The MSME 45-Day Payment Rule: Section 15 Explained
AS | Ankit Sarawagi|Founder, CFOmatrix·July 2026·9 min read | The rule that starts the clock |
- 15 is the default, 45 is the ceiling. With no written agreement the limit is 15 days; a written agreement can extend it, but never past 45 days from acceptance.
- The clock starts at acceptance, not at the invoice date. If the buyer stays silent for 15 days after delivery, the goods are “deemed accepted” and the count begins.
- A 90-day contract clause is void to the extent it crosses 45 days. No contract can lawfully stretch the MSME payment window.
- The “appointed day” triggers interest automatically. You do not need to send a reminder or get consent for the buyer to be in default.
- It applies to micro and small suppliers only, who hold Udyam registration. Medium enterprises are outside the rule.
| 15 days The default limit when there is no written payment agreement | 45 days The absolute ceiling, even with a written agreement | Day 1 The count starts from acceptance, not the invoice date |
Exactly What Section 15 Says
The MSME 45-day payment rule comes from a single, compact section. Section 15 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 says that where a micro or small enterprise supplies goods or services, the buyer must make payment on or before the date agreed in writing, and where there is no such agreement, before the “appointed day.” It then caps the agreed period at 45 days from the day of acceptance. In plain terms, there are two deadlines, and which one applies depends entirely on whether the payment date was put in writing.
Notice the asymmetry. The 15-day rule is what you get for free, without negotiating anything. The 45-day window is a privilege the buyer earns only by putting the terms in writing, and even then the law slams a lid on it. There is no lawful way to reach 46 days. Read alongside the full guide to recovering delayed payments from an MSME buyer, this section is the foundation every other remedy is built on.
When the Clock Starts: Acceptance and Deemed Acceptance
The most common mistake founders make is counting from the invoice date or the delivery date. Section 15 counts from the day of acceptance, and the Act defines that carefully so a buyer cannot just refuse to sign off and stall the clock forever.
Deemed acceptance is the safeguard that matters. If a buyer takes delivery, keeps quiet, and never formally confirms receipt, the law does not let the deadline hang open. Fifteen days of silence after delivery, and the goods are treated as accepted on the delivery date. From that point, your 15 or 45 day count is running whether the buyer likes it or not.
A written objection has to be genuine and prompt, within 15 days of delivery. A buyer who suddenly “finds a quality problem” three months later, only when you chase payment, cannot use it to reset the clock. Keep dated proof of delivery, because the delivery date is what triggers deemed acceptance.
What Counts as a “Written Agreement” (and Why 45 Is the Wall)
To use the 45-day window rather than the 15-day default, there must be a payment date agreed in writing between buyer and supplier. That does not require a thick contract. A purchase order stating the payment terms, a signed work order, an email exchange confirming the terms, or a supply agreement all count, as long as the payment date is recorded and both sides accepted it.
Here is the part buyers routinely get wrong. Even a valid written agreement cannot push the deadline past 45 days. Section 15 is explicit that the agreed period “shall not exceed forty-five days from the day of acceptance.” A clause saying “payment within 90 days” is not simply risky, it is void to the extent it crosses 45 days. The rest of the contract stands, but that payment term is cut back to the statutory maximum by operation of law.
Do not be talked out of your rights by a signed contract. If a large buyer’s standard terms say “net 90,” that clause is unenforceable beyond day 45 against a registered micro or small supplier. You cannot “agree away” the MSME protection, and neither can the buyer’s procurement team, however official the paperwork looks.
The “Appointed Day” and Automatic Interest
The day immediately after the 15 or 45 day period ends has a formal name in the Act: the “appointed day.” This is the single most important date in the whole mechanism, because from the appointed day the buyer is in legal default and interest begins to accrue, automatically, without you sending a single reminder.
To make this concrete, here is how the dates line up for a simple 45-day agreement.
| Event | Date |
| Day of acceptance (day zero) | 1 January |
| Written agreement period | 45 days |
| Last day to pay (due date) | 15 February |
| Appointed day (interest starts) | 16 February |
Every day past the appointed day, the interest meter runs. If there had been no written agreement in the example above, the whole timeline compresses: due date 16 January, appointed day 17 January.
