MSME · Provision
A buyer must pay a micro or small enterprise within 45 days of acceptance — no contract clause can extend this period. (Section 15, Micro, Small and Medium Enterprises Development Act, 2006.) In force since 2 October 2006 · Text checked against India Code on 8 October 2026.
Quick Statutory Answer
Under Section 15 of the MSMED Act 2006, every buyer must pay a registered micro or small enterprise within the agreed credit period, which cannot exceed 45 days from acceptance under any circumstances. If no period is agreed in writing, payment is strictly due within 15 days. Any contract clause specifying longer terms (e.g. 60 or 90 days) is void under law, and Section 16 compound interest begins running automatically from Day 46.
Enter your own figures in the calculator on this page: MSME interest calculator, under Micro, Small and Medium Enterprises Development Act, 2006, s.16.
15. Liability of buyer to make payment.— Where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day: Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed forty-five days from the day of acceptance or the day of deemed acceptance.
| Contract Situation | Agreed Payment Term | Statutory Maximum Allowed | Appointed Day (Interest Trigger) |
|---|---|---|---|
| Written Contract (≤ 45 Days) | e.g. 30 Days | 30 Days | Day 31 onwards |
| Written Contract (> 45 Days) | e.g. 60, 90 or 120 Days | Strictly 45 Days (clause voided by s.15) | Day 46 onwards |
| No Written Agreement | None (Oral / PO) | 15 Days from acceptance | Day 16 onwards |
| Delivery With Written Objection | Objection logged within 15 days | 45 days from dispute resolution | Day 46 after dispute resolved |
45 days from acceptance. No contract can override this. A 60 or 90-day payment clause in a purchase order does not delay the appointed day — section 16 interest still runs from day forty-six.
Section 15 of the Micro, Small and Medium Enterprises Development Act 2006 (also called the MSME Act or MSMED Act 2006) requires a buyer to pay a micro or small enterprise within the agreed period, with a hard cap of forty-five days from acceptance. A credit period longer than forty-five days in the purchase order does not move the appointed day — it only means section 16 interest begins running from day forty-six.
The appointed day is the day immediately following the last day of the permitted period under section 15 — that is, the agreed payment date or, where no date is agreed, the day after fifteen days from acceptance, but never later than the day after forty-five days from acceptance. Section 16 interest starts from this day.
No. Sections 15 and 16 of the MSMED Act 2006 protect micro and small enterprises as suppliers. A medium enterprise cannot claim the 45-day rule or the compound interest under section 16.
A longer period may be agreed in the contract, but section 15 caps the "appointed day" at forty-five days from acceptance regardless. So a 90-day clause is valid as between the parties for other purposes, but section 16 interest still starts accruing from day forty-six.
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The section in its own words, with a plain-English explanation of what it requires. Not legal advice: take advice on anything turning on your own facts.