Payment Recovery Kit · how it works
1Check your paperworkPO, invoice and delivery proof: what must be there to win a recovery case.
2Spot bad payers early17 warning signs to check before you give credit.
3Calculate your claimThe interest the law lets you charge on late payment: 3 times the RBI Bank Rate, compounded monthly.
About this tool
Under the MSMED Act, 2006, a buyer must pay a registered micro or small supplier by the agreed date, and never later than 45 days from acceptance of goods or services (Section 15). If they pay late, they owe compound interest at three times the RBI Bank Rate, with monthly rests (Section 16). The supplier can take the case to the MSE Facilitation Council (MSEFC) through the MSME Samadhaan portal (Section 18): conciliation first, then arbitration, and the council is meant to decide within 90 days.
Since FY 2023-24, Section 43B(h) of the Income-tax Act also stops the buyer from claiming the expense until they pay you, if they cross the 45-day limit. That is your strongest lever in a payment conversation.
The law helps only if your paperwork is right. Most recovery cases are lost on documents, not on facts.
Updated 30 Oct 2026Questions
Do I need Udyam registration before the supply?
Yes. Courts have held that the MSMED Act protects supplies made after the supplier was registered. Register on Udyam today if you have not, and mention the Udyam number on every invoice.
Does this apply to medium enterprises?
The delayed-payment protection under Sections 15 to 18 is for micro and small enterprises. Medium enterprises have to use normal civil remedies.
What is the RBI Bank Rate now?
The calculator starts at 5.75%, the Bank Rate after the October 2026 policy. Check rbi.org.in for the latest and change it if needed.
Is a cheque useful?
Yes. A post-dated cheque gives you a separate criminal remedy under Section 138 of the Negotiable Instruments Act if it bounces, in addition to the civil claim.
Want a CA to look at your numbers?
Book Guruship, a free 30-minute first conversation with the Badho MSME team, or message us on WhatsApp.
This tool is for planning and education. It is not legal, tax or investment advice, and figures depend on what you enter. For decisions, speak to a qualified professional. Rules referred to are as of the date shown; check the latest notifications before acting.
