MSME Delayed Payment Interest Calculator under the MSMED Act, 2006
Interest a buyer owes a micro or small supplier for paying late, with due dates and a reminder letter.
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- Runs in your browser
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About the MSME Delayed Payment Interest Calculator
Type each invoice's date, the day the goods or service were accepted, any credit period agreed in writing and the amount, plus any part payments. You get the last day to pay under section 15 of the MSMED Act, 2006, the days late, interest at three times the RBI bank rate compounded every month, a month-by-month table, and either a reminder letter and WhatsApp text for the supplier or a pay-by list for the buyer. It runs in your browser.
How it works
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Step 1
Choose whether you are the supplier who is owed money or the buyer who owes it, then check the RBI bank rate and the date to work the interest up to.
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Step 2
Add each invoice with its date, acceptance date, agreed credit days and amount, or paste the list from a spreadsheet, and add any part payments with their dates.
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Step 3
Read the total and the interest, then copy the reminder letter, WhatsApp text or pay-by list, and download the CSV file for your accountant.
When a payment to a micro or small supplier is late
Under section 15 of the Micro, Small and Medium Enterprises Development Act, 2006, a buyer pays a micro or small enterprise by the date agreed in writing, and the agreed period cannot be more than 45 days from the day the goods or service were accepted. With no written agreement, payment is due within 15 days of acceptance. Acceptance is the day of delivery or of the service, or, if the buyer objected in writing within 15 days, the day the supplier removed the objection. The supplier must be registered: Udyam Registration replaced the old memorandum from 1 July 2020.
How the interest is worked out
Section 16 says a buyer who pays late owes compound interest with monthly rests at three times the bank rate notified by the RBI, whatever their agreement says. With the Bank Rate at 5.75% (as on 16 October 2026), that is 17.25% a year. Our method adds each full month's interest to the balance, gives a part month its share of that month's interest by days, lets part payments reduce the invoice amount first, and stops the interest once the invoice is paid in full. The month-by-month table shows every step.
What this tool cannot do
It does the arithmetic on the dates and amounts you type. It cannot tell whether a business is a micro or small enterprise, whether a buyer's objection was valid, or which bank rate a Facilitation Council will use if the rate changed during the delay, and a Council may work the interest out differently. According to the MSME Samadhaan FAQ, traders registered under NIC codes 45 to 47 cannot use the Council route. It is not legal or tax advice: check your claim with a CA or lawyer.
Frequently asked questions
How many days does a buyer have to pay an MSME supplier?
The period agreed in writing, but never more than 45 days from the day of acceptance or deemed acceptance (section 15 of the MSMED Act, 2006). With no written agreement, the buyer must pay before the appointed day, which is the day after the 15 days that follow acceptance. A longer credit period on a purchase order does not stretch the limit: the calculator counts it as 45 days.
What interest rate applies to late payments to MSMEs?
Three times the bank rate notified by the Reserve Bank of India, compounded with monthly rests (section 16). The Bank Rate was 5.75% as on 16 October 2026, so the rate is 17.25% a year, or 1.4375% a month. The Bank Rate changes after RBI policy meetings, so check rbi.org.in and type the current figure.
Can a contract take away the supplier's right to interest?
No. Section 16 applies whatever an agreement between the buyer and the supplier says, so a clause that waives the interest or sets a lower rate does not reduce what the Act allows. The supplier can still choose to ask only for the invoice amount: the reminder letter has that option.
What can a supplier do if the buyer still does not pay?
A micro or small enterprise with Udyam Registration can file a delayed payment application online through MSME Samadhaan; since 15 October 2025 new cases have been filed on the Ministry of MSME's ODR portal, which is linked to Samadhaan. The case goes to the Micro and Small Enterprises Facilitation Council of the supplier's State, which tries conciliation first and then arbitration (section 18). The Act gives the Council 90 days from the reference to decide.
Does paying an MSME late affect the buyer's income tax?
Yes. Under section 43B(h) of the Income-tax Act, 1961, from assessment year 2024-25, an amount owed to a micro or small enterprise beyond the section 15 time limit is allowed as a deduction only in the year it is actually paid. The Income-tax Act, 2025, in force from 1 April 2026, keeps this rule in section 37. Section 23 of the MSMED Act also says the interest itself is not deductible. Ask your CA how this affects your return.
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