of the award before challenging it in court.
The award is executed like a decree through attachment of accounts and assets. See delayed payment recovery.
MSMEs are a priority sector for bank lending and can use collateral-free guarantee schemes such as CGTMSE, subject to limits.
Large buyers must join the TReDS platform so MSME invoices can be discounted without waiting for the buyer.
Central ministries and CPSUs have a 25% procurement target from micro and small enterprises, with relaxations like EMD and tender-fee exemption.
Section 43B(h) Income-tax Act: dues beyond 45 days are deductible only when paid — a built-in push for the buyer.
Companies must report dues to micro and small suppliers beyond 45 days in Form MSME-1 every half-year.
What happens, and what you can do, at each stage.
Keep the challan, GRN, e-way bill and acceptance email. The payment clock starts here.
The agreed credit period cannot exceed 45 days. With no agreement, the due day is the 15th day.
Compound interest at three times the bank rate accrues every month. Send a legal notice quantifying it.
Conciliation by the Facilitation Council first; arbitration if it fails, with a 90-day period.
The buyer must deposit 75% to challenge. You execute against assets until paid.
Common things buyers say when MSME payments are delayed — and what the law says.
“Our policy is 90 days credit.”
For registered micro and small suppliers the agreed period cannot exceed 45 days. Interest runs after that.
“We will pay principal, forget interest.”
Section 16 interest is payable notwithstanding any agreement. Accepting principal alone should be a conscious choice.
“Our funds are blocked; wait.”
The buyer's cash flow is not a legal defence. Send a notice and consider the ODR portal.
“We will go to court against the award.”
They must deposit 75% of the awarded amount first (Section 19).
“Drop the case or we stop giving you orders.”
Asserting a legal right is lawful. Record the threat and talk to your lawyer about next steps.
Tick what is true for your business. See how well-protected you are.
13+ years of practice; 1400+ cases handled and successfully executed.
Advises MSMEs on strategy, arbitration and challenges to awards, with practice before the Supreme Court, High Court and NCLT.
Handles legal notices, ODR filings, interest claims and execution of awards against defaulting buyers.
An MSME has rights to Udyam recognition, timely payment within 45 days, compound interest on delayed payment at three times the RBI bank rate, a fast dispute forum (MSME Facilitation Council through the ODR portal), protection against challenges to awards through the 75% deposit rule, and access to support schemes such as credit guarantee cover, public-procurement preferences and invoice discounting on TReDS.
Under Section 15 of the MSMED Act, 2006, the buyer must pay a registered micro or small supplier by the agreed date, which cannot exceed 45 days from acceptance of the goods or services. If there is no written agreement, payment is due within 15 days.
A contract may say so, but the law caps the agreed credit period at 45 days for micro and small suppliers. A longer contractual period does not take away your statutory right to payment and interest after 45 days.
You can send a legal notice, claim Section 16 interest and file a reference on the MSME ODR portal (odr.msme.gov.in), where the MSME Facilitation Council conducts conciliation and then arbitration. You can also pursue civil or other remedies depending on the facts.
The Council's arbitral award is enforceable like a court decree. A buyer who wants to challenge it must apply to set it aside and first deposit 75% of the awarded amount (Section 19).
Yes. Under the Public Procurement Policy for Micro and Small Enterprises Order, 2012, central ministries, departments and CPSUs have an annual target of procuring at least 25% of their requirement from micro and small enterprises, and eligible enterprises get relaxations such as exemption from earnest money deposit and tender fees. Check the latest rules for each tender.
TReDS (Trade Receivables Discounting System) is an electronic platform where MSME suppliers can get invoices accepted by large buyers and discounted by financiers, so they receive cash early. Large buyers above the notified turnover threshold are required to join, which helps MSMEs convert receivables to cash.
MSMEs are a priority-sector for bank lending and can use collateral-free credit guarantee schemes such as CGTMSE, subject to scheme limits and bank approval. Delayed payment from buyers can also be a ground to approach your bank for restructuring support under RBI norms.
Rules provide a limited transition period when an enterprise moves up to a higher category, so benefits are not lost overnight. Keep your Udyam details updated and consult a lawyer on how your category was positioned on the date of each supply.
Apart from interest, buyers face tax and compliance consequences: under Section 43B(h) of the Income-tax Act, amounts owed to micro and small suppliers beyond 45 days are deductible only when actually paid, and companies must report such dues in Form MSME-1 every half-year.
Exercising a legal right is not a ground for adverse action, and a lawful claim cannot be treated as misconduct. Where a buyer threatens to stop business, document the threat and speak to your lawyer; most buyers prefer settlement to a prolonged dispute.
A lawyer checks eligibility, quantifies principal and interest, sends the notice, files on the ODR portal, argues before the Council and executes the award. Global Vision Law Firm's MSME lawyers in Delhi handle the full cycle.
Tell us what the buyer did and we will advise your options. Global Vision Law Firm, M-3 Gupta Tower, Commercial Complex, Azadpur, Delhi 110033.
+91 95998 01188 · globalvisionlawoffice@gmail.com
Last updated: 10 October 2026. General information, not legal advice. Scheme limits and thresholds change; verify the current position.
As per the rules of the Bar Council of India, law firms are not permitted to solicit work and advertise. By clicking the "Agree" button and accessing this website, the user fully accepts that you are seeking information of your own accord and volition and that no form of solicitation has taken place by the Firm or its members. Also, the information about us is provided to the user only on his/her specific request and any information obtained or materials downloaded from this website is completely at the user’s volition and any transmission, receipt or use of this site would not create any lawyer-client relationship.
The information provided under this website is solely available at your request for informational purposes only, should not be interpreted as soliciting or advertisement. We are not liable for any consequence of any action taken by the user relying on material / information provided under this website. In cases where the user has any legal issues, he/she in all cases must seek independent legal advice.