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MSME delayed payment interest calculator

Work out the interest a buyer owes you under Section 16 of the MSMED Act, 2006 when they pay after the 45-day limit. Runs entirely in your browser.

Use the amount due, including GST.
If the buyer raised no written objection within 15 days of delivery, use the delivery date — the goods are deemed accepted.
The law caps this at 45 days, even if the agreement says more.
Pre-filled with the Bank Rate of 5.75% effective 7 October 2026. Check rbi.org.in for the current rate.

Interest payable under Section 16

₹38,231

Payment was due on
16 May 2026
Credit period applied
45 days
Days late
158
Interest rate (3 × Bank Rate)
17.25% p.a.
Principal + interest
₹5,38,231
Month-by-month working
PeriodDaysOpeningInterest
17 May 2026 – 16 Jun 202631₹5,00,000₹7,187
17 Jun 2026 – 16 Jul 202630₹5,07,188₹7,291
17 Jul 2026 – 16 Aug 202631₹5,14,478₹7,396
17 Aug 2026 – 16 Sept 202631₹5,21,874₹7,502
17 Sept 2026 – 16 Oct 202630₹5,29,376₹7,610
17 Oct 2026 – 21 Oct 20265₹5,36,986₹1,245

How the calculation works

  1. Find the due date. It is the date agreed in writing, but never more than 45 days after acceptance. With no written agreement, it is 15 days after acceptance.
  2. Find the rate. Three times the RBI Bank Rate. The calculator uses one rate for the whole period; if the Bank Rate changed while the invoice was unpaid, some courts apply the rate in force at each monthly rest, so run the months separately for a precise figure.
  3. Compound monthly. Interest is added to the balance at the end of each month after the due date. A final part-month is charged pro rata.

What to do with the number

Most suppliers use it as leverage rather than a bill: mentioning in a firm reminder that interest is accruing under the MSMED Act often gets an invoice paid. If the buyer still does not pay, you can file a reference with the Micro and Small Enterprises Facilitation Council through the MSME Samadhaan portal — see our Samadhaan filing guide.

Buyers also have a tax reason to pay on time: under Section 43B(h), a late payment to a micro or small enterprise is deductible only in the year it is actually paid. And the interest itself is never tax-deductible for the buyer (Section 23 of the MSMED Act).

Frequently asked questions

What interest rate applies to delayed payments to MSMEs?

Section 16 of the MSMED Act, 2006 sets interest at three times the Bank Rate notified by the Reserve Bank of India, compounded with monthly rests. With the Bank Rate at 5.75% (effective 7 October 2026), that is 17.25% a year.

From which date does the interest start?

From the day after the agreed payment date — which cannot be more than 45 days after the buyer accepts the goods or services — or, if there is no written agreement, from the appointed day, which is the day after 15 days from acceptance.

Can the buyer and supplier agree to a lower interest rate?

No. Section 16 applies notwithstanding anything in any agreement between the buyer and supplier.

Who can claim this interest?

Suppliers that are micro or small enterprises registered on Udyam. Medium enterprises are not covered by Sections 15 to 17. The Supreme Court has held that the benefit applies only to supplies made after the supplier was registered.

This calculator gives an estimate for general information. It is not legal advice; confirm amounts with your CA or advocate before claiming them.