An MSMED Act delayed payment notice is a demand by a registered micro or small supplier to a buyer that has not paid within the time allowed by Section 15 (the agreed period, never more than 45 days from acceptance, or 15 days if nothing was agreed). It claims the principal and compound interest under Section 16 at three times the RBI bank rate with monthly rests, and states that a reference will be filed under Section 18.
The notice format
NOTICE FOR DELAYED PAYMENT UNDER SECTIONS 15, 16 AND 17 OF THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006 From: [SUPPLIER NAME] [ADDRESS] Udyam Registration No.: [UDYAM NO.] ([MICRO / SMALL] enterprise, [MANUFACTURING / SERVICES]) GSTIN: [SUPPLIER GSTIN] Date: [DATE] BY REGISTERED POST AD / SPEED POST AND EMAIL To: [BUYER LEGAL NAME] [REGISTERED ADDRESS] GSTIN: [BUYER GSTIN] Kind attention: [DIRECTOR / CFO NAME] Subject: Demand for payment of Rs [TOTAL] (principal and interest) under the MSMED Act, 2006 Sir/Madam, 1. We are a [micro / small] enterprise registered under Udyam Registration No. [UDYAM NO.] since [REGISTRATION DATE]. 2. At your request we supplied [GOODS / SERVICES] under [PO NO. AND DATE / AGREEMENT DATED ...]. The supplies were accepted by you on the dates shown below and no objection was raised: Invoice no. | Invoice date | Date of acceptance | Amount (Rs) | Due date [INVOICE NO.] | [DATE] | [ACCEPTANCE DATE] | [AMOUNT] | [DUE DATE] [INVOICE NO.] | [DATE] | [ACCEPTANCE DATE] | [AMOUNT] | [DUE DATE] Less payments received: Rs [AMOUNT] Principal outstanding: Rs [PRINCIPAL] 3. Under Section 15 of the MSMED Act, you were required to pay each invoice on or before the date agreed in writing, which cannot exceed 45 days from the day of acceptance [or: in the absence of any agreement, within 15 days of acceptance]. You have failed to do so. 4. Under Section 16, you are liable to pay compound interest with monthly rests on the unpaid amount, from the appointed day or the agreed date, at three times the bank rate notified by the Reserve Bank of India, notwithstanding anything in any agreement. Interest computed up to [DATE] amounts to Rs [INTEREST] (computation enclosed) and continues to accrue. 5. Under Section 17, you are liable to pay the principal together with this interest. 6. We call upon you to pay Rs [TOTAL] (principal Rs [PRINCIPAL] plus interest Rs [INTEREST] up to [DATE]) within [15] days of receipt of this notice to: A/c name [ACCOUNT NAME], A/c no. [ACCOUNT NO.], IFSC [IFSC], [BANK, BRANCH]. 7. If payment is not received within this period, we will file a reference under Section 18 of the Act before the Micro and Small Enterprises Facilitation Council through the MSME Samadhaan portal, and claim the full amount with interest until payment, at your cost. 8. Please also note that amounts payable to micro and small enterprises are to be disclosed under Section 22 of the Act, and that under Section 43B(h) of the Income-tax Act, 1961, such amounts unpaid beyond the period in Section 15 may not be allowed as a deduction in the year they are not paid. Yours faithfully, [NAME] [DESIGNATION] For [SUPPLIER NAME] Enclosures: Udyam certificate; invoices; delivery and acceptance proof; statement of account; interest computation
How to fill it
- Confirm your Udyam certificate shows you as micro or small (not medium) and check the registration date. Courts have held that the protection generally applies to supplies made after registration, so list only those invoices or take advice on older ones.
- Fill the date of acceptance for each invoice, usually the GRN or delivery date. The 45 days run from acceptance, not from the invoice date.
- Use the due date your PO or agreement fixes, capped at 45 days. If there is no written agreement, use 15 days from acceptance.
- Compute interest with the MSME interest calculator using the RBI bank rate for the period, and attach the working.
- Check the buyer's legal name and GSTIN on FundRaksha Trust so the reference later names the right entity.
Common mistakes
- Claiming as a medium enterprise or a trader without checking eligibility. Section 15 to 18 rights are for micro and small suppliers; see trader eligibility.
- Running interest from the invoice date instead of the due date fixed by Section 15.
- Using simple interest or a lower contractual rate. Section 16 overrides any agreement on the rate.
- Relying only on this notice. The notice is not compulsory before a Section 18 reference, but it strengthens the record and often produces payment.
What happens next
If the buyer pays principal but not interest, you can still claim the interest before the Council. If nothing comes within the notice period, file the reference on MSME Samadhaan. The Council first tries conciliation and, if that fails, takes up arbitration itself or refers it; the Act targets a decision within 90 days of the reference, though in practice timelines vary by state. A buyer that wants to challenge an award must first deposit 75% of the awarded amount.
FundRaksha advocates file and argue Section 18 references across states; see MSME Samadhaan filing. The fee is 30% of recovery and nothing upfront.
Last reviewed: 2026-10-20. Information for Indian businesses; not legal advice.