Question 1

What is the 'appointed day' under the MSMED Act?

Accepted Answer

It is the day immediately following the due date for payment. Interest under Section 16 starts accruing from the appointed day.

Question 2

Can the agreed credit period be more than 45 days?

Accepted Answer

No. Under Section 15, the agreed credit period cannot exceed 45 days. If there is no written agreement, the due date is 15 days from acceptance.

Question 3

What does 'three times the bank rate' mean?

Accepted Answer

The interest rate is three times the RBI Bank Rate notified from time to time. We compound it monthly as required by Section 16.

Question 4

Is MSME interest tax-deductible?

Accepted Answer

No. Interest paid under the MSMED Act is not deductible as a business expense under the Income-tax Act.

Question 5

How is this related to Section 43B(h)?

Accepted Answer

Section 43B(h) disallows the underlying expense if not paid to a micro/small enterprise within the Section 15 window. Our 43B(h) tracker handles the disallowance; this calculator handles the MSMED Act interest.

MSME Delayed Payment Interest Calculator (Section 16, MSMED Act)

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