MSME delayed-payment interest calculator

What the statute describes

Section 16 of the MSMED Act describes compound interest with monthly rests at three times the bank rate notified by the Reserve Bank of India when an eligible buyer fails to pay as required by Section 15.

The calculator is intentionally labelled indicative. A proper calculation can require multiple rate periods, the legally relevant acceptance date, agreed terms, partial payments and the treatment adopted by the deciding forum.

Do not use the invoice date blindly

Determine when the goods or services were accepted or deemed accepted, whether the buyer raised a timely written objection, and what payment term was agreed. The statutory framework caps an agreed period at 45 days, but the actual due date may be earlier.

Before sending an interest demand

• Confirm your enterprise and transaction are eligible.
• Reconcile every partial payment and credit note.
• Use the RBI bank rate applicable to each relevant period.
• Separate the principal, claimed interest and supporting calculation.
• Have a qualified professional review material or disputed claims.

See the MSMED Act on India Code and the Reserve Bank of India for official materials.