You delivered the goods, raised the invoice and kept your side of the bargain. Then the buyer went quiet. Salaries, rent and raw material bills don’t wait for anyone’s ‘next month’, and that gap is what strangles many small businesses.
MSMED ACT Section 15 was written to close it. The rule is short: a buyer must pay a micro or small enterprise on or before the date agreed in writing, and that agreed period can never exceed 45 days from acceptance of the goods or services. If nothing is agreed in writing, payment is due within 15 days. Miss the date and compound interest at three times the RBI bank rate starts running.
This guide shows you how to count the days, what happens after a default, and what to do next.
What Is MSMED ACT Section 15?
Section 15 of the MSMED Act, 2006 is the section that mandates that the buyer pay the micro or small enterprise seller on the date specified in writing which should not exceed 45 days from the date of acceptance or deemed acceptance or the “appointed day” (Day 15), whichever is earlier, in the absence of any written agreement.
Section 15 falls under Chapter V of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). The aim of the section is to stop buyers from taking advantage of the micro or small enterprises by using them as sources of credit for an indefinite period of time. The longer period of time will not override the 45-day period of time.
Which Enterprises Are Covered Under Section 15?
Only a ‘supplier’ as defined in Section 2(n) gets this protection:
| Covered | Not covered |
| Udyam-registered micro or small enterprise supplying goods or services | Medium and large enterprises (a small unit upgraded to medium is generally still treated as small for three years) |
| Supplies made on or after the date of Udyam registration | Supplies made before registration. The Supreme Court held in Silpi Industries v. KSRTC (2021) that registration is not retrospective |
| NSIC, State small industries corporations and bodies selling goods or services made by micro and small enterprises | Micro or small units with no Udyam registration |
| Manufacturing and service activity | Units shown only as traders on their Udyam certificate (Ministry office memorandum, 1 September 2021) |
Since 1 April 2025, a micro enterprise has investment up to ₹2.5 crore and turnover up to ₹10 crore; a small enterprise up to ₹25 crore and ₹100 crore; and a medium enterprise up to ₹125 crore and ₹500 crore (Notification S.O. 1364(E), 21 March 2025). Confirm your category on the Udyam Registration Portal, and see our Udyam Registration guide if you haven’t registered yet.
What Is the Payment Time Limit Under MSMED ACT Section 15?
The time limit is 15 days when there is no written agreement, and the agreed period, capped at 45 days, when there is one.
15-Day Payment Rule When There Is No Written Agreement
Section 2(b) defines the appointed day as the day immediately after 15 days have passed from the day of acceptance or deemed acceptance. The buyer must pay before that day, which in practice means by day 15.
This rule applies when there is no agreement at all, and also when the ‘agreement’ is only verbal. Section 15 looks for a date agreed in writing. A phone promise of ‘pay in 60 days’ is hard to prove and doesn’t count, so the 15-day default applies. In practice, a payment term printed only on your own invoice, never accepted by the buyer, is weak evidence too.
45-Day Payment Rule When There Is a Written Agreement
Buyer and supplier can agree a payment date in writing: a contract, a signed PO or accepted written terms. But the proviso to Section 15 says that period can never exceed 45 days from acceptance or deemed acceptance.
- Written term of 30 days: payment is due on day 30.
- Written term of 60 or 90 days: payment is still due by day 45. The extra days have no legal effect against you.
| Point | 15-day rule | Up-to-45-day rule |
| When it applies | No agreement, or only a verbal one | Payment date agreed in writing |
| Due date | Day 15 from acceptance | The agreed date, never later than day 45 |
| Maximum period | 15 days | 45 days |
| PO says 90 days? | Not relevant | Cut down to 45 days |
| Section 16 interest starts | The day after day 15 (the appointed day) | The day after the agreed date (or after day 45) |
| Buyer’s tax cut-off (Section 43B(h)) | Day 15 | Agreed date or day 45, whichever is earlier |
When Does the Payment Period Start Under Section 15?
The clock starts on the day of acceptance. It is not the invoice date and not the PO date.
- Day of acceptance: the day the goods are actually delivered or the services rendered.
- Deemed acceptance: if the buyer doesn’t object in writing within 15 days of delivery, acceptance is deemed to have happened on the delivery day itself. Silence works in your favour: the clock runs from delivery.
- Written objection: if the buyer objects in writing within those 15 days, acceptance is the day you remove the objection, and the clock starts then. Generally, an objection after day 15 doesn’t shift the date, and a verbal complaint doesn’t count at all.
What Is Deemed Acceptance Under the MSMED Act?
Deemed acceptance comes into operation if the buyer does not make a written objection concerning the acceptance of goods/services within 15 days from the date of delivery or provision of services.
In such cases, the date of acceptance is considered the actual date of delivery or the day when the service was provided. For instance, the date of acceptance of the goods will be 1 October, if they are delivered on this date and the buyer does not make a written objection within the next 15 days.
