MSME Delayed Payment Interest Calculator
If a buyer pays your registered MSME later than 45 days, the law says they owe you compound interest at 3 times the RBI bank rate, whether the contract mentions it or not. Most units never calculate it. Here is what you are owed.
Check the current rate on rbi.org.in
Indicative calculation for awareness, not legal or financial advice. The applicable bank rate is the RBI-notified rate for the delay period; consult your CA before filing a claim. Applies to Udyam-registered micro and small enterprises under the MSMED Act, 2006.
MSME delayed payments, FAQs
What interest is owed on delayed payments to an MSME?
Under Section 16 of the MSMED Act 2006, if a buyer fails to pay a registered micro or small enterprise within the agreed period (which cannot exceed 45 days from acceptance), the buyer owes compound interest with monthly rests at three times the bank rate notified by the RBI. The interest applies automatically by law, even if the purchase order says otherwise.
How do I claim delayed payment interest as an MSME?
File a claim on the MSME Samadhaan portal (samadhaan.msme.gov.in) referencing your Udyam registration. The Micro and Small Enterprises Facilitation Council (MSEFC) of your region handles the case; for Bhiwadi units that is the Rajasthan council. Many disputes settle once the buyer receives the council notice.
Does the 45-day limit apply if my agreement says 90 days?
Yes. The MSMED Act caps the credit period at 45 days from acceptance of goods or services for registered micro and small enterprises. An agreement cannot override the statute; interest liability begins after day 45 regardless of the agreed terms.
Is the interest taxable or deductible?
For the buyer, interest paid under the MSMED Act is NOT deductible as a business expense under income tax rules, which makes delay doubly expensive. Consult your CA for treatment on the receiving side.