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MSME Section 43B(h) Interest Calculator

See exactly how much you owe an MSME supplier under MSMED Act Section 16 (compound interest at 3× the RBI bank rate) and check whether the amount is disallowed under Income Tax Section 43B(h).

Invoice amount (₹)

Unpaid principal only (excl. GST if you've already paid GST portion).

Invoice date

Paid on (leave blank if still unpaid)

Agreed credit period (days)

Leave blank if no written agreement, statutory 45 days applies.

Is the credit period in a signed written agreement?

Yes, written agreement No / verbal only

MSMED Act caps the credit period at 45 days regardless of what's agreed if there's no signed agreement.

Reset

How MSME interest & Section 43B(h) work

MSMED Act, Section 15 — the 45-day rule

If your supplier is registered as Micro or Small under the MSMED Act 2006, you must pay them within the period agreed in writing — capped at 45 days from the day the goods or services are accepted. If nothing is agreed in writing, the payment is due within 15 days. (Medium enterprises are outside Section 43B(h) scope.)

MSMED Act, Section 16 — interest liability

Any delay beyond the agreed / statutory period attracts compound interest with monthly rests at 3× the RBI bank rate (currently 6.5% × 3 = 19.5% p.a.). This interest is not deductible for the buyer under income-tax computation.

Income Tax Act, Section 43B(h) — the FY-end disallowance

Effective 1 April 2024, any amount payable to a Micro or Small enterprise that remains unpaid at the end of a financial year cannot be claimed as a deduction in that FY. The expense gets added back to your taxable income — even if it's a legitimate purchase — and only becomes deductible in the year of actual payment.

Common mistakes we see

Assuming a verbal 60-day credit works — it doesn't. Without a signed agreement, it's 15 days.
Paying the interest but forgetting the 43B(h) disallowance is separate from the interest.
Not tracking Udyam status — if your supplier isn't registered as Micro/Small, none of this applies.
Missing the MSME-1 half-yearly return (due 30 Apr & 31 Oct) for outstanding > 45 days.

This calculator is provided for information only. Actual interest and tax computation should be verified with your CA. dcomply is not a legal or tax advisor.