If your supplier is a registered Micro or Small enterprise, the law changes how quickly you must pay them — and getting it wrong can cost you compound interest. Here's what Udyam / MSME registration means and why verifying it matters for buyers, not just suppliers.
What is Udyam / MSME?
Udyam is the Government of India's online registration for MSMEs (Micro, Small and Medium Enterprises). A registered enterprise gets a Udyam Registration Number (e.g. UDYAM-TN-02-0292600) and a classification — Micro, Small or Medium — based on investment and turnover.
What the Udyam record reveals
- The Udyam number and enterprise type (Micro / Small / Medium).
- The registered enterprise name and organisation type.
- Major activity (manufacturing or services) and NIC activity codes.
- Registration / commencement dates and the registered business address.
The 45-day payment rule (Section 15, MSMED Act)
Under the MSMED Act, when you buy from a registered Micro or Small enterprise, you must pay within the agreed date — and in any case within 45 days of accepting the goods or services. Miss it and you owe compound interest at three times the RBI bank rate on the overdue amount. Since FY2023-24, payments to MSEs outstanding beyond the limit can also be disallowed as a tax deduction until actually paid (Section 43B(h) of the Income-Tax Act) — a real cash-flow and tax consequence for buyers.
Why buyers should verify it
You can only manage the 45-day obligation if you know a supplier is a registered Micro/Small enterprise. Verifying Udyam status up front lets you set the right payment terms, budget for the deadline, and avoid surprise interest or disallowed deductions at year-end.
How to verify Udyam status
Confirm the supplier's Udyam number against the official MSME registry and check the enterprise type. SupplierProof does this inside every Deep report — showing the Udyam number, Micro/Small/Medium classification, activity and registration details — so you instantly know whether the 45-day rule applies. For the full vendor picture, see how to verify a supplier in India.
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