A late payment is not standing still
Where a buyer pays a registered micro or small enterprise late, section 16 of the MSMED Act 2006 provides for compound interest with monthly rests at three times the Bank Rate notified by the Reserve Bank. Most suppliers never work out what that comes to. This does.
Enter the invoice details and the computation appears here — the interest accrued under section 16, month by month, and what it is adding each month.
When the clock starts
Not from the invoice date. Section 2(b) puts the appointed day at the day following the expiry of fifteen days from acceptance, so where nothing is agreed in writing, interest runs from the sixteenth day after the goods or services were accepted.
Where a period is agreed in writing, section 16 runs interest from the day after the agreed date instead — and section 15 caps any such agreement at forty-five days, however long the contract says.
Why period by period
The Bank Rate moves. A claim running eighteen months can cross several changes, so each month is computed against the rate in force during it. The single-formula approach most explainers use is only correct while the rate holds still.
Where a period falls outside the rate history we have checked at source, the calculator says so rather than substituting the nearest rate it holds.
Who the provisions run to
Micro and small enterprises. Medium enterprises are outside the delayed-payment provisions, which is a distinction a good deal of published material gets wrong.
Registration is evidenced by a Udyam number, and the date on the certificate matters as well as the number. We check the format of what you enter; we do not verify it against the Udyam portal.
What this page is not
It is a calculator. It does not tell you whether you have a claim, what to do about one, or how any of this applies to your situation — those are legal questions and this is not legal advice.
Also worth knowing: the other side of the same relationship — checking supplier invoices before claiming input tax credit.