Chapter V - Delayed Payments to Micro and Small Enterprises
Section 22
Section 22: disclose unpaid amounts and interest
A buyer that must get its annual accounts audited under any law has to give five additional pieces of information in its annual statement of accounts about unpaid amounts to suppliers and interest under the Act.
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Need advice on Section 22?
This article is for general information. Refer to the Micro, Small and Medium Enterprises Development Act, 2006 official text for the official provisions. If you need professional advice for your situation, contact Bizeneed.
Statutory text
Bare law
Where any buyer is required to get his annual accounts audited under any law for the time being in force, such buyer shall furnish the following additional information in his annual statement of accounts, namely:—
(i) the principal amount and the interest due thereon (to be shown separately) remaining unpaid to any supplier as at the end of each accounting year;
(ii) the amount of interest paid by the buyer in terms of section 16, along with the amount of the payment made to the supplier beyond the appointed day during each accounting year;
(iii) the amount of interest due and payable for the period of delay in making payment (which have been paid but beyond the appointed day during the year) but without adding the interest specified under this Act;
(iv) the amount of interest accrued and remaining unpaid at the end of each accounting year; and
(v) the amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues as above are actually paid to the small enterprise, for the purpose of disallowance as a deductible expenditure under section 23.
Introduction
Section 22 is an accounts disclosure duty tied to the delayed-payment chapter. It applies where the buyer is required by any law to have its annual accounts audited, and it asks for several separate figures rather than one combined 'MSME dues' amount.
Key takeaways
Applies to buyers with a statutory audit
The duty falls on a buyer that is required by law to get its annual accounts audited.
Five separate items
Year-end unpaid principal and interest (shown separately), interest paid and late payments made, interest for the delay period, accrued unpaid interest, and further interest due in later years.
Contravention is an offence
Under section 27(2) as it currently stands, a buyer who contravenes section 22 is punishable with a fine of not less than ten thousand rupees.
Identify supplier balances that count
At the year-end, reconcile ledgers for suppliers that meet the Act's definition in section 2(n). Work out which balances are still outstanding and whether section 16 interest has arisen on them.
Prepare each disclosure separately
Clause (i) needs unpaid principal and interest at the year-end, shown separately. Clause (ii) needs section 16 interest paid together with payments made after the appointed day. Clause (iii) needs interest due for the delay on payments made late during the year. Clause (iv) needs accrued interest still unpaid at the year-end. Clause (v) needs further interest that remains due in later years until actually paid.
Link to interest and tax working papers
Tie the figures to the section 16 working (three times the bank rate, monthly rests). Clause (v) refers to disallowance under section 23, which deals with the income-tax treatment of interest under the Act; have the tax position reviewed separately.
Status of the 2026 amendment
The Micro, Small and Medium Enterprises Development (Amendment) Act, 2026 (No. 16 of 2026) received the President's assent on 13 August 2026. Under its section 1(2) it comes into force on dates the Central Government notifies in the Official Gazette, and different provisions can start on different dates. When this page was checked on 11 October 2026, we had not found a commencement notification, so this page describes the law as it stood before that Act. The 2026 Act does not change the wording of section 22. Once in force, it adds a separate section 22A on disclosure of invoices settled through TReDS by notified public sector enterprises and other bodies, and it replaces section 27 so that a section 22 contravention leads to a warning first, then a penalty, then a fine. Until those provisions commence, section 27(2) in its original form applies. Check the Gazette for a commencement notification before relying on any 2026 change.
Official sources
Practical checklist
Do
- Get the list of micro and small suppliers from procurement and accounts payable.
- Reconcile year-end principal and interest separately.
- Keep invoice, acceptance and payment dates behind each figure.
- Have the disclosure reviewed with the annual accounts.
Avoid
- Do not merge the five statutory items into one number.
- Do not treat section 22A as in force before its commencement is notified.
Frequently asked questions
Who has to make the section 22 disclosure?
A buyer that is required to get its annual accounts audited under any law for the time being in force.
What happens if a buyer does not comply?
Under section 27(2) as it currently stands, a buyer who contravenes section 22 is punishable with a fine of not less than ten thousand rupees. The 2026 Amendment Act replaces this with a graded scheme, but only once that change is notified into force.
Need help applying this provision to your situation?
Contact BizeneedLast updated 11 October 2026