Question 1

When must a buyer pay a micro or small enterprise?

Accepted Answer

By the agreed date, which cannot be more than 45 days from acceptance of the goods or services. With no agreement, within 15 days.

Question 2

What interest applies after that?

Accepted Answer

Compound interest with monthly rests at three times the bank rate notified by the RBI (section 16, MSMED Act, 2006).

Question 3

Does the supplier need Udyam registration?

Accepted Answer

Yes, the protection is for micro and small enterprises registered on Udyam.

Question 4

Is there a tax side for the buyer?

Accepted Answer

Yes. A buyer who pays a micro or small enterprise late cannot claim that expense in the year until it is actually paid.