Section 15 of the Micro, Small and Medium Enterprises Development Act, 2006 tells the buyer when to pay. Section 16 tells the buyer what happens if it does not. Section 18 tells the supplier where to go. Most delayed-payment files mix these up, and then apply a flat 18% as if the Act were the Interest Act.
When is the money due?
If the parties have a written agreement on credit, the buyer must pay on or before the agreed date. That date cannot be later than 45 days from the day of acceptance or deemed acceptance. An agreed 60-day or 90-day clause does not survive the cap.
If there is no written agreement, payment is due before the appointed day. The appointed day is the day immediately following the expiry of 15 days from acceptance or deemed acceptance. In the calculator on this site, that is treated as a 15-day credit period.
What interest runs?
Section 16 requires compound interest with monthly rests at three times the bank rate notified by the Reserve Bank of India. It is not simple interest. It is not the contract rate, unless the contract rate is higher and a court or council is asked to consider that separately. The Bank Rate is not the repo rate — it sits above the repo in the RBI’s corridor (presently 5.50% where repo is 5.25%). Three times 5.50% is 16.50% per annum, compounded monthly.
A spreadsheet that multiplies principal × 16.50% × days/365 understates a long delay, because it ignores monthly rests. Over a year the difference is visible; over three years it is the dispute.
Who can claim?
The supplier must be a micro or small enterprise for the Act to apply in the way the Council and the courts have read it. Udyam registration, the date of registration relative to the supply, and whether the buyer can go behind the certificate are live issues. Medium enterprises do not get the same delayed-payment machinery.
Where the claim is filed
Section 18 sends the dispute to the Micro and Small Enterprises Facilitation Council. A buyer who challenges a Council award in court is met with Section 19 — a 75% deposit. That provision is why a correctly computed Section 16 figure is not an academic exercise. It is the number on which the deposit is calculated.
Use the MSME delayed payment interest calculator for an indicative working, and read it against the invoices before any demand is issued.
Related: MSME Claims & Delayed Payment Recovery.