Section 15, MSME Act 2006 (MSMED Act) — The 45-Day Payment Rule

What the section does

• Where a buyer has accepted goods or services delivered by a micro or small enterprise, payment is due on the agreed date or, if no agreement exists, within fifteen days from the day of acceptance.
• In no case can the agreed period exceed forty-five days from the day of acceptance. A clause fixing 60, 90 or 120 days is overridden — it does not extend the appointed day under this section.
• Section 15 defines the "appointed day" — the day immediately following the end of the permitted period. This is the date from which compound interest runs under section 16 of the MSMED Act 2006.
• Sections 15 and 16 apply to micro and small enterprises as suppliers, not medium enterprises. The Udyam registration certificate confirms the classification.

Section 15 MSME Payment Deadlines & Appointed Day Matrix

Maximum credit period

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.

Where people go wrong

• Treating the agreed payment date as overriding the 45-day cap. Section 15 says the period cannot in any case exceed 45 days, so a 60-day clause does not delay the appointed day.
• Counting from the invoice date rather than the date of acceptance. The period runs from when the goods or services were accepted, not when the bill was raised.
• Assuming medium enterprises are covered. Sections 15 and 16 protect micro and small enterprises as suppliers only.
• Believing section 16 interest can be waived by contract. Section 15 sets the clock; section 16 says the interest runs notwithstanding any agreement.

Common questions

What is section 15 of the MSME Act 2006?

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.

What is the appointed day under section 15 and 16 of the MSME Act?

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.

Does section 15 of the MSMED Act apply to medium enterprises?

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.

Can a vendor agreement set payment terms longer than 45 days under MSME law?

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.

Act on this

• Section 16 — interest on delayed payment
• Section 43B(h) — 45-day tax disallowance
• MSME interest calculator
• MSME statutory notice template
• What late payment to an MSME actually costs

• Section 16 — interest on delayed payment
• Section 43B(h) — 45-day tax disallowance
• MSME interest calculator
• MSME statutory notice template
• What late payment to an MSME actually costs

About this summary

A plain-English summary of what this provision requires, not a reproduction of it and not legal advice. Read alongside the bare Act, and take advice on anything turning on your own facts.