• What interest rate charged by seller to buyer on unpaid sales price

Dear Sir, 
pls advice 1] W heather [ Maharashtra ]seller can legally charge interest to buyer for late payment of sales price ?

2] if yes then what is maximum & minimum interest rate?
3]If Business concern is not falling under MSME defination 
4] If any minimum period is provided i.e. 10-20-25 days etc  for not to charge interest rate
5] Registration or Licence is require under any act for charging interest
6] Under Income Tax act TDS to be deduct on such interest payment [ From Buyer's view] & such interest allowed under the income tax act
Asked 1 year ago in Business Law from Yavatmal, Maharashtra
1) it would depend upon contract between parties . 

2) if contract provides that in case of late payment by buyer interest would be charged at 18%pa then buyer has to pay said interest rate 

3) contract would contain a provision that 30 days or 45 days be provided for making payment for goods sold and delivered 

4) in case money is borrowed from money lender then money lender licence would be necessary . 

5) if contract is silent about interest rate then seller would not be able  to recover interest for late payments made 

6) Section 194A deals with the provisions relating to TDS on interest other than on
securities. Tax is to be deducted under section 194A, if interest (other than interest on
securities) is paid to a resident.
Ajay Sethi
Advocate, Mumbai
23079 Answers
1212 Consultations
5.0 on 5.0
NATIONAL CONSUMER DISPUTES REDRESSAL COMMISSION
NEW DELHI
 
 
Complaint Case No. 51 of 2007
 Dated the    7th  July 2008
 
M. B. SHAH, J., PRESIDENT

Charging of interest at rates in excess of 30% p. a. from the credit card holders by banks for the former’s failure to make full payment on the due date or paying the minimum amount due,  is an unfair trade practice.
(ii)        Penal interest can be charged only once for one period of default and shall not be capitalised.
(iii)       Charging of interest with monthly rests is also an unfair trade practice.
(iv)       Hence, the banks are directed not to indulge in the aforesaid unfair trade practices or repeat them.
Ajay Sethi
Advocate, Mumbai
23079 Answers
1212 Consultations
5.0 on 5.0
1. To act as a Money Lender, a person is required to obtail license and Registration from RBI,

2. An interest payment clause for late payment can be incorporated in a sale agreement executed by both the parties,

3. No body can charge more than 30% per year as interest,

4. You shall have to deduct 1% TDS for the entire sale amount including interest before paying to the seller,

5. The said deducted TDS shall have to be deposited by you to the I.T. Department.
Krishna Kishore Ganguly
Advocate, Kolkata
12027 Answers
226 Consultations
5.0 on 5.0
1. Consumer Dispute Redressal Forum deals with deficiency in service and unfair business practice as defined as per The Consumer Protection (Ammendment) Act, 2002,

2. If there is no clause mentioned in the said agreement for sell for late payment and still the seller claims it, then certainly you can approach the Consumer Forum,

3. Your future step will depend on what terms have you agreed in the Agreement for Sale signed by you.
Krishna Kishore Ganguly
Advocate, Kolkata
12027 Answers
226 Consultations
5.0 on 5.0
If there is a stipulation for the rate of interest, from the parties voluntarily agreed upon, the Court must allow that rate up to the date of the suit subject to three exceptions;
 (i) any provision of law applicable to money lending transactions, or Usurious Loans Act or any other debt relief law governing the parties and having an overriding effect on any stipulation for payment of interest voluntarily entered into between the parties;

(ii) if the rate is penal (under any debt relief law or market rate), the Court must award at such rate as it deems reasonable (as per prevailing market rate);

 (iii) even if the rate is not penal the Court may reduce it if the interest is found excessive and the transaction was substantially unfair (subject to such observations and conditions supported by reasons).

Vithal Das Vs. Rup Chand .1967 AIR 188, 1966 SCR 164
If there is no express stipulation for payment of interest and rate of interest; the plaintiff is not entitled to interest much less at the rate claimed except on proof of mercantile or trade usage having the force of law or statutory right to interest like by Section 80 of the Negotiable Instruments Act & Section 23 of the Trusts Act or Section 61 of the Sale of Goods Act or the like or an implied agreement and under the provisions of the Interest A
Ajay Sethi
Advocate, Mumbai
23079 Answers
1212 Consultations
5.0 on 5.0
economic times feb 10 2014 

The RBI has removed the 26% interest rate cap on loans given by microfinance companies. Starting April 1, the interest rate will be linked to their cost of funds, and the regulator has prescribed the way interest should be worked out. Price decontrol will increase the supply of finance and enable the poor to turn to microfinance institutions (MFIs). 
Ajay Sethi
Advocate, Mumbai
23079 Answers
1212 Consultations
5.0 on 5.0
1. This is as per R.B.I. Guidelines,

2. File the consumer case as suggested in my earlier post.
Krishna Kishore Ganguly
Advocate, Kolkata
12027 Answers
226 Consultations
5.0 on 5.0
1. The seller's right to charge interest for the delayed payment flows out of the agreement he made with the buyer. If the agreement has a clause for charge of interest then the clause can be enforced. 

2. The rate of interest will be the one that is mentioned in the agreement alone. 

3. No license is required to charge the above interest.

Ashish Davessar
Advocate, Jaipur
18049 Answers
445 Consultations
5.0 on 5.0

Ask a Lawyer

Get legal answers from top-rated lawyers in 1 hour. It's quick, easy, and anonymous!
Ask a Lawyer

Business Lawyers

T Kalaiselvan
Advocate, Vellore
13902 Answers
127 Consultations
5.0 on 5.0
Ajay Sethi
Advocate, Mumbai
23079 Answers
1212 Consultations
5.0 on 5.0
Ashish Davessar
Advocate, Jaipur
18049 Answers
445 Consultations
5.0 on 5.0
Krishna Kishore Ganguly
Advocate, Kolkata
12027 Answers
226 Consultations
5.0 on 5.0
Devajyoti Barman
Advocate, Kolkata
5131 Answers
54 Consultations
4.9 on 5.0
Nadeem Qureshi
Advocate, New Delhi
3513 Answers
129 Consultations
4.9 on 5.0
Rajgopalan Sripathi
Advocate, Hyderabad
868 Answers
43 Consultations
5.0 on 5.0
Shivendra Pratap Singh
Advocate, Lucknow
2693 Answers
41 Consultations
4.9 on 5.0
Lakshmi Kanth
Advocate, Hyderabad
221 Answers
2 Consultations
4.8 on 5.0
Shashidhar S. Sastry
Advocate, Bangalore
1231 Answers
59 Consultations
5.0 on 5.0