Summary
- The Micro, Small and Medium Enterprises Development Act, 2006 mandates buyers to settle payments to micro and small suppliers within 45 days, or 15 days if no terms are agreed.
- Delayed payments incur compound interest at three times the RBI bank rate, with buyers facing tax implications under Section 43B(h) of the Income-tax Act for late payments.
- Suppliers must obtain Udyam registration before transactions and can seek recovery through the Micro and Small Enterprises Facilitation Council via MSME Samadhaan.
- Prompt action and clear credit terms significantly enhance recovery chances for suppliers facing delayed payments.
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