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MSME interest calculator · Free

MSME late payment interest calculator

If you are a Udyam-registered micro or small enterprise, a business customer who pays after the 45-day limit owes you interest. Enter the bill and the dates to see how much.

MSME interest calculator

Fill in the amount, the date and the bank rate to see the interest.

Runs in your browser. Nothing you type is sent or saved.

Flag late bills and add this interest to statements automatically

The rule in short

Under Section 15 of the MSMED Act, 2006, a buyer must pay a micro or small supplier by the agreed date, which cannot be more than 45 days after the goods or services are accepted, or within 15 days if nothing was agreed in writing. Under Section 16, a late buyer owes compound interest with monthly rests at three times the bank rate notified by the RBI, from the day after the due date.

How the interest is worked out

  • Last day to pay: the agreed date, capped at 45 days from acceptance (15 days if there was no written agreement)
  • Yearly rate: 3 × the RBI bank rate
  • Each full month late: the amount grows by (yearly rate ÷ 12)
  • Leftover days: simple interest at the yearly rate × days ÷ 365
  • Interest = amount × (growth − 1)

Who can claim it

Micro and small enterprises registered on Udyam that supply goods or services to other businesses. Medium enterprises are not covered, and trading businesses are covered only for limited purposes, so check your Udyam certificate and talk to your CA.

Why buyers pay attention: Section 43B(h)

Since 1 April 2024, Section 43B(h) of the Income Tax Act, 1961 lets a buyer deduct a purchase from a micro or small enterprise only in the year it is paid within the MSMED Act limit. Ask your CA how the Income Tax Act, 2025 (in force from 1 April 2026) carries it forward. Section 23 of the MSMED Act also says the interest itself is never tax-deductible for the buyer.

The RBI bank rate

The bank rate moves with the RBI's policy decisions (it is set at the Marginal Standing Facility rate). Look up the current figure on rbi.org.in and enter it in the calculator.

How to use it

  1. Enter the amount and dates

    The unpaid amount, the date the buyer accepted the goods or services, and the payment date (or today).

  2. Enter the agreed credit period

    The days written in your agreement or purchase order. Leave it blank if there was none; the limit is then 15 days.

  3. Enter the RBI bank rate

    The calculator shows the last day to pay, the days late and the interest owed.

Frequently asked questions

What is the MSME 45-day payment rule?

A buyer must pay a micro or small enterprise supplier within the agreed period, no longer than 45 days from accepting the goods or services, or within 15 days if there is no written agreement (MSMED Act, 2006, Section 15).

What rate of interest applies to late MSME payments?

Compound interest with monthly rests at three times the bank rate notified by the RBI, from the day after the due date (MSMED Act, Section 16). This applies even if your agreement says otherwise.

Can the buyer claim this interest as an expense?

No. Section 23 of the MSMED Act says interest paid under the Act is not allowed as a deduction when the buyer computes taxable income.

What if the buyer does not pay?

You can file a case with the MSME Samadhaan portal, which sends it to your state's Micro and Small Enterprise Facilitation Council (MSMED Act, Section 18).

Is this legal advice?

No. The calculator follows the formula in the Act. Speak to your CA or lawyer about your case.

Sources

This page explains the rules in general terms as of November 2026. It is not tax or legal advice; check your case with your CA.

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