If you sell to other businesses, you already know the feeling. The goods went out in August, the invoice was accepted, and in October the buyer's accounts team is still "processing". In August 2026 Parliament passed an amendment to the Micro, Small and Medium Enterprises Development Act, 2006, and the first part of it is now in force. So what actually changed?
The dates
- Passed: Rajya Sabha on 3 August 2026, Lok Sabha on 7 August 2026.
- Assent: 13 August 2026, as Act No. 16 of 2026 (BharatLaw).
- In force: the Ministry of MSME's notification S.O. 5575(E) of 12 October 2026 brought Sections 2 to 7, 11 and 13 to 17 of the amending Act into force on 15 October 2026, and Section 12 on 15 December 2026 (TeamLease RegTech).
Section numbers in an amending Act don't map neatly to the sections of the main Act, so if a dispute depends on one provision, ask your CA or lawyer to check the Gazette text. This summary was checked on 22 October 2026.
What stayed the same: 15 days, or 45 at most
The basic rule hasn't moved. A buyer must pay a registered micro or small supplier by the date agreed in writing, and that date can't be more than 45 days from acceptance. With no written agreement, the limit is 15 days. Pay late, and the buyer owes compound interest at three times the RBI bank rate under Section 16, with monthly rests (TaxGuru; L&T Finance).
There's also a tax angle your buyers care about. Since 1 April 2024, section 43B(h) of the Income-tax Act lets a buyer deduct a payment to a registered micro or small supplier only in the year it's actually paid, if it's paid after the MSMED limit (Tally). Larger buyers watch this at year-end, which is one reason March is a good month to send reminders.
What changed
As reported by BharatLaw:
- Disputes go to your Council. The Micro and Small Enterprises Facilitation Council for the supplier's registered address has jurisdiction, wherever the buyer sits.
- Timelines. Mediation within 90 days of the first appearance, referral to arbitration within 30 days if mediation fails, and an award within 90 days of pleadings closing. The Act doesn't say what happens if a Council misses these.
- PSU payments through TReDS. Central public sector enterprises must route payments to MSMEs through the Trade Receivables Discounting System and report on it each year.
- Registration. Thresholds move to notifications, and registration becomes voluntary and free on a national platform.
- Penalties. Some offences move from criminal fines to civil penalties, starting with a warning.
What to do this month
- Check your Udyam registration is current and shows the right category. The protection depends on it.
- Put the payment term on every invoice and PO, in days, and get it accepted in writing. "Payment within 30 days of acceptance" is clearer than "as per terms".
- Write down the acceptance date for every delivery. The 15 and 45 day clocks start there.
- Send reminders before the due date, not after. A polite note three days before, on the day, and a week after fixes most late payments. Our guide to payment reminders on WhatsApp and calls has the wording.
- Escalate in writing when an invoice crosses 45 days. Mention the MSMED Act and the interest clause calmly. Many buyers pay at this point.
- File on the MSME Samadhaan portal if they don't. With the new timelines, a case should not sit for years, though how fast your state's Council moves in practice is still to be seen.
This is a summary for small business owners, not legal advice.
Get the numbers right
Our free GST calculator works out tax-inclusive and exclusive amounts for your invoices, so the figure in your reminder matches the bill. If you'd like overdue invoices followed up by a polite AI caller, on schedule and in Hindi or English, ask for a callback.