What does your late-paying client actually owe you?

Estimate the compound interest a buyer owes a registered micro or small enterprise under Section 16 of the MSMED Act, 2006.

Estimated interest payable to you
Rs 0
Days overdue0
Statutory rate applied (3 x bank rate)16.50%
CompoundingMonthly rests
Invoice principalRs 0
Total now recoverableRs 0
This is an estimate for your own planning, not legal or financial advice. The statutory rate under Section 16 is three times the bank rate notified by the RBI - check the current bank rate and confirm your Udyam registration status before relying on it or citing it to a buyer.
Chasing this manually is why it stayed unpaid.
Papagye emails your client automatically on the due date, then again on day 15, 30 and 45 - from a neutral address, with replies going straight to you. You add the invoice once.
Add your first invoice free

How the calculation works

Section 15 of the MSMED Act requires a buyer to pay a registered micro or small enterprise by the agreed date - and an agreed period cannot exceed 45 days from acceptance. Where no period is agreed, it is 15 days. Miss that date and Section 16 makes the buyer liable for compound interest with monthly rests at three times the RBI bank rate, running from the appointed day until payment.

This calculator compounds monthly from your due date to the payment date (or to today if the invoice is still unpaid), which is the ordinary reading of "monthly rests". Partial months are pro-rated on a daily basis.

Common questions

Does this apply to every business?

The Section 16 statutory rate applies to suppliers registered as micro or small enterprises. Without that registration you can still pursue interest under your contract or general law, but not at this rate.

Can I actually recover this?

The liability exists in statute, and MSME Samadhaan facilitation councils exist to hear delayed-payment references. In practice most buyers pay once they understand the exposure - which is why stating the figure early tends to work better than chasing politely for months.

Is the interest taxable or deductible?

Interest received is income to you. Separately, Section 43B(h) of the Income Tax Act disallows a buyer deduction for sums owed to micro and small enterprises beyond the MSMED time limit until actually paid - which is often what makes buyers settle before their year end. Confirm specifics with your CA.