what is interest rate of payment delay to msme supplier.
its calculate on basics price or basics plus tax value.
#IL&FS
#DHFL
#ESSAR
#Jet Airways
#SEBI
#RBI
#NCLT
#IBC
#NSE
Plain Truth
In your interest.
Online Personal Finance Magazine

Unbiased Research
Hard Facts
Clear Analysis
No beating about the bush.
Know More
Subscribe
Already subscribed ? Log in
COMPANIES & SECTORS
Economy & Nation
Will the New Rules on Delayed Payment to MSMEs Have Any Impact?
Simran Jalan15 November 2018 1

On 2 November 2018, the Union government issued a notification under the Micro, Small and Medium Enterprises (MSMEs) Development Act, 2006 ostensibly to ensure timely and smooth flow of credit to MSMEs and minimise sickness among them.
Get Moneylife's
Top Stories by Email
SUBSCRIBE
The Act strengthens the provisions relating to delayed payments to the MSMEs by specifying the maximum credit period and higher penal interest if delayed beyond that period. If there is a delay in payment, companies will have to mention the reason for such delay in the statement of accounts.
The question is whether such notifications will actually foster the growth of the MSME sector when there are other prevailing laws to curb its growth. Let us understand the current provisions relating to delayed payments in
Liability of Buyer to Make Payment
Section 15 of the Act states that where the supplier supplies goods or renders any services to any buyer, then the buyer shall make payment on or before the date mentioned in the agreement and, if there is no agreement, then before the appointed date. The proviso to this Section states that the period of credit given by the seller shall not exceed 45 days from the day of acceptance or from the date of deemed acceptance. To understand the provision of this section, one must take note of the following definitions:
“supplier” means a micro or small enterprise, which has filed a memorandum with the specified authority and has obtained the Unique Identification Number (UIN) for MSMEs.
“buyer” means any person who buys any goods or receives any services from the suppliers for a consideration.
“appointed date” means the day following immediately after the expiry of the period of fifteen days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier.
Explanation—For the purposes of this clause,—
(i) “the day of acceptance” means,—
(a) the day of the actual delivery of goods or the rendering of services; or
(b) where any objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day on which such objection is removed by the supplier;
(ii) “the day of deemed acceptance” means, where no objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day of the actual delivery of goods or the rendering of services;
Therefore, Section 15 of the Act clearly states that the payment to the suppliers shall be made within the date specified in the agreement, and in case there is no agreement then before the appointed date. However, a maximum period that is allowed under the Act is a period of 45 days from the date of delivery of goods/services.
as per Section 16 of the Act, if a buyer fails to make the payment within the stipulated date, it will be liable to pay compound interest with monthly rests on the outstanding amount additionally. The interest shall be calculated from the appointed date at three times of the bank rate notified by the RBI. However, in case of any dispute regarding the payment of principal/interest between the supplier and the borrower, reference shall have to be made to the Micro and Small Enterprises Facilitation Council (MSEFC), constituted by the respective state governments.
CAclubindia
