MSME Delayed Payments: Only 20% of Complaints Resolved, Government Data Reveals

Since October 2017, micro and small enterprises (MSEs) have filed over 2.12 lakh complaints involving a total of Rs 47,147 crore against delayed payments by their buyers, according to the government’s MSME Samadhaan portal. However, only 20% of these complaints have been resolved so far. As of this week, MSE Facilitation Councils (MSEFCs) across India have disposed of 42,791 cases involving Rs 7,053 crore.

The MSME Samadhaan portal, launched in 2017 to address payment delays, also shows that 19,787 applications worth Rs 2,515 crore were mutually settled between sellers and buyers. Additionally, 59,318 applications amounting to Rs 11,577 crore were rejected by MSEFCs. Currently, 40,354 applications representing Rs 13,064 crore are still under consideration.

Among the complaints filed, 53,755 were against proprietorship units that delayed payments to MSEs, while 17,084 complaints targeted other MSME units. Other complaints were filed against various entities: 11,922 against state governments, 7,059 against central public sector units (PSUs), 2,838 against central government departments, 3,740 against state PSUs, and 1,457 against central ministries, among others.

In July 2024, the government revised the MSME form 1, requiring buyers to provide more detailed information on delayed payments, including amounts paid within 45 days through platforms like TReDS or other payment modes, outstanding amounts, and reasons for delays. Buyers must submit this form by October 31 for the April to September period and by April 30 for the October to March period annually.

To further address payment delays, the government amended Section 43B of the Income Tax Act in April. Under clause (h), buyers can only claim expenses on invoices from MSEs as deductible if payments are made within 45 days (or 15 days if no agreement exists) in the year of payment, rather than the year the expense was incurred.

Disclaimer: This article is for informational purposes only. While efforts have been made to ensure accuracy, readers are encouraged to verify information and seek professional advice for specific legal, financial, or business matters related to MSME regulations and compliance.