What Happens If the Buyer Raises an Objection?
In the case where the buyer makes an objection about the goods/services in writing within fifteen days after delivery or performance of the obligation, the acceptance date will be changed. In such a case, the date of acceptance will be the day when the supplier withdraws the objection.
It is important to note that an oral complaint cannot qualify as a written objection.
How To Calculate The MSME Payment Due Date?
To calculate the due date for the payment, please follow the below procedure:
- Note the date of delivery or performance of services.
- Ascertain whether any written objection from the buyer was received within 15 days.
- Find the relevant acceptance date.
- Ascertain if there is any written payment agreement.
- Consider the payment period as per the agreement, subject to the maximum of 45 days, or 15 days in case of no agreement.
- Compute the due date for payment.
What Happens If a Buyer Fails to Pay Within 15 or 45 Days?
Section 15 itself sets the deadline and does not prescribe a fine. The consequences of missing it sit in other provisions:
| Provision | What it does |
| Section 16, MSMED Act | Buyer owes compound interest with monthly rests at three times the RBI bank rate, from the appointed day or the day after the agreed date. It applies notwithstanding any agreement |
| Section 17 | Buyer is liable to pay the price and the interest |
| Section 18 | Either side can refer the dispute to the Micro and Small Enterprises Facilitation Council (MSEFC): conciliation first, then arbitration, to be decided within 90 days of the reference |
| Section 19 | A buyer challenging an award in court must first deposit 75% of the awarded amount |
| Section 22 | Audited buyers must disclose unpaid principal and interest in their annual accounts |
| Section 23 | Interest paid or payable to the supplier is not deductible for income tax |
| Section 43B(h), Income-tax Act | The buyer’s tax deduction is deferred if payment is late (see below) |
Section 16 interest in numbers. The bank rate has been 5.75% since 7 October 2026, so three times that is 17.25% a year, compounded monthly (about 1.44% a month). On ₹10 lakh, the first month’s interest is roughly ₹14,375. The rate moves whenever RBI changes the bank rate, so check the current figure on the RBI website.
Section 43B(h): the tax angle. Clause (h) of Section 43B of the Income-tax Act, 1961 (effective from AY 2024-25) allows a buyer to deduct an amount owed to a micro or small supplier only on actual payment if it is paid beyond the Section 15 limit. The Income-tax Act, 2025 carries the same rule as Section 37(2)(g) from Tax Year 2026-27, and the Finance Ministry restated the 45-day limit in a Rajya Sabha reply on 21 July 2026. Example: an invoice accepted on 1 March 2026 with 45-day written terms falls due on 15 April 2026. If the buyer pays on 15 May 2026, the deduction moves out of FY 2025-26 to the year of payment. It covers micro and small suppliers only, not medium. Remember that this is the buyer’s tax problem. To actually get paid, you still need Sections 16 to 18.
Stuck with unpaid invoices from a buyer?
Udyamita Helpline guides Indian entrepreneurs through MSME delayed-payment rights, from counting the due date to the next legal step.
Does MSMED ACT Section 15 Apply to Service Providers?
Yes. Section 15 covers any supplier who ‘supplies any goods or renders any services’, so a Udyam-registered service enterprise has the same rights as a manufacturer. Typical examples are IT and software firms, caterers, transporters and logistics operators, design and marketing agencies, repair and maintenance contractors, security and housekeeping providers, and professional firms such as a CA practice registered on Udyam.
Two cautions. First, the activity shown on your Udyam certificate matters: enterprises registered only as traders are excluded. Second, the Delhi High Court has not settled whether a pure works contract counts as goods or services, so take advice before relying on Section 15 for one.
What Can MSMEs Do If Buyers Delay Payments?
- Work out the due date and interest: Use the steps above and calculate Section 16 interest. Our guide to Section 16 interest walks through it.
- Send a firm reminder: Email or WhatsApp the buyer with the invoice number, your Udyam number and the Section 15 due date.
- Keep your proof together: Invoices, purchase orders, delivery challans, e-way bills, signed receipts or acceptance emails, proof of service completion, bank statements and every buyer reply.
- Issue a legal notice: State the principal, the due date and the interest claimed. Many buyers pay at this stage.
- File on the MSME ODR portal: MSME Samadhaan stopped taking new delayed-payment references on 15 October 2025; new ones go to odr.msme.gov.in (Ministry office memorandum dated 3 October 2025), while cases already on Samadhaan continue. You need a valid Udyam registration, and trader-only units cannot file. The reference goes to the MSEFC of your state. See our ODR portal filing guide.
- Conciliation, then arbitration: Under Section 18 the Council tries conciliation first and, failing that, arbitrates or refers the matter to an institution, with a 90-day target.
- Know your other options: A civil suit, or a Section 138 Negotiable Instruments Act case for a bounced cheque, may also be available.
