MSME delayed payment interest calculator
Enter the unpaid amount, the date your goods or services were accepted and the payment date. The calculator estimates the compound interest your buyer owes under Section 16 of the MSMED Act — at three times the RBI bank rate, with monthly rests.
In short
Interest on a delayed MSME payment is compound interest with monthly rests at three times the bank rate notified by the RBI, payable by the buyer from the date payment became due — the agreed date, which cannot be more than 45 days after acceptance. With a bank rate of 5.50%, that means about 16.5% a year, compounded monthly.
Calculate interest on an overdue MSME invoice
- Payment was due on
- –
- Days of delay
- 0
- Interest rate (3 × bank rate)
- –
- Total due (principal + interest)
- –
Estimate only: compound interest with monthly rests, computed per month of delay. Actual liability depends on acceptance dates, part-payments and the rates notified for each period.
Get help recovering this amountHow MSME delayed payment interest works
Section 15 of the Micro, Small and Medium Enterprises Development Act, 2006 requires a buyer to pay a micro or small supplier on or before the agreed date. That date cannot be later than 45 days from the day the goods or services were accepted, or deemed accepted. If there is no agreement on payment terms, payment is due within 15 days.
If the buyer misses the deadline, Section 16 makes it liable to pay compound interest with monthly rests on the amount, at three times the bank rate notified by the Reserve Bank of India. The interest runs from the date the payment fell due until it is actually paid, and it applies even if the purchase order or contract says something different.
“Monthly rests” means the interest is added to the amount every month and the next month’s interest is calculated on the increased total. Over long delays this makes a large difference: at 16.5% a year compounded monthly, an amount unpaid for two years grows by roughly 39%.
What the calculator does not cover
The calculator uses one bank rate for the whole period. If the RBI changed the bank rate during the delay, the exact figure should be computed period by period. It also assumes a single invoice and no part-payments. For a claim before the MSE Facilitation Council, we prepare an invoice-wise statement that accounts for every rate change and payment.
Before you send a claim
- Who can claim
- Micro and small enterprises registered under Udyam. Medium enterprises are not covered by the delayed-payment provisions.
- Starting date
- Interest runs from the day after the agreed payment date, which cannot exceed 45 days from acceptance.
- Rate
- Three times the RBI bank rate, compounded monthly; the rate is fixed by law and overrides contrary contract terms.
- Where to claim
- The MSME Samadhaan portal, which refers the matter to the state’s Micro and Small Enterprises Facilitation Council.
- Tax angle for the buyer
- Under Section 43B(h) of the Income-tax Act, 1961 — now Section 37(2)(g) of the Income-tax Act, 2025 — a buyer paying late loses the deduction until actual payment — a strong reason to settle.
This calculator gives an estimate for information only and is not legal advice.
Turn the number into a recovered payment
Devendra Yadav and the Aidwish team prepare invoice-wise claims, legal notices and MSEFC applications for micro and small suppliers across Uttar Pradesh.
- Invoice-wise interest statements
- MSEFC conciliation and arbitration
- Award enforcement
MSME interest — questions answered
How is interest on delayed MSME payment calculated?
Under Section 16 of the MSMED Act, the buyer pays compound interest with monthly rests at three times the RBI bank rate, from the date the payment became due until it is paid. The due date is the agreed date, which cannot be more than 45 days after acceptance.
What is the current MSME delayed payment interest rate?
It is three times the bank rate notified by the RBI. With the bank rate at 5.50%, the rate is 16.5% a year, compounded monthly. Check the current bank rate before computing a claim, because it changes with RBI policy.
Can the contract reduce the MSME interest rate?
No. Section 16 applies notwithstanding anything contained in any agreement between the buyer and the supplier, so a lower contractual rate does not override it.
Is interest payable if the payment term was 60 or 90 days?
Under the MSMED Act, the agreed period cannot exceed 45 days from acceptance. Interest is generally computed from the end of that 45-day limit even if the contract allowed longer.
Where do I claim the interest?
File a delayed-payment application on the MSME Samadhaan portal. It is referred to the Micro and Small Enterprises Facilitation Council, which conducts conciliation and then arbitration if needed.
Often needed alongside this
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