What Happens After the Appointed Day
Section 15 sets the deadline; the sections that follow turn a missed deadline into money and leverage. Once the appointed day passes, three things are in play.
- Interest accrues under Section 16, at three times the RBI bank rate compounded monthly, roughly 19.5% a year at a 6.5% bank rate. This overrides any lower rate in your contract, and the buyer cannot claim it as a tax expense.
- You can escalate to the MSEFC through the free MSME Samadhaan portal, which attempts conciliation and then arbitration if the buyer will not pay.
- The buyer faces a tax consequence under Section 43B(h): it loses the income-tax deduction for your purchase until it actually pays, if it missed the 15 or 45 day limit.
Those mechanics are each worth a post of their own. → See exactly how the interest is calculated (with a calculator) to turn your own appointed-day date into a rupee figure.
Common Misconceptions About the 45-Day Rule
A few myths cause founders to either miss their rights or claim rights they do not have. Clear these up before you rely on Section 15.
Bake the appointed day into your receivables tracking. For each invoice to a buyer, record the acceptance date and compute the appointed day the moment you deliver. That single date tells your finance team exactly when a customer flipped from “slow” to “in statutory default,” and when the ₹ interest clock started earning for you.
“Founders lose the argument before it starts because they count from the invoice date and accept a 90-day PO. The law counts from acceptance and voids anything past 45 days. Know the real dates, and you hold the leverage.”
Ankit Sarawagi, CFOmatrixFrequently Asked Questions
Is the MSME payment deadline 45 days or 15 days?
It depends on whether there is a written agreement. If the buyer and supplier have agreed a payment date in writing, the limit is that date but never more than 45 days from acceptance. If there is no written agreement on the payment date, the limit is just 15 days from acceptance. So 15 days is the default and 45 days is the maximum you can reach only with a written contract.
Can a contract specify 90-day payment terms for an MSME?
No. Section 15 of the MSMED Act 2006 caps the payment period at 45 days from acceptance, and any contract term that goes beyond 45 days is void to that extent. A buyer and supplier can agree 30 or 45 days, but a 90-day clause is simply not enforceable past day 45. After that the MSME payment is legally overdue and interest starts to run, whatever the contract says.
When exactly does the 45-day clock start for an MSME payment?
The clock starts on the day of acceptance, not the invoice date or the delivery date. Acceptance is when the buyer actually accepts the goods or services. If the buyer raises a written objection about the goods within 15 days of delivery, acceptance runs from when that objection is resolved. If the buyer says nothing within 15 days, the law deems the goods accepted on the delivery date, and the 15 or 45 day period runs from there.
What is deemed acceptance under the MSMED Act?
Deemed acceptance means the law treats the goods or services as accepted even if the buyer never formally signed off. If the buyer does not object in writing within 15 days of delivery, acceptance is deemed to have happened on the delivery date. This stops a buyer from delaying the payment clock forever simply by refusing to confirm receipt.
Does the 45-day rule cover medium enterprises?
No. The delayed-payment protection under the MSMED Act, including the 45-day rule and the interest that follows, is available only to micro and small suppliers. Medium enterprises are outside this remedy. The supplier must also hold a valid Udyam registration and be a manufacturer or service provider to invoke the mechanism.
What if the buyer disputes the quality of the goods?
A genuine quality dispute can affect when acceptance happens, but the objection must be in writing and within 15 days of delivery. If it is, the acceptance date, and therefore the payment clock, moves to when the dispute is resolved. If the objection is late or an afterthought raised only to stall payment, it does not reset the clock, and the facilitation council can still treat the goods as accepted and award the principal plus interest.
Sources: Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, Section 15 (payment deadline) read with Section 2(b) (“appointed day” and “day of acceptance”) and Section 16 (interest); Section 2(n) (“supplier”, micro and small only); Udyam registration framework. RBI bank rate and effective interest figures are indicative and move with RBI notifications.
This is general educational information, current to mid-2026, and not legal or tax advice. Rates, forms and procedures change; verify the current position or consult a professional before acting on a specific matter.
AS | Founder, CFOmatrix | Finance Strategy & Equity Compliance CFOmatrix is a knowledge platform focused on how finance actually works inside growing companies. This guide draws on first-hand experience filing MSME delayed-payment cases, alongside the current statutory position under the MSMED Act. |