Is the supplier covered?
Supplier's Udyam category
What the supplier does
Was the supplier on Udyam before the order was placed?
Is the buyer in India?
Answer the questions above to see whether the MSMED Act protects this supplier.
Invoices
Interest on unpaid invoices is worked out up to today, 27 Oct 2026.
- Accepted on: the day the goods were delivered or the service was done. If the buyer objected in writing within 15 days, the day the problem was put right.
- Agreed days: credit days agreed in writing, such as in the contract or purchase order. Leave it blank if there are none: then 15 days apply. More than 45 counts as 45.
Due dates and interest
Answer the questions above to see whether the MSMED Act protects this supplier.
Reminder letter
Make a formal reminder letter listing the overdue invoices, with the interest worked out month by month in an annexure. Free, no sign-up.
The letter is for micro and small suppliers that step 1 shows are covered: on Udyam before the order, making goods or providing services, with a buyer in India. Not sure of your registration date? Check your Udyam certificate first.
How the 45-day rule works
- With no written agreement, the buyer must pay within 15 days of accepting the goods or services.
- A written agreement can give more time, but never more than 45 days from acceptance. Longer terms count as 45 days.
- A buyer who pays late owes compound interest, added every month, at three times the RBI Bank Rate. A contract cannot lower it (section 16).
- If the buyer still does not pay, the supplier can take the claim to the state's Micro and Small Enterprises Facilitation Council on the MSME ODR portal (section 18).
RBI Bank Rates used
Checked against rbi.org.in on 26 Oct 2026. The interest rate is three times the Bank Rate.
| From | Bank Rate | Interest a year | RBI circular |
|---|---|---|---|
| 7 Oct 2026 | 5.75% | 17.25% | RBI/2026-27/283 |
| 5 Dec 2025 | 5.50% | 16.50% | RBI/2025-26/134 |
| 6 Jun 2025 | 5.75% | 17.25% | RBI/2025-26/45 |
| 9 Apr 2025 | 6.25% | 18.75% | RBI/2025-26/23 |
| 7 Feb 2025 | 6.50% | 19.50% | RBI/2024-25/111 |
| 8 Feb 2023 | 6.75% | 20.25% | RBI/2022-23/174 |
| 7 Dec 2022 | 6.50% | 19.50% | RBI/2022-23/148 |
| 30 Sept 2022 | 6.15% | 18.45% | RBI/2022-23/123 |
| 5 Aug 2022 | 5.65% | 16.95% | RBI/2022-23/103 |
| 8 Jun 2022 | 5.15% | 15.45% | RBI/2022-23/65 |
| 4 May 2022 | 4.65% | 13.95% | RBI/2022-23/45 |
| 22 May 2020 | 4.25% | 12.75% | DOR.No.Ret.BC.74/12.01.001/2019-20 |
Questions about the MSME 45-day rule
What is the MSME 45-day rule?
Section 15 of the MSMED Act, 2006 says a buyer must pay a micro or small supplier by the date agreed in writing, and that date can be at most 45 days after the goods or services were accepted. With no written agreement, payment is due within 15 days of acceptance.
How much interest does a buyer owe for paying late?
Section 16 sets compound interest with monthly rests at three times the RBI Bank Rate, from the day after the due date until the day of payment. It applies whatever the contract says. The table above shows the rates the calculator uses.
Who can claim this interest?
Micro and small enterprises registered on Udyam that make goods or provide services, for orders placed after they registered, from a buyer in India. Medium enterprises cannot claim it. Traders, and units with only a Udyam Assist certificate, get priority-sector lending benefits only.
Can I claim interest on invoices the buyer has already paid late?
Yes. Interest runs until the day of payment, so an invoice paid late still carries interest. Enter the payment date and the calculator works it out.
What if the buyer still does not pay?
Send a reminder first: this page makes the letter free. If that does not work, file the claim with your state's Micro and Small Enterprises Facilitation Council on the MSME ODR portal (odr.msme.gov.in). The Council tries conciliation first, then arbitration. A buyer who challenges its award in court must first deposit 75% of the amount (section 19).
Can the buyer claim a tax deduction for a late payment?
Only in the year it is paid. An amount owed to a micro or small supplier and paid after the MSMED Act limit is deductible only in the year of actual payment (section 37(2)(g) of the Income-tax Act, 2025; section 43B(h) of the 1961 Act before it). The interest itself is never deductible (section 23 of the MSMED Act).
This calculator gives an estimate under the MSMED Act, 2006, with the RBI Bank Rates shown above. It is not legal advice: if the claim goes to the Facilitation Council, the Council decides the amount. Old claims may be time-barred, so check with a lawyer or chartered accountant before you rely on it.