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MSME interest calculator for delayed payment

If a buyer pays a micro or small enterprise late, the MSMED Act adds interest at three times the RBI Bank Rate, compounded monthly. Enter the invoice amount and dates to see the MSME interest and total due at today's Bank Rate of 5.75%, or 17.25% a year.

Last updated . An estimate, not legal advice.

Usually the delivery date. If the buyer objected in writing within 15 days, use the day the objection was removed.

From your written agreement. Leave it blank if there is none, and the Act's 15 days apply.

Bank Rate 5.75% from 7 Oct 2026

Result

Due date
Not calculated yet
Days late
Not calculated yet
Annual interest rate
Not calculated yet
Interest owed
Not calculated yet
Total due
Not calculated yet

Enter the invoice amount, the acceptance date and the payment date to see the interest.

Estimate only. It uses one Bank Rate for the whole period. See how it is calculated below. Interest is rounded to the nearest rupee.

Next steps for a late payment

How is MSME interest on delayed payment calculated?

Section 16 of the MSMED Act, 2006 sets compound interest with monthly rests, at three times the Bank Rate notified by the RBI. The calculator applies the formula below and counts part months as fractions.

interest = amount × ((1 + R/12)^m - 1)
R = 3 × Bank Rate
m = days late ÷ (365 ÷ 12) = days late ÷ 30.42

Amount is the unpaid sum, R is the yearly rate (3 × 5.75% = 17.25%) and m is the months late.

Worked example: ₹5,00,000 unpaid and 90 days late.

  1. R = 0.1725, so R/12 = 0.014375.
  2. m = 90 ÷ 30.42 = 2.96 months.
  3. Interest = ₹5,00,000 × (1.014375^2.96 - 1) = ₹21,568.
  4. Total due = ₹5,00,000 + ₹21,568 = ₹5,21,568.

When does the interest start?

Interest runs from the day after the due date. The due date is the date agreed in writing, never more than 45 days after the buyer accepted the goods or services. With nothing in writing, it is day 15 after acceptance, so interest runs from day 16. The MSME 45 days payment rule guide explains acceptance and deemed acceptance.

FAQ

Who can claim interest on delayed payment under the MSMED Act?

Micro and small enterprises registered on Udyam, for goods or services they supplied. Medium enterprises are not covered. We found no official statement on whether a trader counts as a supplier, so ask your CA [1][2].

Which Bank Rate does the calculator use?

5.75%, the Bank Rate the RBI set on 7 October 2026, which gives 17.25% a year. Before that it was 5.50%, which gives 16.5%. Change the rate field if your delay fell in an earlier period [3].

From which day does interest start?

From the day after the due date, which is the agreed date (45 days at most from acceptance) or, with no written agreement, day 16 after acceptance [1].

How exact is the result?

It is an estimate. It uses one Bank Rate for the whole delay and counts part months as fractions, which a council, arbitrator or court may treat differently. Use the figure in your demand notice, then confirm it with your adviser.

What should I do after I have the number?

Send the buyer a statement of account and a written demand for the amount and interest. If it stays unpaid, file on the MSME ODR portal, odr.msme.gov.in, where new delayed-payment cases go [4]. The buyer cannot deduct this interest from taxable income [1]. Our guide to the 45 days rule has the steps, and our payment reminder templates help before then.

Sources

All pages opened on 18 Oct 2026.

  1. Micro, Small and Medium Enterprises Development Act, 2006, Gazette text as enacted, sections 2(b), 2(n), 15, 16, 23 (not amended by the 2026 Bill as introduced). https://samadhaan.msme.gov.in/WriteReadData/DocumentFile/MSMED2006act.pdf
  2. Udyam Registration portal (registration free; size limits effective 1 Apr 2025). https://udyamregistration.gov.in/ . On traders: Reserve Bank of India circular RBI/2021-2022/67, 7 Jul 2021. https://rbi.org.in/Scripts/BS_CircularIndexDisplay.aspx?Id=12126
  3. Reserve Bank of India, notification RBI/2026-27/283 of 7 Oct 2026, Bank Rate raised from 5.50% to 5.75%. https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13728&Mode=0
  4. Ministry of MSME, Annual Report 2025-26, paragraph 1.7.1 (new delayed-payment cases on the MSME ODR portal from 15 Oct 2025). https://www.msme.gov.in/static/uploads/2026/05/1bfda06b460e72543530b40817573495.pdf . Portal: https://odr.msme.gov.in/