Buyer Not Paying? MSME Samadhaan and Your Options for Delayed Payments

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Delayed payments choke small businesses. If you're a Udyam-registered micro/small enterprise and a buyer pays beyond the MSMED limit (15 days, or up to 45 with a written agreement), the law backs you.

What the MSMED Act gives you

The buyer owes compound interest (monthly rests) at 3× the RBI bank rate on the overdue amount.
You can refer the dispute to MSME Samadhaan / the Facilitation Council for conciliation and, if needed, arbitration.

Practical steps

Send a clear, dated demand notice citing the invoices and the MSMED Act.
Keep proof of Udyam registration and delivery/acceptance.
If unresolved, file on MSME Samadhaan or consult an advocate.

A firm, professionally-drafted demand notice settles many cases before escalation.

🧮 Worked example

A buyer owes you ₹4,00,000, now 120 days overdue (75 days past the 45-day limit).

Beyond the principal, the MSMED Act entitles you to compound interest at 3× the RBI bank rate for the delay — often several thousand rupees — and the right to escalate to MSME Samadhaan. Even the mention of this in a notice frequently prompts payment.

👩‍💼 Expert view

Send the demand notice early and keep it factual — most buyers pay once they see you know your MSMED rights. Escalate to Samadhaan only if the notice fails. This article is general information; for a specific dispute, have an advocate review before filing.

⚠️ Please read: This article is general information based on laws and notifications current as of August 2026. It is not legal, tax, accounting or professional advice or opinion and must not be relied upon for any decision. Rules change frequently and their application depends on your specific facts. Verify the latest position and connect with a KyaTax expert or your advisor before acting.

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Not sure how this applies to you?

Rules change and the answer depends on your exact numbers. Get a qualified professional to review recovering a delayed payment for your case — before you act.

Talk to a KyaTax expert →

Frequently asked questions

Do I need to be registered to use Samadhaan?

The delayed-payment remedy is for Udyam-registered micro/small enterprises. Register first; keep the certificate handy.

How much interest can I claim?

Compound interest at 3× the RBI bank rate on the overdue amount. The exact figure depends on dates and rate — compute carefully.

Should I go legal immediately?

Often a formal demand notice resolves it first. If not, Samadhaan or legal action are options — consult an advocate for your case.