MSME Delayed Payment Interest Calculator

Calculate compound interest payable on delayed payments to MSME suppliers under Section 16 of the MSME Development Act, 2006. Interest rate = 3× RBI bank rate.

Last updated: July 2026 · RBI Bank Rate: 6.5%

Current RBI bank rate is 6.5%. Interest = 3 × bank rate = 19.5% p.a.

Days Delayed 0 days
Applicable Interest Rate (3× bank rate) 19.50% p.a.
Interest Amount ₹0.00
Total Payable (Principal + Interest) ₹0.00

MSME Delayed Payment Rules — Section 16 Explained

The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 protects MSME suppliers from delayed payments by large buyers. Under Section 15, any buyer purchasing goods or services from an MSME supplier must make payment within 45 days from the date of acceptance.

If payment is not made within 45 days, Section 16 mandates that the buyer pays compound interest at three times the bank rate notified by the Reserve Bank of India (RBI). As of July 2026, the RBI bank rate is 6.5%, making the applicable interest rate 19.5% per annum, compounded monthly.

Key Points for MSME Suppliers

  • 45-day limit: Payment must be made within 45 days of acceptance of goods/services
  • Interest rate: 3× RBI bank rate (currently 19.5% p.a.), compounded monthly
  • No waiver: The buyer cannot contractually waive this interest — it is a statutory obligation
  • Tax implication: The interest paid is not deductible as a business expense for the buyer under Income Tax
  • Udyam registration: The supplier must have a valid Udyam registration to claim MSME benefits

Need to check if you qualify as an MSME? Learn more about GST for freelancers and small businesses. For GST-related calculations, use our GST Calculator.

Frequently Asked Questions

Is interest compounded monthly or annually?
Under Section 16 of the MSMED Act, interest is compounded monthly. This means interest is calculated on the principal amount and any previously accumulated interest at the end of each month.
Can the buyer refuse to pay MSME interest?
No. The interest is a statutory obligation under the MSMED Act. The buyer cannot waive this through any contractual agreement. Additionally, the interest paid is not deductible as a business expense for income tax purposes, creating a double penalty.
Where can MSME suppliers file complaints for delayed payments?
MSME suppliers can file complaints with the Micro and Small Enterprise Facilitation Council (MSEFC) in their state. The complaint can be filed online through the MSME Samadhaan portal (samadhaan.msme.gov.in).
Does the 45-day rule apply to all buyers?
The 45-day rule applies when the buyer purchases goods or services from a supplier registered as an MSME (with valid Udyam registration). The size of the buyer does not matter — even large corporates and government entities are bound by this rule.