Delayed payments to MSMEs: How to file online complaint against govt departments, PSUs, other buyers

Credit and finance for MSMEs: Failure to receive payments timely chokes their working capital cycle and hurt competitiveness in domestic and international markets.

Written by MSME Desk

April 13, 2023 18:57 IST

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Payments due beyond 45 days are treated as delayed.

Credit and finance for MSMEs: Struggling to recover dues from their public or private buyers is arguably the biggest challenge after credit accessibility micro and small enterprises (MSEs) face in their growth journey. A number of MSEs, which cater to a minimum of 20 per cent of the total annual purchases by central ministries, departments or public sector units, don’t receive payments within 45 days of acceptance of goods by buyers. Failure to receive payments timely chokes their working capital cycle and hurt competitiveness in domestic and international markets. Here’s how MSMEs can apply online to recover their dues:

How to recover the dues unpaid by the buyer?

To support the recovery of dues by MSMEs, the state governments have set up MSE Facilitation Councils (MSEFCs). The buyer, who fails to pay MSEs within 45 days, is liable to pay compound interest with the monthly rests to the supplier on the amount at three times the bank rate notified by the Reserve Bank of India (RBI) as per Section 16 of the Micro, Small and Medium Enterprise Development (MSMED) Act.

Also read: Over Rs 2,600 crore in MSME payment yet to be cleared by central PSUs, ministries, departments: Govt data

What’s the process to file an application against delayed payment online?

Visit the delayed payment filing and monitoring portal by the MSME ministry samadhaan.msme.gov.in
Click on the ‘Case Filing for Entrepreneur/MSE Units’ tab
Select the type of MSME registration — Udyog Aadhaar Number or Udyam Registration Number
Enter the registration number, mobile number as in the registration certificate and verification code
Click on ‘Validate Udyog Aadhaar’ or ‘Validate Udyam Registration’ as per your registration type
Enter the OTP shared on the registered mobile number or email address for verification
Upload PDF of the required documents (each document of 2MB size or less) such as work orders of the respondent (buyer) and invoices generated by you against those work orders
- A work order is a formal document describing details of work undertaken or order fulfilled
Click on the ‘Submit’ button to complete the application process
An acknowledgement will be sent to you along with the address of the concerned MSEFC of your state

Can I file an application at the council?

Yes, the application can also be filed physically at the MSEFC. Every application filed with the council is visible to the council after being verified post 15 days of filing and then converted into a case for recovery or rejection.

Is Udyog Aadhaar or Udyam registration number mandatory to file the application?

Yes, the unit needs to register itself with the MSME ministry before filing for delayed payment with the council.

How to get Udyam registration online?

You can register your enterprise on the udyamregistration.gov.in website. Here’s the process.

Can the MSME ministry intervene in the case with the council?

No. Only the council is empowered as per MSMED Act, 2006 to take decisions regarding its reference made with them. Hence, the ministry cannot interfere with the judicial functioning of an MSEFC.

Also read: Video: How MSME dues pending with govt departments can be cleared without delay

How many days it would take to settle the delayed payment case at the council?

Every reference made to MSEFC has to be decided within a period of 90 days from the date of making such a reference as per provisions laid in the Act, according to the information on the Samadhaan portal.

The budget announced amending section 43B of the Income Tax Act to solve the delayed payment crisis. How does that work?

According to the announcement, buyers will be able to claim a deduction for payments made to MSMEs only after they actually make the payment to their MSME sellers otherwise they would be liable to pay income tax on it. The move will aim at forcing buyers to pay MSMEs on time.