MSME 45-Day Payment Rule: What Buyers and Suppliers Should Know
Understand the MSME 45-day payment rule, the 15-day position without written agreement, delayed-payment interest, MSEFC and Section 43B(h) implications.
Section 15 of the MSMED Act requires buyers of eligible micro and small enterprise goods or services to pay by the agreed date, but a written agreement cannot extend beyond 45 days from acceptance or deemed acceptance. Without a written agreement, official Income Tax guidance explains the timeline as 15 days. Delayed payment can trigger statutory interest, and Section 43B(h) can affect the buyer’s income-tax deduction timing.
- The statutory maximum written payment period is 45 days.
- Without a written agreement, the timeline is 15 days.
- Section 16 provides compound interest with monthly rests at three times the RBI bank rate for qualifying delays.
- The protection focuses on eligible micro and small enterprises.
- Section 43B(h) links overdue MSE payments to deduction on actual payment.
- Buyers should track supplier classification, acceptance dates and due dates.
Under Section 15 of the MSMED Act, a buyer purchasing goods or services from an eligible micro or small enterprise must pay by the agreed written date, but the agreed period cannot exceed 45 days from acceptance or deemed acceptance. If there is no written agreement, official Income Tax guidance explains the payment timeline as 15 days.
| At a glance | Summary |
|---|---|
| Topic | MSME 45-Day Payment Rule: What Buyers and Suppliers Should Know |
| Core answer | Use the Quick Answer above for the direct answer, then use the sections below for the practical process, checks and next steps. |
| What to remember | Why it matters |
|---|---|
| Editorial note | For eligible micro and small enterprises, payment-period rules differ depending on whether there is a written agreement; the statutory framework should be read together with the current tax treatment of delayed deductions. |
| Situation | Maximum framework |
|---|---|
| No written agreement | Appointed day framework can arise after 15 days |
| Written agreement | Agreed period cannot exceed 45 days |
| Delay | Interest / MSEFC consequences may apply |
| Tax | Buyer deduction timing needs separate review |
Related step: delayed payment recovery.
1. The 45-Day Rule Comes From the MSMED Act
Section 15 states that the written payment period cannot exceed 45 days from acceptance or deemed acceptance of goods or services.
2. No Written Agreement Means a Shorter Timeline
Income Tax Department guidance explains that where there is no written agreement, Section 15 requires payment within 15 days; where a written agreement exists, the period cannot exceed 45 days.
| Next step |
|---|
| Once your compliance and commercial controls are clear, keep your company and product information structured for B2B discovery. |
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3. Delayed Payment Can Trigger Statutory Interest
Section 16 provides for compound interest with monthly rests at three times the RBI bank rate where the buyer fails to pay within the Section 15 timeline.
4. The Protection Focuses on Micro and Small Enterprises
Businesses should verify the supplier’s current Udyam classification and whether the relevant activity is eligible for the delayed-payment mechanism.
For current category limits, read MSME Classification Limits Explained.
5. Section 43B(h) Creates a Separate Income-Tax Consequence
Section 43B(h), introduced by the Finance Act 2023, provides that sums payable to a micro or small enterprise beyond the Section 15 time limit are deductible only on actual payment. The normal return-filing proviso does not apply to clause (h).
6. Buyer vs Supplier Impact
| Party | Practical impact |
|---|---|
| Micro/small supplier | Stronger statutory payment protection and potential interest claim |
| Buyer | Needs invoice/acceptance-date tracking and timely payment controls |
| Accounts team | Must identify eligible MSE vendors and monitor ageing |
| Tax team | Needs to review Section 43B(h) for overdue eligible MSE amounts |
7. Acceptance Date and Disputes Matter
The legal timeline is linked to acceptance or deemed acceptance. Genuine quality, quantity or contractual disputes should be documented promptly.
8. What Buyers Should Track
| Field | Track |
|---|---|
| Supplier status | Micro/small/other |
| Udyam details | Current registration/classification |
| Invoice date | Recorded |
| Acceptance date | Recorded |
| Written payment term | Days agreed, maximum 45 where Section 15 applies |
| Due date | System-calculated |
| Dispute | Documented promptly if genuine |
| Payment date | Actual date |
| 43B(h) review | Flag overdue eligible amounts |
9. What Suppliers Should Do
Keep Udyam details current, issue clear invoices, retain purchase orders and delivery/acceptance evidence, follow up before the due date and document overdue balances.
10. MSME Samadhaan / MSEFC
The MSMED Act provides for references to the Micro and Small Enterprises Facilitation Council for disputes over amounts due. MSME Samadhaan supports delayed-payment applications for eligible MSEs.
Our next article covers practical delayed-payment recovery options.
11. Where BulkVyapar Fits
BulkVyapar helps with supplier and business discovery, but payment terms remain between buyer and seller. Clear quotations and purchase requirements can reduce ambiguity before a transaction.
Important Note
This is general information, not legal or tax advice. Eligibility, acceptance dates, trading-activity treatment and Section 43B(h) consequences can depend on the facts. Reviewed against official MSME and Income Tax material available on 30 September 2026.
Related BulkVyapar Guides
Continue with these related BulkVyapar guides for the next practical step.
| Business action |
|---|
| Use BulkVyapar as a discovery channel while keeping your own tax, credit, payment and risk controls in place. |
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| Written by | Editorial approach |
|---|---|
| BulkVyapar Editorial Team | Practical Indian B2B guidance with official-source verification where regulations, platform features or market processes can change. |
Frequently Asked Questions
Is the MSME payment rule always 45 days?
No. A written agreement can allow up to 45 days. Without a written agreement, official Income Tax guidance explains the timeline as 15 days.
Does the rule apply to medium enterprises?
The delayed-payment provisions focus on micro and small enterprises, not medium enterprises.
What interest applies to delayed MSME payments?
Section 16 provides compound interest with monthly rests at three times the RBI bank rate for qualifying delayed payments.
What is Section 43B(h)?
It is an Income Tax provision under which sums payable to eligible micro or small enterprises beyond the Section 15 time limit are deductible on actual payment basis.
Official Sources
- India Code — MSMED Act 2006 Official statutory text for Sections 15–18.
- Ministry of MSME — Delayed Payment Guidance Official guidance summarising eligibility, the 45-day rule and delayed-payment interest.
- Income Tax — Circular 1/2024 Official explanation of Section 43B(h), including 15-day/45-day timelines.
- Income Tax — AY 2026-27 ITR-3 Validation Rules Current filing validation material continuing to reflect Section 43B(h).