When an eligible micro or small enterprise is paid late, the amount outstanding may not be the only issue. The MSMED Act contains a statutory interest provision that buyers and suppliers should understand.<\/p>\r\n\r\n
What does Section 16 provide?<\/h3>\r\nSection 16 of the MSMED Act provides for compound interest with monthly rests at three times the bank rate notified by the Reserve Bank of India, subject to the statutory conditions.\r\n\r\nThis is not the same as simply adding an arbitrary annual interest percentage to an overdue invoice.\r\n
What information is needed?<\/h3>\r\nBefore calculating a claim, establish:\r\n
\r\n \t
The original invoice amount.<\/li>\r\n \t
The amount that remains unpaid.<\/li>\r\n \t
The applicable contractual payment period.<\/li>\r\n \t
The acceptance or deemed-acceptance date.<\/li>\r\n \t
The relevant date from which statutory interest applies.<\/li>\r\n \t
The applicable RBI-notified bank rate over the relevant period.<\/li>\r\n \t
The dates and amounts of part-payments.<\/li>\r\n<\/ul>\r\nThe calculation may need to account for changing rates and payments made during the period. The relevant legal provisions should be applied to the facts.\r\n
Why simple online calculators can mislead<\/h3>\r\nA calculator that assumes one fixed annual rate or ignores monthly rests may not reflect the statutory calculation. Similarly, using the invoice date alone may not establish the correct interest start date.\r\n
What should a business do?<\/h3>\r\nMaintain an invoice-wise record and verify the calculation against the statutory method and applicable RBI rates. Where the amount is substantial or the dates are disputed, obtain professional assistance.\r\n\r\nRemember:<\/strong> Statutory interest is subject to eligibility and the legal requirements of the case. Do not assume that every overdue commercial invoice qualifies for the same calculation.","link":"https:\/\/filingpoint.com\/consultants\/india\/how-is-interest-calculated-on-delayed-msme-payments\/","name":"How Is Interest Calculated on Delayed MSME Payments?","slug":"how-is-interest-calculated-on-delayed-msme-payments","taxonomy":"post_tag","meta":[],"yoast_head":"\nHow Is Interest Calculated on Delayed MSME Payments? - Best Company Registration | Tax Filing Services in Chennai, India<\/title>\n<meta name=\"description\" content=\"Call Filing Point 72999-72500. The Best Company Registration, GST, ROC Filing Consultants. 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