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

Updated 2026-08-02 · By KyaTax · 6 min read

Delayed payments choke small businesses. If you are a Udyam-registered micro or small enterprise and a buyer pays beyond the MSMED Act limit (15 days, or up to 45 with a written agreement), the law is on your side.

What the MSMED Act provides

The buyer becomes liable to pay compound interest (with monthly rests) at three times the RBI-notified bank rate on the overdue amount.
You can refer the dispute to the MSME Samadhaan portal / the Micro and Small Enterprises Facilitation Council for conciliation and, if needed, arbitration.

Practical steps

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

A firm, professionally drafted demand notice settles many cases before escalation. KyaTax's free tool drafts one; an advocate can review and dispatch it.

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

Rules change often and how they apply depends on your exact numbers and facts. Don't guess on recovering a delayed payment — get a qualified professional to review your case.

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Frequently asked questions

Do I need to be registered to use MSME Samadhaan?

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

How much interest can I claim?

The Act provides compound interest at three times the RBI bank rate on the overdue amount. The exact figure depends on dates and rate; compute carefully or get help.

Should I go legal immediately?

Often a formal demand notice resolves it first. If it does not, Samadhaan or legal action are options — this article is general information, so consult an advocate for your case.