MSME Samadhaan Filing Guide & Section 16 Interest Calculator (2026)
After day 45, the statute itself starts charging interest on your buyer’s bill.
A working guide to filing on the MSME Samadhaan portal in 2026 who qualifies, how Section 16 compound interest is actually computed, what the two governing Supreme Court rulings settled, and the step-by-step path from complaint to enforceable award.
- By Suresh Kumar, Aran Law Firm
- Tamil Nadu, India
- 14 min read
- Updated June 2026
Section 16 Interest Ledger
Work out what's actually owed
Section 16 of the MSMED Act compounds interest monthly at three times the RBI Bank Rate automatically, from the day after the appointed day, with no notice required. Enter the figures below for an illustrative reading.
Six things to get right before you file
- Only micro and small enterprises holding a valid Udyam Registration on the date of the underlying supply may use the Samadhaan portal. Medium enterprises and traders sit outside Sections 15–24 of the MSMED Act, 2006 entirely.
- Section 15 caps payment at the agreed date or, at the very outside, 45 days from acceptance or deemed acceptance. A contract clause stretching that period further is void to the extent it does so.
- Section 16 imposes compound interest, with monthly rests, at three times the RBI Bank Rate on every overdue amount. At an illustrative April-2026 Bank Rate of 5.50%, that works out to 16.50% per annum, compounded monthly.
- Silpi Industries v. Kerala SRTC, (2021) 18 SCC 790, holds that registration must predate the supply not merely the dispute. Suppliers who register after the fact have no protection for that supply.
- Gujarat State Civil Supplies Corp. v. Mahakali Foods, (2023) 6 SCC 401, confirms the MSMED Act overrides any contractual arbitration clause the Facilitation Council's jurisdiction cannot be contracted away.
- Section 43B(h) of the Income Tax Act, in force from AY 2024-25, disallows the deduction of any sum owed to a micro or small enterprise that stays unpaid past the Section 15 deadline a tax penalty that sits on top of Section 16 interest.
Who can actually file
The Samadhaan scheme protects micro and small enterprises engaged in manufacturing or services. A valid complaint needs three conditions to hold at once.
Udyam Registration predates the supply
It must have been active on the date of the transaction in dispute, not merely on the date of filing. This is the single most misunderstood condition, and getting it wrong is fatal to the claim.
The transaction fits the statutory definition
The supply of goods or services has to fall within "supplier" as defined under Section 2(n) of the MSMED Act.
Payment is genuinely overdue
The buyer must have missed the appointed day under Section 2(b) — the date fixed in writing, or the 45th day from acceptance, whichever comes first.
The Supreme Court treated Udyam Registration as a substantive eligibility condition rather than paperwork: a supplier cannot reach back and claim MSMED protection for supplies made before they registered. Register before you start supplying — not after the payment dispute begins. The Court also confirmed that the ordinary three-year limitation period under Article 137 of the Limitation Act, 1963 applies, running from the date the cause of action arises. A complaint filed late carries a complete limitation defence for the buyer.
How the 45-day clock actually runs
The clock starts on the “day of acceptance” not the invoice date, unless the two happen to coincide. Suppliers who compute interest from the invoice date alone tend to land on the wrong figure.
Any clause attempting to push payment beyond 45 days is void to that extent. Buyers cannot contract their way around Section 15.
Reading the worked example
Three times the Bank Rate, compounded monthly, regardless of anything the supply contract says to the contrary. Here’s how that plays out over a full year of non-payment, using an illustrative Bank Rate of 5.50% confirm the figure currently in force before relying on it.
| Item | Value |
|---|---|
| Principal overdue | ₹10,00,000 |
| Appointed day | 1 Jan 2026 |
| As-of date | 31 Dec 2026 |
| Statutory rate (3 × Bank Rate) | 16.50% p.a. |
| Compounding | Monthly rests |
| Effective annual rate | ≈ 17.81% p.a. |
| Interest accrued over 12 months | ≈ ₹1,78,100 |
| Total recoverable | ≈ ₹11,78,100 |
This is before any further compensation the Facilitation Council may separately award. If the Bank Rate changes mid-delay, split the ledger into segments at each effective date rather than applying one rate throughout.
Section 23 of the Act closes one more door for buyers: the interest paid under Section 16 cannot be claimed as a deductible business expense under the Income Tax Act, 1961.
Section 43B(h) the tax side of delay
The Finance Act, 2023 added clause (h) to Section 43B, effective from Assessment Year 2024-25. Any sum owed to a micro or small enterprise that stays unpaid past the Section 15 deadline is deductible only in the year it’s actually paid the unpaid amount gets added back to the buyer’s taxable income for the year it fell due. Medium enterprises and traders are outside this clause. The buyer’s tax auditor must report unpaid MSE dues under Clause 22 of Form 3CD.
