Urgent! interest on msme

8129 views 11 replies

Prabhaharan

Internal Controller

57 Points Joined September 2008

Interest on Micro, Small and Medium enterprises (MSME) to be provided in books for delayed payments beyond 45 days (Max credit period as per MSMED Act 2006).

I come across the situation, where the company is provided the interest for MSME creditors where ever the payment is made beyond 45 days. Since the PO terms is 60 days, all payments made to supplier exceeds the limit of 45 days. Last 3 years they provided the interest, the accumulation is about 60 lakhs. The suppliers is also not demanding for interest, since it is before the due date for them.

In this context, I have a questions

1. If the PO terms says 60 days as the credit period, whether interest should be provided in books?

2. The outstanding as on year end is NIL to the MSME creditors, still interest to be provided?

3. If interest is provided in books, when it should be paid to the creditors? Is there any time limit for payment.

4. The contention of the company is not going to pay to the supplier as per PO terms.

Please advice.

Thanks

Replies (11)

DDDDDD

176 Points Joined September 2010

Dear Prabhaharan,

1. As per MSME act, 2006. Payment should be made to MSME parties within the date mentioned in the PO or within 45 days which ever is earlier. Thus even if the credit period is greater than 60 days, payment should be made within 45 days.

2. The outstanding amount payable to the MSME parties is just a sort of disclosure requirement as per Section 22 of MSME Act. It as nothing to do with the interest payment. Interest on delayed payment should be computed for every case where the payment is made after 45 days (from the date of bill).

3. There is no time limit for making the payment. If the interest is not paid then the seller can approach MICRO AND SMALL FACILITATION COUNCIL.

4. The contention of the company is not correct. Bcoz it is their statutory obligation to make the payment.

saurendra rautray

Advocate

85 Points Joined April 2013

Hi,

The time limit for payment is 3 years from the date it accrued.

Regards

Saurendra Rautray

Rautray&Co

www.rautray.com

09437008255

MOHIT KUMAR JAIN

CFO

68 Points Joined January 2010

If MSMED vendor -

1. Is not demanding interrest on delayed payment.

2. Has provided his statement of account for balance confirmation without charging interest on delayed payment received by him.

Is the buyer still under obligation to provide for interest?

saurendra rautray

Advocate

85 Points Joined April 2013

Hi,

EVen if he hasnt claimed yet he can still claim the same before the council by filing a claim peition including interest as per the MSMED Act 2006.

Regards

Saurendra Rautray

Rautray & Co

New Delhi

www.rautray.com

09437008255

vaibhav goyal

partner

21 Points Joined October 2016

Hi Mr Saurendra

Is there any time limit of filing our claim for Interest on Delayed Payment to MSME As per the provision rules ? We a MSME supplying to govt departments. In 2013 , our payments from Our Buyer (Govt Department) on regular basis was being delayed to more that 80-90 days cycle. But we have not claimed any interest yet fearing that it might spoil our long term relations with the buyer !! Thanks iin Advance

Vaibhav

saurendra rautray

Advocate

85 Points Joined April 2013

Hi,

As what you have provided me with the information you can still file a case under MSMED act for inteerst only but subject to limitation. The agreement between the buyer and supplier for what ever days if its beyond 45 days the act will prevail over such agreement. sorry for the dealy as i was out.If any further queries kindly contact me at 09437008255.

regards saurendra

www,rautray.com

Ritesh Jain

CA CS in Job

675 Points Joined September 2008

Can one have retention clause of 10% in MSME contract i.e 90% payment wiull be made and 10% liability will be accounted before 45 days but that 10% will be paid after achiveing certain milestone or completion of warranty period etc.

Regards,

Ritesh

Yogesh Chandola

Accountant

22 Points Joined March 2017

Sir,

What is the formula of Intt. charges,

bill date 07-Oct-2016

BILL. NO- 1100

bill amount 80,701.00

due on 05-Jan-2017

over due as on 30.08.2018 is 602 day.

what is the Inttest come out. Please Please help me , i m new for msme.

Y.v. Sandeep

4 Points Joined October 2015

Hello Mr.saurendra rautray

I have one quick question on MSME payment terms + Incoterm:-

In our organization we follow payment terms for MSME vendors as 45days from the date of acceptance of materials and incoterm may be ex-works or FOR.

Issue(i):- In case Incoterm is exworks then the seller liability ends at the ex-works location and buyer obligation raises then in such case how the 45days to be calculated like how the day of actual delivery of goods is to be considered. Whether from the day of seller risk and rewards transferred to buyer or from the day the actual receipt of goods at the mill(GR booked)

Since act is silent about actual delivery meaning can I assume it as the actual delivery at my factory gate irrespective of incoterms.

Issue(ii):- In case of advance payment terms we are facing an issue that material is received at gate and then advance is released then is it an non-compliance to act(since advance means payment to be made before actual receipt of goods to the supplier)

Can you please clarify the doubts

Thanks in advance.