How To Avoid Penalty For Non Payment Of Msme Fee

leadindia422
Jun 19, 2024
3 min read

One of the challenges or perils that a micro or small industry or corporation regularly encounters is MSME Payment Delay. MSME payment delays have an influence on cash flow, which has an impact on the entire business.

Business requirements might be a strong motivator for micro and small businesses to avoid being too tough on the recovery process. However, whether willingly or unwillingly, business establishments occasionally have to move forward and make difficult choices in order to pursue the legal route to pursue payment from the buyer of products or services.

Section 15: MSME ACT, 2006

Section 15 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 pertains to the delayed payment to micro and small enterprises.

Purpose- Section 15 aims to address the issue of delayed payments to micro and small enterprises (MSEs) by providing them with a mechanism to claim interest on delayed payments.
Applicability- This section applies to buyers who have purchased goods or availed services from micro and small enterprises as defined under the MSMED Act.
Time Limit for Payment- According to MSME Act Section 15, the purchaser of the products or services must pay the supplier of those goods or services on or before the specified date. The agreed date cannot be more than 45 days away. When there is no mutually agreed upon time, the supplier must receive a payment within a maximum of 15 days.
Liability for Interest- If the buyer fails to make the payment within the specified time period, they become liable to pay compound interest with monthly rests to the MSE. The interest rate will be three times the bank rate notified by the Reserve Bank of India or as specified under any other relevant law.
Initiating a Claim- The MSE is entitled to raise a written request or issue a demand draft or a similar instrument seeking the payment due, along with the applicable interest. The claim should include the interest amount calculated as per the provisions of the MSMED Act.
Resolution and Legal Action- If the buyer fails to make the payment despite the MSE's claim, the MSE can initiate legal proceedings by filing an application under the provisions of the MSMED Act before the Micro and Small Enterprises Facilitation Council or the concerned authority.

Ways to Avoid Penalty for Non Payment to MSME Fee

To avoid penalties for non-payment of fees under the Micro, Small and Medium Enterprises Development (MSMED) Act, you should take the following steps-

Understand the Fee Structure- Familiarize yourself with the specific fees and their payment terms as outlined under the MSMED Act. Be aware of the amount, frequency, and due dates of the fees.
Maintain a Payment Schedule- Create a system to track the payment due dates for MSME fees. Set reminders or use calendars to ensure timely payments. Stay organized and allocate funds in advance to meet the payment obligations.
Prioritize Fee Payments- Make the payment of MSME fees a priority within your financial planning. Allocate sufficient resources to ensure timely payment and avoid delays.
Prompt Fee Calculation and Payment- Calculate the fees accurately based on the provisions of the MSMED Act. Make the payment promptly within the specified timeframe to avoid penalties for late payment.
Retain Documentation- Keep records of fee payments and related documents, such as receipts or invoices. Maintaining proper documentation serves as proof of payment and can be crucial in case of any disputes or audit.
Seek Professional Guidance- Consult legal or financial professionals with expertise in MSME matters. They can provide guidance on fee requirements, assist with fee calculations, and ensure compliance with the provisions of the MSMED Act.
Stay Informed- Regularly update yourself with any amendments or changes to the fee structure or payment procedures under the MSMED Act. Stay in touch with official sources, government notifications, or consult relevant authorities to ensure compliance with the latest regulations.

You will need the help of lawyers to help you avoid penalty for non- payment to MSME fee. The lawyers will help you know the PF and ESI applicability under the MSME Act, 2006. The lawyers provide expert guidance on GST matters, ensuring timely payment of MSME fees and helping businesses avoid penalties for non-payment. The MSME lawyers in Delhi provide legal expertise and assistance to micro, small, and medium enterprises (MSMEs) in matters such as compliance, contract drafting, dispute resolution, and protection of their rights and interests.

You can talk to a lawyer at Lead India for any kind of legal advice. In India, free legal advice online is available. Along with free legal advice online you can ask questions to experts online free in Lead India.