- No Section 16 interest accrues.
- Full deduction in the year the expense was incurred.
- Nothing to report under Clause 22, Form 3CD.
- Compound interest at 3 × Bank Rate, monthly rests, from day 46.
- Deduction deferred to the year of actual payment; unpaid sum added back to taxable income meanwhile.
- Auditor must disclose the unpaid dues in the Tax Audit Report.
What happens after you file
Samadhaan is a filing gateway. Once submitted, the complaint goes to the Facilitation Council in the supplier’s state not the buyer’s.
Section 18(5) targets a 90-day resolution, though backlogs in some states mean real timelines can run longer. Where a Council sits dormant, a supplier can move the High Court under Article 226 to compel it to act.
A buyer cannot point to a contractual arbitration clause to escape the Facilitation Council’s jurisdiction. The Court held the MSMED Act, as a special statute, displaces the general Arbitration and Conciliation Act, 1996 a Section 18 reference stands regardless of what the supply contract’s dispute-resolution clause says. The Court also fixed the relevant moment for “supplier” status at contract formation, not at the date of filing.
The 75% pre-deposit rule
A buyer who wants to challenge an MSEFC award under Section 34 of the Arbitration and Conciliation Act first has to deposit 75% of the awarded sum principal plus Section 16 interest up to the award date. This is mandatory, not a matter of court discretion.
The rule exists to stop buyers from filing a Section 34 challenge purely to stall and keep holding the supplier’s money during years of litigation. Courts also retain discretion to release part of the deposit to the supplier while the challenge runs which means the precision of the Council’s interest computation directly sets the size of the barrier a buyer has to clear before even getting a hearing.
Filing on Samadhaan, step by step
Verify Udyam Registration status
Confirm it was active on the date of the disputed supply, then pull your URN, PAN, and the mobile number linked to your Udyam profile.
Assemble the evidence
Purchase order, tax invoices, delivery proof, acceptance correspondence, and bank statements showing the outstanding balance plus a ledger computing Section 16 interest from the appointed day, segment by segment if the Bank Rate changed.
Authenticate on the portal
Go to samadhaan.msme.gov.in, choose "Case Filing for Entrepreneur / MSE Units," and verify your URN with the OTP sent to your registered mobile number.
Enter the statutory particulars
Buyer's name, address, GSTIN, principal due, appointed day, and computed interest. Getting the appointed day wrong is the single most consequential error at this stage.
Upload supporting documents
Every invoice, purchase order, delivery record, and piece of correspondence dated, signed where required, and legible, within the portal's file-size limits.
Submit and keep the case number
The portal issues a case number and routes the complaint to the relevant state MSEFC. That number is needed for every hearing notice and follow-up from here on.
Where filings usually go wrong
Registration timing
If Udyam Registration post-dates a supply, Silpi Industries bars the claim for that supply specifically mixed pre- and post-registration supplies need to be separated out.
Wrong appointed day
The 45-day clock runs from acceptance or deemed acceptance, not the invoice date get this wrong and both the interest figure and the limitation analysis are wrong.
Thin documentation
A buyer who denies receipt is hard to rebut without a signed purchase order, a valid tax invoice, and delivery acknowledgement obtained at the time, not after the dispute starts.
Ignoring limitation
The three-year period under Article 137 runs from the date payment fell due. Wait past that and the claim is barred outright.
Unreserved partial payment
Accepting part-payment without writing "without prejudice to the remaining claim" can be read as waiving the balance and the interest on it.
Frequently Asked Questions
Who can file a complaint on the MSME Samadhaan portal?
Only micro and small enterprises with a valid Udyam Registration active on the supply date. Medium enterprises and traders sit outside Sections 15–24 of the MSMED Act regardless of their Udyam status.
What's the Section 16 interest rate in 2026?
Three times the RBI Bank Rate, compounded monthly. At an illustrative 5.50% Bank Rate, that’s 16.50% per annum compounded confirm the rate currently notified by the RBI before relying on any specific figure.
Can a buyer dodge the MSEFC using a contractual arbitration clause?
What is the Section 19 pre-deposit rule?
Does Section 43B(h) apply to every overdue MSE payment?
For Enquiry
Adv.Suresh Kumar
About the Author
Founding Advocate and Senior Partner
Adv. Suresh Kumar is the Founder and Managing Attorney of Aran Law, with over 18 years of litigation and legal advisory experience. He is enrolled with the Bar Council of Tamil Nadu and Puducherry and practises before the Madras High Court, City Civil Court, DRT Chennai, NCLT Chennai Bench, and district courts across Tamil Nadu. He holds a BA, BL (Hons), an M.Sc in Criminology, and postgraduate qualifications in Victimology and Juvenile Justice.
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