The MSME 45-day payment rule in 2026: interest, the buyer's tax angle and how to file on the ODR portal

Last updated 11 Oct 2026 · India

Last checked: 11 Oct 2026 against Ministry of MSME: ODR scheme guidelines for delayed payments and DC-MSME: FAQs on delayed payments (interest at 3× bank rate).

Short answer. If you are a micro or small enterprise with Udyam registration, a buyer must pay you by the agreed date, which can be at most 45 days from acceptance, or within 15 days if nothing was agreed (MSMED Act 2006, s.15). Late payments carry compound interest at three times the RBI bank rate (s.16). Since 15 Oct 2025, new delayed-payment cases are filed on the MSME ODR portal (odr.msme.gov.in). Medium enterprises and, in practice, many traders are not covered.

Why the rule exists

Small suppliers often wait months while bigger customers use their money as free credit. The MSMED Act sets a hard limit, and since 2024 the income-tax law adds a reason for buyers to care: under s.43B(h) of the 1961 Act (now s.37(2)(g) of the 2025 Act), a buyer that pays a micro or small supplier late can deduct the expense only in the year it actually pays.

The rule in plain words

Who is protected: micro and small enterprises (not medium) whose Udyam registration predates the supply.
When payment is due: the agreed date, capped at 45 days from acceptance; 15 days if no date was agreed.
Interest: compound, with monthly rests, at 3× the bank rate notified by RBI, from the day after the due date. Any figure you work out is an estimate; the MSE Facilitation Council decides.
Where to go: the MSE Facilitation Council, through the ODR portal: online negotiation, then conciliation, then arbitration if needed.

The real problem: keeping the customer

Most owners know exactly who owes them. The hard part is asking without losing the client. A calm, step-by-step sequence works better than a legal threat on day one:

When	Step
5 days before due	Friendly reminder: invoice number, amount, due date
Day 1–3 overdue	Ask for the expected payment date; offer to fix any invoice query
About day 15	Firm reminder mentioning your Udyam status, s.15/s.16 and the buyer's tax deduction
Day 30+	Final notice: pay by a date 7 days out, or you will file on the ODR portal

Common mistakes

No written credit period. Put the payment term on every invoice and order.
Udyam registered after the supply. Register first; protection depends on it.
Skipping proof of acceptance. Keep signed delivery challans or acceptance emails.
Filing on MSME Samadhaan. New cases go to odr.msme.gov.in.

Documents to keep ready

Udyam certificate
Invoices and purchase/work order
Proof of delivery or acceptance
Copies of your reminders and any replies
A ledger extract for the buyer

Frequently asked questions

What is the MSME 45-day payment rule?

Under s.15 of the MSMED Act 2006, a buyer must pay a micro or small supplier by the agreed date, which cannot exceed 45 days from acceptance, or within 15 days if no date was agreed.

What interest is payable on late MSME payments?

Compound interest with monthly rests at three times the bank rate notified by the Reserve Bank of India, under s.16 of the MSMED Act.

Where do I file a delayed payment complaint now?

New cases since 15 October 2025 are filed on the MSME ODR portal, odr.msme.gov.in, using your Udyam number and OTP.

Are medium enterprises covered?

No. The delayed-payment provisions protect micro and small enterprises only.

Official sources

Not legal or tax advice. Any interest figure is an estimate; the MSE Facilitation Council decides the actual amount. For a disputed or large claim, speak to a lawyer or CA. Last checked 11 Oct 2026.

Get free deadline reminders. Free: one short email every Wednesday listing the GST, TDS and ITR due dates coming up. Unsubscribe anytime.

Subscribe free on Gumroad (email only, no payment).

Or put every date in your calendar now: free India tax deadline calendar (Google Calendar, Outlook, phone; .ics + spreadsheet).

If you want a ready-made tool

Free: the 45-day rule on one page (PDF, no sign-up).

If you want the tracker that works out due dates, days overdue and an interest estimate, plus 5 letters with WhatsApp versions and an ODR filing guide: MSME Payment Chaser Kit (paid).

← All guides

Unadhi Guides are free, independent explainers. Not an official government publication. We correct errors as soon as we find them: write to mininglife7@gmail.com.

Partners earn 50% on every sale until 11 Nov 2026 (launch month; 30% after). Nothing to buy: become an Unadhi affiliate (free to join) and share our tools.