The short version
- If you're registered on Udyam as a micro or small enterprise, the MSMED Act gives the buyer 45 days to pay you — 15 if there's no written agreement.
- Miss that, and the brand owes compound interest at three times the RBI bank rate, which they cannot claim as a tax deduction.
- Worse for them: the entire payment stops being tax-deductible in the year they booked it.
- None of this applies unless you were registered and your Udyam number was on the invoice. Registration is free and takes about twenty minutes.
Here is the conversation almost every creator in India has had. The deal was signed in June. The reel went live in July. It's now September, the brand's marketing manager has stopped replying, and their accounts team says it's "in process."
You send another follow-up. You soften it, because you want the next campaign too. And nothing happens, because from the brand's side nothing is forcing anything to happen. Your invoice sits in a queue with a hundred others, and the ones that get paid are the ones that are noisy or the ones that are expensive to ignore.
You can't easily make yourself noisier without damaging the relationship. But you can make yourself expensive to ignore, and it doesn't require a lawyer.
The rule nobody tells creators about
The Micro, Small and Medium Enterprises Development Act, 2006 — the MSMED Act — sets a hard limit on how long a buyer can take to pay a registered micro or small enterprise.
Section 15 says payment is due on the date agreed in writing, and that agreed date cannot be more than 45 days from the day your work was accepted. If there is no written agreement at all, the limit drops to 15 days.
The 45-day ceiling is absolute. A contract that says "Net 90" doesn't buy the brand ninety days; the excess is simply not enforceable for this purpose. This surprises people, including some brand finance teams.
Almost certainly, yes. Since April 2025 a micro enterprise is one with investment up to ₹2.5 crore and turnover up to ₹10 crore. Small goes up to ₹25 crore and ₹100 crore. Unless you're running a genuinely large operation, you're comfortably inside micro — and the classification no longer distinguishes between manufacturing and services, so content and creative work qualify.
What it actually costs the brand
This is the part that changes the tone of your follow-up, because there are two separate consequences and the second one is much bigger than the first.
| What happens | The consequence for the brand |
|---|---|
| Interest on the delay | Compound interest with monthly rests, at three times the RBI's notified bank rate, running from the day after the deadline. Crucially, this interest is not deductible for them under income tax — so it's a real cost, not a shifted one. |
| Loss of the tax deduction | If they haven't paid you within the MSMED deadline, the expense cannot be deducted in the year they booked it. It's added back to their taxable income and only becomes deductible in the year they actually pay. On a ₹1,20,000 invoice at a 30% rate, that's roughly ₹36,000 of tax pulled forward — for delaying a payment they owed anyway. |
| Reporting exposure | Companies have to disclose outstanding dues to micro and small enterprises in a half-yearly filing and in their accounts. Overdue MSME balances are visible to their auditor, not buried in a spreadsheet. |
This rule was introduced as Section 43B(h) of the Income-tax Act, 1961 and applies from FY 2023-24 onwards. Under the Income-tax Act, 2025, which came into force in April this year, the same rule continues as Section 37(2)(g). The section number changed; the consequence did not.
So when a brand's accounts team pushes your invoice to next quarter, they are not making a cash-flow decision. They are making a tax decision, and usually nobody has told them that.
The catch that costs creators this protection
All of the above depends on you being a registered micro or small enterprise. Not eligible to be one. Registered.
Registration happens on the Udyam portal, it is free, and it takes about twenty minutes with your PAN and Aadhaar. You get a Udyam Registration Number. That number then has to appear on the invoice itself — because that's how the brand's finance team knows, and it's what your claim rests on later.
If you register today, you cannot un-send the invoices you raised last year without a Udyam number on them. Every month you delay is another set of invoices with no protection attached. If you take one thing from this article, register this week — even if you never use the rest of it.
Two things that trip people up
- The buyer doesn't need to be registered. The obligation attaches to them because you are a registered micro or small enterprise. A brand that isn't an MSME still owes you the 45 days.
- Traders are excluded, service providers are not. This has caused confusion, but it doesn't affect creators — you're supplying a service, which is squarely covered.
The follow-up that actually moves things
Once the number is on your invoice, your reminder stops being a request and starts being information the other side needs. Notice what this email does not do: it doesn't threaten, it doesn't accuse, and it doesn't mention lawyers. It just says what is true.
Hello,
Invoice [number] for ₹[amount], for work accepted on [date], is unpaid on day 60.
I'm registered as a micro enterprise under the MSMED Act and my Udyam Registration Number appears on the invoice, so payment was due within 45 days of acceptance.
Beyond that date, interest accrues at three times the RBI bank rate and is not deductible, and the expense itself may be disallowed in your computation for the year until payment is actually made.
I'd much rather close this quietly. Could you confirm a payment date this week?
[Your name]
Send it to the accounts or accounts-payable address, not only to your marketing contact. Your marketing contact wants to pay you and can't; the person who can pay you has never heard of you. Keep both on the thread.
If they still don't pay
Almost all of these end here. For the ones that don't, there is a formal route that is deliberately cheap and doesn't require you to hire anyone: the MSME Samadhaan portal, run by the Ministry of MSME, where a registered enterprise can file a delayed-payment application against a buyer.
The case goes to the Micro and Small Enterprise Facilitation Council in the relevant state, which attempts conciliation first and can then move to arbitration. It is not instant. But filing itself changes the temperature, because the complaint is visible and the brand now has an active matter rather than an ignored email.
Be deliberate about when you use it. A brand you want to work with again for ₹80,000 is a different decision from an agency that owes you ₹6 lakh and has stopped answering. The point of having the option is that you get to choose — which is not where most creators are today.
What this doesn't fix
Honesty matters more than a clean ending, so: this rule does not make brands pay fast. Ninety-day cycles are normal in Indian advertising and plenty of large companies will still take their time. What it does is give you a real, specific, unemotional reason for them to move your invoice up the queue instead of down it.
It also does nothing for the invoice you sent last month without the number on it. That's the whole argument for registering before you need it.
Do this week
- Register on the Udyam portal. Free, about twenty minutes, PAN and Aadhaar.
- Add your Udyam Registration Number to your invoice template, permanently.
- Put the acceptance date on every invoice — that's the date the clock runs from, not the date you sent it.
- List every invoice currently outstanding and mark which ones went out with the number on them. Those are the ones you can act on now.
This article is general information for Indian creators, not advice on your specific situation. Thresholds and rates change, and the right move depends on your contracts and your relationship with the brand. If you'd like us to look at your actual receivables, tell us about your business.