Payment Terms Legislation In India

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India

Please scroll down for a summary of payment terms in India and the various industries across which payment term legislation appears.

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Industries Laws Codes Notes Interest Rate
Government
Comm_terms_law
Construction
Manufacturing
Retail_agriculture
Services

Laws

The Micro, Small and Medium Enterprises Development (MSMED) Act 2006 limits payment terms to SMEs to 45 days and has penalties including fines and imprisonment. Firms dealing with SMEDs are required to report to the government on the amount and reasons for late payment.

Comm_terms_law Construction Manufacturing Retail_agriculture Services
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Notes

The Indian government’s e-marketplace for government procurement currently requires payment of suppliers within 10 days.

Government
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Interest Rate

The default interest rate for late payments to small and medium sized companies under the MSMED Act 2006 is three times the bank rate of the Reserve Bank of India.

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