Is the 45-day limit fixed or can a contract extend it?

It is a ceiling. Parties may agree a shorter credit period in writing, but no written agreement can push the payment date beyond 45 days from acceptance under Section 15.

Does the buyer owe interest automatically or only if the supplier asks?

The Section 16 liability arises by operation of law from the appointed day, whether or not the supplier raises a demand. A clause waiving it has no effect.

Which buyers have to file MSME Form 1?

Companies that owe a micro or small supplier for more than 45 days. The half-yearly return is due by 31 October and 30 April, and is separate from the interest.

Buyer obligations under the MSME 45-day payment rule

When must a buyer pay a micro or small supplier?

A buyer must pay within the period agreed in writing, which can never be more than 45 days from the day the goods or services are accepted, and within 15 days where nothing is agreed in writing. This is the rule Section 15 of the MSMED Act, 2006 fixes.

Acceptance can be actual or deemed: if the buyer does not object in writing within 15 days of delivery, the supply is treated as accepted and the clock begins. The day after the due date is the appointed day, when the payment becomes overdue.

Does the buyer's own size change the obligation?

No. The duty depends only on the supplier being a registered micro or small enterprise at the time of supply — the buyer's own turnover, size, or legal form makes no difference.

A large company owes a small registered supplier exactly the same duty as any other buyer. The protection travels with the supplier's Udyam registration, not with the buyer.

What does paying late cost the buyer?

A late-paying buyer owes compound interest under Section 16 at three times the RBI Bank Rate, with monthly rests, from the appointed day — and, separately, loses the income-tax deduction for the purchase until it is actually paid under Section 43B(h).

The interest cannot be contracted out of: Section 16 applies notwithstanding any agreement to a lower rate or none. You can size the interest on one bill with the MSME delayed-payment interest calculator.

What must a company additionally disclose?

A company that owes any amount to a micro or small supplier for more than 45 days must report the outstanding sum and the reason for the delay to the Ministry of Corporate Affairs twice a year through MSME Form 1.

The half-yearly returns are due by 31 October for April to September and by 30 April for October to March. The disclosure duty is separate from the Section 16 interest and the Section 43B(h) tax cost.

How does a ledger help a buyer stay inside the deadline?

A ledger helps by ageing every payable against the 45-day clock, so the owner can see which supplier bills are close to the line and clear them before interest and the tax disallowance bite.

Lekha ages each bill from the date of acknowledgement and flags the overdue ones. Lekha records what your documents say and tracks the money on both sides — what you owe and what you are owed. It records and tracks; it does not replace your accountant.

Questions

Is the 45-day limit fixed or can a contract extend it?: It is a ceiling. Parties may agree a shorter credit period in writing, but no written agreement can push the payment date beyond 45 days from acceptance under Section 15.
Does the buyer owe interest automatically or only if the supplier asks?: The Section 16 liability arises by operation of law from the appointed day, whether or not the supplier raises a demand. A clause waiving it has no effect.
Which buyers have to file MSME Form 1?: Companies that owe a micro or small supplier for more than 45 days. The half-yearly return is due by 31 October and 30 April, and is separate from the interest.

This guide is general information, not legal or tax advice. Confirm the current rules and your own circumstances for any specific case.

A buyer's obligations under the MSME 45-day payment rule