Sections 1 and 32 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 1 gives the Act its name and lets the Central Government bring it into force by notification, in stages if it wishes. Section 32, the last section, repeals the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 and saves everything done under it. Read together, the first and last sections tell you when the Act started to apply and what it replaced.
The Micro, Small and Medium Enterprises Development Act, 2006 is the short title. It comes into force on the date the Central Government appoints by notification, and different dates may be appointed for different provisions. Section 32 repeals the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (32 of 1993). Anything done or any action taken under the repealed Act is deemed to have been done or taken under the corresponding provisions of the 2006 Act.
What section 1 says
Section 1 has two sub-sections.
| Sub-section | What it provides |
|---|---|
| (1) | The Act may be called the Micro, Small and Medium Enterprises Development Act, 2006. |
| (2) | It comes into force on such date as the Central Government may, by notification, appoint. Different dates may be appointed for different provisions. A reference in any provision to the commencement of the Act is read as a reference to the coming into force of that provision. |
The text of the Act in our source does not itself state a commencement date. The date is whatever the Central Government's commencement notification says, so if you need the exact date for a particular provision, check that notification rather than relying on the Act's text. If the date decides a claim, a legal consultation can trace the right notification for you.
Why "different dates for different provisions" matters
Sub-section (2) is a standard device. A big Act often needs its machinery to be ready before each part can work. For this Act, parts such as the National Board (section 3 starts "with effect from such date as the Central Government may, by notification, appoint") and the State Facilitation Councils (section 20, established by State notification) need separate steps. The last limb of sub-section (2) says any reference to "the commencement of this Act" in a provision means the commencement of that provision. A practical effect is that a time limit counted from commencement, such as the 180 days in the proviso to section 8(1) or the one year in section 25, runs from the date that provision came into force, not from some single Act-wide date.
If you are reading the Act in a dispute about an old transaction, the first question is always which provision applied on the date of the supply, and that depends on the commencement notification.
What section 32 says
Section 32 is the repeal and savings clause.
| Sub-section | What it provides |
|---|---|
| (1) | The Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (32 of 1993) is repealed. |
| (2) | Notwithstanding the repeal, anything done or any action taken under the repealed Act is deemed to have been done or taken under the corresponding provisions of the 2006 Act. |
What the 1993 Act was
The 1993 Act dealt with interest on delayed payments owed to small scale and ancillary industrial undertakings. The 2006 Act carries that idea forward in Chapter V (sections 15 to 24), but widens and sharpens it. The definition of "supplier" in section 2(n) covers micro and small enterprises that have filed a memorandum, the payment date rules are in section 15, compound interest with monthly rests at three times the bank rate notified by the Reserve Bank is in section 16, and a dispute route through the Facilitation Council is in section 18. For a fuller history of how the two Acts compare, see our guide on interest on delayed payments under the 1993 Act and the MSMED Act.
The savings clause in practice
Sub-section (2) protects continuity. If a small scale unit had already claimed interest or started a proceeding under the 1993 Act, the repeal does not wipe that out. The step is treated as if it had been taken under the "corresponding provisions" of the new Act. The Act does not list which provision corresponds to which, so a lawyer arguing continuity must identify the corresponding provision case by case, typically the delayed payment sections in Chapter V.
The clause says nothing about a supply made after the repeal took effect. Those supplies fall squarely under the 2006 Act. If you are a buyer or a supplier today, the 1993 Act is of historical interest only.
How the two sections fit into the rest of the Act
Sections 1 and 32 frame the Act without carrying any obligation for an enterprise. They do not create a right to interest, a filing duty or a penalty. For those, go to the operative sections.
| If you want to know about | Go to |
|---|---|
| Who counts as a buyer, supplier or enterprise | Section 2 definitions |
| The "appointed day" for payment | Section 2(b) |
| Payment deadlines and interest | Sections 15 and 16 |
| Penalties | Section 27 |
Practical examples
Example 1: reading an older dispute. A small manufacturer supplied goods years ago and wants to claim delayed payment interest. The first check is which Act governed that supply. If the supply and the delay both fell after the 2006 Act's relevant provisions came into force, the claim is under Chapter V of the 2006 Act. The 1993 Act cannot be invoked for that period because section 32(1) repealed it.
Example 2: a step already taken. A unit had filed a claim under the repealed 1993 Act before the repeal. Section 32(2) means the filing is treated as taken under the corresponding provision of the 2006 Act. The unit should still confirm with a legal adviser which forum now hears the matter, because the clause only says "corresponding provisions" and does not name them.
Common mistakes
- Quoting a single commencement date for every section. Section 1(2) allows different dates for different provisions.
- Treating the 1993 Act as still available. It stands repealed by section 32(1).
- Assuming the savings clause keeps the old Act's rates alive. It only treats old actions as taken under the new provisions.
- Reading the short title as a statement about scope. It is only a name.
Need help with an old or new MSME payment claim?
If you are sorting out which law applies to a supply, or how an earlier claim carries forward, our team can go through the documents with you. Start with our legal consultation service and we will map the provisions that apply to your facts.
Key takeaways
- Section 1(1) gives the short title: the Micro, Small and Medium Enterprises Development Act, 2006.
- Section 1(2) brings the Act into force on a date notified by the Central Government, and different dates may be appointed for different provisions.
- Section 32(1) repeals the Interest on Delayed Payments to Small Scale and Ancillary Industrial Undertakings Act, 1993 (32 of 1993).
- Section 32(2) treats anything done under the repealed Act as done under the corresponding provisions of the 2006 Act.
- Neither section creates a duty or penalty on its own; the operative rules sit in the later chapters.
Read next
- Introduction to MSME Development Act 2006
- Interest on Delayed Payments to MSMEs — Act 1993 and MSMED Act 2006 Guide
- Section 2 of the MSMED Act, 2006: Definitions of enterprise, supplier and buyer
- Section 2 of the MSMED Act, 2006: Appointed day, acceptance and deemed acceptance
Disclaimer: Based on the Micro, Small and Medium Enterprises Development Act, 2006 (official text, not amended by the Jan Vishwas Acts of 2023 or 2026) and the Udyam notifications S.O. 2119(E) of 26 June 2020 and S.O. 1364(E) of 21 March 2025, read with later developments noted in the article, as on 30 September 2026. Notifications, rules and the Udyam portal change; verify the current position before acting.