Jugaad Tools[Your business name]
[Your address]
Date: 25 Jul 2025
By Registered Post A.D. / Speed Post / email
To
[Buyer name]
[Buyer address]
Subject: Demand for payment of overdue invoices with interest under sections 15 to 17 of the MSMED Act, 2006
Dear Sir or Madam,
We are a micro enterprise registered on Udyam, engaged in manufacturing. We supplied goods to you under the invoices below.
| Invoice no. | Invoice date | Delivered / accepted | Amount | Paid | Balance | Interest |
|---|---|---|---|---|---|---|
| INV/24-25/0091 | 8 Jan 2025 | 10 Jan 2025 | 1,00,000.00 | 0.00 | 1,00,000.00 | 9,883.88 |
Under section 15 of the Micro, Small and Medium Enterprises Development Act, 2006, a buyer must pay a micro or small supplier on or before the date agreed in writing, which cannot be more than 45 days from the day of acceptance, or, where nothing is agreed in writing, within 15 days of acceptance.
Under section 16, a buyer who fails to do so must pay compound interest with monthly rests at three times the bank rate notified by the Reserve Bank of India, from the appointed day or the day after the agreed date, notwithstanding any agreement to the contrary. Under section 17, the buyer is liable to pay the amount with this interest.
The interest due as on 25 Jul 2025 is ₹9,883.88, worked out month by month in Annexure A. Interest continues to run until payment.
We therefore ask you to pay ₹1,09,884 (One Lakh Nine Thousand Eight Hundred Eighty Four Rupees Only), being principal of ₹1,00,000 and interest of ₹9,884 as on 25 Jul 2025, within 15 days of this letter, that is, on or before 9 Aug 2025, together with further interest under section 16 until the date of payment, by bank transfer to our account.
If the amount is not paid, we may refer the matter to the Micro and Small Enterprises Facilitation Council through the MSME ODR portal under section 18 of the Act.
Please also note that under section 43B(h) of the Income-tax Act, 1961 (section 37(2)(g) of the Income-tax Act, 2025 from tax year 2026-27), an amount payable to a micro or small enterprise beyond the time limit in section 15 is deductible only in the year it is actually paid, and under section 23 of the MSMED Act the interest is not deductible at all.
This letter is without prejudice to our other rights and remedies.
Yours faithfully,
For [Your business name]
Authorised signatory
Enclosures
- Copies of the invoices
- Proof of delivery or acceptance
- Udyam registration certificate
- Annexure A: interest schedule
Annexure A: interest schedule as on 25 Jul 2025
Compound interest with monthly rests at three times the Bank Rate notified by the Reserve Bank of India (section 16). The Act doesn't say which bank rate applies after it changes; we use the rate on the first day of each month.
INV/24-25/0091: ₹1,00,000.00, accepted 10 Jan 2025, due 25 Jan 2025, interest from 26 Jan 2025
| Period | Bank Rate on 1st day | 3× | Interest | Balance |
|---|---|---|---|---|
| 26 Jan – 25 Feb 2025 | 6.75% | 20.25% | 1,687.50 | 1,01,687.50 |
| 26 Feb – 25 Mar 2025 | 6.50% (from 7 Feb) | 19.50% | 1,652.42 | 1,03,339.92 |
| 26 Mar – 25 Apr 2025 | 6.50% | 19.50% | 1,679.27 | 1,05,019.20 |
| 26 Apr – 25 May 2025 | 6.25% (from 9 Apr) | 18.75% | 1,640.92 | 1,06,660.12 |
| 26 May – 25 Jun 2025 | 6.25% | 18.75% | 1,666.56 | 1,08,326.68 |
| 26 Jun – 25 Jul 2025 | 5.75% (from 6 Jun) | 17.25% | 1,557.20 | 1,09,883.88 |