Date:May 26, 2023
MSME invoice payment
MSME Law Notes by NB Associates
Under the Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006, there are certain provisions related to the MSME invoice payment or payment of invoices by the buyer to the micro or small supplier.
These provisions are aimed at ensuring timely payment and addressing delayed payments, which can be a significant challenge for MSMEs.
Here’s a brief overview:
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According to Section 15 of the MSMED Act, the buyer is required to make payment to the MSME supplier for the goods or services rendered.
The period for making such payment should not exceed 45 days from the date of acceptance of the goods or services.
If the buyer fails to make payment within the stipulated period of 45 days, the buyer is liable to pay compound interest to the supplier.
The interest rate is three times the prevailing bank rate notified by the Reserve Bank of India (RBI) in this regard.
Read here – RBI Bank rate for MSME notified from time to time.
The Act provides for the establishment of Micro and Small Enterprises Facilitation Councils (MSEFCs) at the central and state levels. The MSEFCs are responsible for facilitating the resolution of disputes related to delayed payments.
If there is a delay in payment, the MSME supplier can approach the MSEFC for redressal.
The MSME supplier can file a complaint regarding the delayed payment with the MSEFC within a period of three years from the date of delivery of the goods or services.
The MSEFC will then examine the matter and pass appropriate orders for the recovery of the principal amount along with interest.
It is important to note that the specific procedures and mechanisms for resolving disputes related to payment may vary depending on the jurisdiction and the rules set by the respective MSEFCs.
Therefore, it is advisable to consult the relevant authorities or legal professionals to understand the specific provisions and processes applicable in your region.