A lawyer can draft the notice, compute interest correctly and appear before the Council, which matters most when the buyer disputes the amount. Udyamita Helpline can point you in the right direction.
Legal Update: MSMED Amendment Act, 2026
The MSMED Amendment Act, 2026 (Act 16 of 2026) introduces changes to dispute resolution under Section 18, adds Sections 15A and 18A, and strengthens MSME payment recovery provisions. However, Sections 15 and 16 remain unchanged. The amendments will take effect as notified by the Central Government. Check the latest Gazette notifications for their commencement status.
MSME Buyer Payment Obligations
If you buy from MSMEs, protect yourself too:
- Verify the Udyam certificate and the activity shown (manufacturing, service or trader).
- Put payment terms in writing, never beyond 45 days. With no written term, pay within 15.
- Track due dates invoice by invoice, with ageing buckets of 0 to 15 days, 15 to 45 days and overdue.
- Clear MSME invoices before 31 March if you want to protect the deduction.
- Disclose and report: show overdue dues and interest in your accounts (Section 22) and file MSME Form 1 half-yearly if your company has MSME dues pending beyond 45 days.
How Does Section 15 of the MSMED Act Protect Small Businesses?
- Improved cash flow: having a legal maximum helps you budget for your revenues rather than scrambling to get them.
- Decreased delays: clients understand that delaying their payments will cost them interest and the loss of their tax deduction.
- Financial stability: the interest covers the delay for you and is not going to be nullified with any clause of the contract.
- Binding agreement: it becomes an actual deadline, and the 45-day limit prevents a more powerful party from putting any demands.
- Strengthened working capital: fewer loans will mean reduced expenses on financing.
Key Takeaways
- No written agreement means payment is due within 15 days of acceptance.
- A written agreement can allow more time, but never beyond 45 days.
- The clock starts on delivery (deemed acceptance) unless the buyer objects in writing within 15 days.
- Late payment attracts compound interest at three times the RBI bank rate under Section 16.
- New delayed-payment references now go to the MSME ODR portal, not Samadhaan.
- Keep your Udyam registration current and your paperwork in order.
Conclusion
The MSMED Act section 15 grants the micro and small suppliers what is very uncommon in the business world – a time limit on payments. A 15-day deadline without a contract, a set deadline not exceeding 45 days with one, as well as 3 times the bank interest rate for compound interest. What will determine your status will be the documents: the date of acceptance, lack of a written rejection, and a written deadline not exceeding 45 days.
Therefore, preserve your proof of delivery and ensure that you write the deadlines. Treat your buyer’s delayed payment as a right, not as a favour.
Still have questions about MSMED ACT Section 15, or facing a delayed payment right now?
Our team at Udyamita Helpline can help you understand your options and the right next step, including legal guidance for recovery.
FAQs
Section 15 of the MSMED Act, 2006 requires a buyer to pay a micro or small enterprise supplier on or before the date agreed in writing, and never later than 45 days from acceptance or deemed acceptance. If there is no written agreement, payment is due within 15 days.
The maximum is 45 days from the day of acceptance or deemed acceptance of the goods or services. A written agreement can set a shorter period but not a longer one.
Both, depending on your paperwork. It is 15 days when there is no written agreement, and the agreed period, capped at 45 days, when there is one.
No. Even if the purchase order says 60 or 90 days, the statutory ceiling is 45 days, and Section 16 interest applies after that date.
It starts on the day of acceptance, which is the delivery or service completion date. If the buyer objects in writing within 15 days, it starts when the supplier removes the objection.
If the buyer does not raise a written objection within 15 days of delivery or service, acceptance is deemed to have happened on the delivery day. The payment clock then runs from that day.
The buyer owes compound interest with monthly rests at three times the RBI bank rate. The supplier can refer the dispute to the MSE Facilitation Council through the MSME ODR portal, and the buyer’s tax deduction under Section 43B(h) may be deferred.
Yes. It covers both goods and services, provided the supplier is a Udyam-registered micro or small enterprise and is not registered only as a trader.
No. Sections 15 to 24 protect micro and small enterprise suppliers only, though a small enterprise upgraded to medium is generally still treated as small for three years.
Yes. Section 16 entitles the supplier to compound interest at three times the bank rate, notwithstanding anything in the agreement, and Section 17 makes the buyer liable for both the price and the interest.
Send reminders and a legal notice, then file a delayed payment reference on the MSME ODR portal for conciliation and arbitration before the Facilitation Council. A civil suit or a cheque-bounce case under Section 138 may also be available.
Section 43B(h) of the Income-tax Act, 1961 (now Section 37(2)(g) of the Income-tax Act, 2025) uses the Section 15 time limit as its cut-off. If the buyer pays a micro or small supplier late, the deduction is allowed only in the year of actual payment.
