How late payment interest is calculated
Most commercial leases charge simple interest on rent paid after the due date, often after a short grace period:
For a monthly rate, the calculator uses Amount × Monthly rate × Days ÷ 30.
Example: ₹2,36,000 due on 5 September, paid on 20 October — 45 days late. With a 7-day grace period and 18% a year charged only after the grace period, 38 days are charged: ₹2,36,000 × 18% × 38 ÷ 365 = ₹4,422.58.
Two ways leases treat the grace period
- Only days after the grace period are charged — the most tenant-friendly reading.
- From the due date once the payment is later than the grace period — all days late are charged.
Check which one your lease uses; the difference can be a week or more of interest.
Frequently asked questions
How do I calculate interest on late rent?
Multiply the overdue amount by the annual interest rate and by the number of days charged, then divide by 365. For a monthly rate, divide by 30 instead and use the monthly rate.
What is a grace period for rent?
A few days after the due date during which rent can be paid without interest. Some leases charge interest only for days beyond the grace period; others charge from the due date once it is exceeded.
Is GST charged on late payment interest?
It can depend on the contract and how the interest is billed. Check with your chartered accountant.
Collect rent on time
LeaseHub360 tracks dues, sends payment reminders and applies late-payment penalty rules automatically.