Facts checked on 27 October 2026. Published by MDG Services on 5 November 2026.
The rule in one table
This page is for a petrol pump whose regular customers, transporters, take diesel on credit. The rule is written for suppliers; whether a pump counts as one is doubtful, as below.
| Point | What it says | Source |
|---|---|---|
| Who it protects | A micro or small supplier with a valid Udyam registration | MSME Samadhaan portal |
| Payment time | By the agreed date, at most 45 days from acceptance of the fuel or service; 15 days if nothing was agreed in writing | MSMED Act 2006, s.15 |
| Late interest | Compound interest, with monthly rests, at three times the RBI bank rate | MSMED Act 2006, s.16 |
| Where to claim | The government's MSME ODR portal | MSME Samadhaan portal |
| The buyer's tax | If the buyer pays after the limit, its tax deduction for money owed to a micro or small supplier is allowed only once it is actually paid | Income-tax Act, s.43B(h) |
The Income-tax Act has been rewritten, so the section number may have changed. Ask a chartered accountant.
Who may not be covered
- Traders. In 2021 traders were allowed to register on Udyam "for the limited purpose of Priority Sector Lending" RBI circular, 7 Jul 2021. Some writers read this to mean traders are outside the payment rule. We found no court ruling or official statement either way. So a fuel station should not assume it is protected as a seller. Ask a lawyer.
- Registration date. Courts have differed on whether Udyam registration must come before the contract.
- The 2026 amendment. A 2026 amendment may change how claims are heard. Check the portal for the current steps before you file.
Who may gain most
A registered micro or small transporter who supplies services to a larger firm may gain most, if he qualifies: see transporters. If you are the buyer, this is the rule your own registered micro and small suppliers may rely on.
A Khata Kavach bill can carry a due day, and the Bills screen shows what is past due. That makes your own dates easy to check. Khata Kavach does not collect dues.
General information, not legal advice. For your own case, speak to an advocate or a chartered accountant.
Questions people ask
01What is Udyam registration?
It is the government registration for micro, small and medium enterprises. A supplier needs a valid one to use this rule MSME Samadhaan portal. Medium enterprises are outside the rule.
02How do I know if I count as micro or small?
The government sets size limits and has changed them. Check the current limits on the Udyam portal or with a chartered accountant before you rely on them.
03Does the interest follow the contract?
No. The rate in the Act applies whatever the contract says MSMED Act 2006, s.16. Again, this is for suppliers who qualify.
04Should I mention the MSME rule in a payment reminder?
Only if you hold Udyam registration and have checked that you qualify. Otherwise it may read as a threat you cannot back. Keep reminders polite: see reminder messages.
Related pages
About Khata Kavach (advertisement)
Khata Kavach is a shared credit book for petrol pumps, from MDG Services. The transporter asks before each truck fills, your nozzle man sees the limit before he fills, and both of you see every fill, payment and bill. It never lends or holds money.