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MSME Delayed-Payment Interest Calculator

If your registered micro or small enterprise (MSE) supplier was paid late, Section 16 of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 entitles it to compound interest — with monthly rests — at three times the bank rate notified by the Reserve Bank of India. Enter the invoice amount, the due (appointed) date and the actual payment date to estimate the interest and total payable.

Default is illustrative only — verify the current RBI bank rate before relying on this.
The date payment was due under the agreement (or, if none, the appointed day under §2(b) of the MSMED Act — generally 15 or 45 days from acceptance of goods/services).
The date payment was (or will be) actually made. Use today's date to see interest accrued so far.
Days late
61
Interest rate applied
19.50%
3 × 6.50% bank rate
Interest amount
₹16,657.91
Total payable
₹5,16,657.91

Compounded monthly (with monthly rests) at 19.50% p.a. over 2 whole month(s) and 1 additional day(s), as per §16 of the MSMED Act, 2006.

How this is calculated

Section 16 of the MSMED Act, 2006 provides that where a buyer fails to pay a micro or small enterprise supplier by the "appointed day" (or within the agreed period, capped at 45 days), the buyer is liable to pay compound interest, with monthly rests, at three times the bank rate notified by the RBI, from the appointed day until the date of actual payment.

This calculator: (1) computes the number of days between the due date and the payment/as-on date; (2) applies the interest rate as 3 × the bank rate you enter; (3) compounds that rate on a monthly basis — splitting the overdue period into whole months plus a remainder of days — over the principal amount; (4) adds the resulting interest to the principal to show the total payable.

  • Interest rate used = 3 × RBI notified bank rate (editable above).
  • Compounding is monthly (monthly rests), not daily or annual.
  • The remainder period (less than a full month) is charged pro-rata on a daily basis at the same annual rate.

Sources & legal basis

  • Micro, Small and Medium Enterprises Development Act, 2006 — Section 16 (date from which and rate at which interest is payable) and Section 15 / §2(b) (appointed day).
  • Reserve Bank of India — notified bank rate, updated periodically.

Confirm the RBI bank rate in force on the relevant date(s) and the exact appointed-day computation for your facts with a qualified advocate or chartered accountant before relying on this estimate, especially for MSME Facilitation Council references or arbitration under §18 of the Act.

Frequently asked questions

Under Section 16 of the MSMED Act 2006, a buyer who delays payment to a registered micro or small enterprise beyond the appointed day owes compound interest, with monthly rests, at three times the bank rate notified by the Reserve Bank of India.

The appointed day is the date agreed between buyer and supplier for payment; if no date is agreed, it is 15 days from the day of acceptance of the goods or services. The maximum period allowed by agreement is 45 days from acceptance.

Section 16 expressly provides for "compound interest with monthly rests" — the interest is added to the outstanding principal at the end of each month, and the next month's interest is charged on the enlarged balance, rather than only on the original invoice amount.

No. This is an indicative estimate. The RBI bank rate changes periodically, and the exact computation depends on the agreed/appointed date and any partial payments. Verify the current bank rate and your specific facts with an advocate or chartered accountant.

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