CA Sarthak Ahuja Breaks Down What to Do When Clients Don't Clear Dues

Delayed payments are one of the biggest challenges faced by freelancers, service providers, small businesses, startups, and MSMEs across India. Finance influencer CA Sarthak Ahuja shares two powerful, legally supported actions you can take immediately, without sending a legal notice, to protect your dues and put firm pressure on a non‑paying client.

1. Use the GST Portal to Officially Record Non‑Payment:

Under the GST portal, the Communication Between Taxpayers feature is an underrated but highly effective tool. By navigating to User Services to Communication Between Taxpayers, you can formally inform the client, through the GST system, that payment for a specific invoice remains pending.

This creates an official digital trail, far stronger than simple email follow‑ups.

Why this matters:

• If payment is not made within 180 days of the invoice date, your customer is legally required to reverse their Input Tax Credit (ITC) until they pay you.
• When your communication is logged on the portal, the GST department may choose to examine whether the client has reversed ITC or avoided payment.
• This becomes credible evidence of non‑payment, which may help trigger compliance pressure from the tax department.

It's not a legal notice, but it sends a signal that you are formally escalating the issue.

2. Email the Client with Your MSME Certificate and Interest Warning

If you are registered as an MSME, the law gives you additional leverage. CA Sarthak Ahuja advises sending a clear email to the client with your MSME Udyam Registration Certificate attached.

Explain that under Section 26 of the MSME Development Act, 2006, payments delayed beyond 45 days attract mandatory interest at three times the RBI bank rate.
With the current bank rate at 5.25%, the payable interest becomes 15.75% per annum, compounded monthly.

This is a strong, legal, financial implication, yet still not a legal notice.

A Practical Middle Path Before Legal Action:

While a legal notice may eventually become necessary, many businesses hesitate due to relationship concerns. These two steps allow you to escalate the matter professionally, create official evidence, and apply financial pressure, without burning bridges.

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