MSME 45-Day Payment Rule: what suppliers should verify

The short version

Sections 15–24 of the Micro, Small and Medium Enterprises Development Act, 2006 contain delayed-payment protections for eligible micro and small suppliers. Where a written payment term exists, it cannot extend beyond 45 days from the relevant acceptance or deemed-acceptance date.

This does not mean every business called an MSME can automatically invoke every remedy. Eligibility, registration timing, activity classification, acceptance, limitation and the underlying dispute all matter.

Who should check eligibility carefully?

• The supplier should ordinarily be an eligible micro or small enterprise with valid Udyam registration.
• Official Ministry guidance states that enterprises registered only for trading activities under NIC codes 45, 46 and 47 are not eligible for these delayed-payment provisions.
• The registration date and the date of the underlying transaction may affect the analysis.
• A genuine quality, delivery or contractual dispute can change the recovery path.

When does the clock start?

The relevant date is not always the invoice date. The Act refers to acceptance or deemed acceptance of goods or services. Preserve proof of delivery, completion, sign-off, email acknowledgement and any objection raised by the buyer.

Documents worth preserving

• Udyam certificate and registration history
• Purchase order, work order or signed agreement
• Invoice and agreed payment terms
• Delivery receipt, completion certificate or timesheets
• Email or WhatsApp acknowledgement
• Buyer objections and your responses
• Ledger, bank statement and partial-payment records
• Every reminder and payment promise

Official sources

Start with the Ministry's MSME Samadhaan information page, the MSMED Act on India Code, and the current MSME ODR portal.