Form MSME-1 is a half-yearly return in which a company tells the Registrar of Companies which of its micro and small suppliers it has not paid on time. It is due by 30 April for the October to March half year, and by 31 October for April to September.
It is the only routine MCA filing whose trigger sits in a different statute entirely. Whether you have to file depends on the MSMED Act, 2006, and the deadline that matters is not 45 days for most companies. It is fifteen.
What Is Form MSME-1?
MSME-1 is filed under Section 405 of the Companies Act, 2013, through the Specified Companies (Furnishing of Information about Payment to Micro and Small Enterprise Suppliers) Order, 2019, notified on 22 January 2019.
Section 405 lets the Central Government order companies to furnish information it considers necessary. The 2019 Order used that power to make overdue payments to small suppliers visible on the public record, as a pressure mechanism rather than a tax.
Who Has to File
The Order applies to a specified company, meaning any company that receives goods or services from a micro or small enterprise and whose payment to that supplier remains outstanding for more than 45 days from the date of acceptance or deemed acceptance.
Three limits on that definition catch people out:
- Micro and small only. Medium enterprises are outside the Order entirely, despite the form being called MSME-1. A late payment to a medium supplier is not reportable here.
- Companies only. The Order is made under the Companies Act, so it binds companies. An LLP, a partnership firm or a proprietorship does not file MSME-1 whatever its size.
- The supplier must be registered. The supplier needs a Udyam registration as a micro or small enterprise, and must be a manufacturer or service provider. Traders hold Udyam registration for lending purposes but are outside the MSMED Act payment provisions.
The 45 Day Rule Is Really a 15 Day Rule
This is the part almost every summary gets wrong, and it is worth being precise about because it changes who has to file.
Section 15 of the MSMED Act, 2006 requires a buyer to pay on or before the date agreed in writing, and where there is no written agreement, before the appointed day. It then caps any agreed period at 45 days from acceptance.
Section 2(b) defines the appointed day as the day immediately following the expiry of fifteen days from the day of acceptance or deemed acceptance.
| Situation | Payment due within |
|---|---|
| No written agreement on credit period | 15 days from acceptance |
| Written agreement specifying a period | As agreed, but never more than 45 days |
So 45 days is a ceiling on what you may agree, not a default entitlement. A company buying on an informal purchase order with no written credit terms is late on day 16, not day 46.
Acceptance itself has a definition. Where the buyer raises no written objection within fifteen days of delivery, the goods are deemed accepted on the delivery date, and the clock runs from there.
MSME-1 Due Dates
| Half year covered | Due date |
|---|---|
| 1 October to 31 March | 30 April |
| 1 April to 30 September | 31 October |
The return reports amounts outstanding beyond the permitted period as at the end of the half year, together with the reasons for the delay. It is a snapshot, not a running log, so an invoice paid late but settled before the half year closed is not reported.
Is a Nil Return Required?
Generally no. The obligation attaches to a specified company, and a company with nothing outstanding beyond the permitted period at the end of the half year does not meet that definition for that period.
That said, a number of practitioners file a nil return anyway, on the view that it costs nothing and creates a clean record that the question was considered. If your statutory auditors have a house position on this, follow it. What you should not do is assume the question away: the test is whether anything was overdue at the half year end, and that requires actually ageing the creditor ledger.
Information Required in the Return
- Total outstanding amount due to micro and small enterprises beyond the permitted period
- For each supplier: name, PAN, and the amount outstanding
- The date from which the amount has been outstanding
- Reasons for the delay in payment, which is a free text field and is the part most companies leave until last
- DSC of a director, or of the company secretary where one is appointed
There is no filing fee for MSME-1. The cost of getting it wrong sits in the penalty rather than the fee.
Penalty for Not Filing
Because the Order is made under Section 405, the penalty in Section 405(4) applies: the company and every officer in default are liable to a penalty of ₹20,000, and where the failure continues, a further ₹1,000 for each day, subject to a maximum of ₹3 lakh.
The same provision covers knowingly furnishing information that is false or incomplete in any material respect, so an understated return carries the same exposure as no return at all.
Interest Runs Whether or Not You File
MSME-1 reports a liability that already exists. Section 16 of the MSMED Act makes a buyer who misses the deadline liable to pay compound interest with monthly rests at three times the bank rate notified by the Reserve Bank of India, and it applies notwithstanding anything in the contract between the parties.
Two things follow. The supplier cannot waive that interest by agreement, and under Section 23 the interest paid is not deductible in computing the buyer's taxable income. It is a genuine cost, not an accounting entry.
Separately, Section 22 of the MSMED Act requires the principal and interest still owed to micro and small suppliers to be disclosed in the company's annual accounts, so the same figures surface again in the financial statements filed with AOC-4.
The Income Tax Consequence Most Companies Miss
Section 43B(h) of the Income Tax Act, inserted by the Finance Act, 2023 and applicable from assessment year 2024-25, allows a deduction for any sum payable to a micro or small enterprise only in the year it is actually paid, where payment falls outside the Section 15 time limit.
What makes this sharper than the rest of Section 43B is that the usual escape does not apply. For other items in Section 43B you can pay before the income tax return due date and still claim the deduction in the earlier year. That first proviso was expressly made unavailable for clause (h). Pay a small supplier late and the deduction moves to the following year with no way to pull it back.
This is tax advice territory rather than ROC compliance, so confirm the treatment with your tax advisor. But it is the reason MSME ageing stopped being a purely procedural exercise and started affecting taxable profit.
How to File MSME-1 on MCA V3
- Age the creditor ledger as at the half year end, and isolate suppliers with Udyam registration as micro or small
- Apply the correct period to each: 15 days where there is no written credit term, or the agreed period capped at 45 days
- Log in to mca.gov.in with the company business user credentials
- Open MCA Services, then e-Forms, then MSME Form 1
- Enter the CIN. Company details pre-fill from master data
- Select the half year being reported
- Enter the supplier details, amounts outstanding, dates from which they are due, and the reasons for delay
- Affix the DSC and submit, then note the SRN. There is no fee to pay
Common Mistakes
- Assuming 45 days applies to everyone, when most informal supply arrangements carry no written credit term and are therefore on 15 days
- Including medium enterprises, which are outside the Order
- Relying on the supplier to mention it. The obligation is on the buyer, and suppliers often do not raise it for fear of losing the account
- Treating the ledger as static. Udyam status can change during the year, and a supplier that was micro at the start may have moved up
- Reporting amounts merely outstanding rather than outstanding beyond the permitted period, which overstates the return
- Leaving the reasons field generic. A blank or boilerplate reason invites follow-up
Building It Into the Half Year Close
MSME-1 is unusual among ROC filings in that the work is almost entirely in the accounts rather than the form. Once the ageing is done and the suppliers are classified, the filing itself takes minutes. Companies that struggle with it are not struggling with MCA; they are struggling to tell which of their creditors are registered micro or small enterprises.
The practical fix is to capture Udyam registration numbers at vendor onboarding rather than reconstructing them twice a year. Leagully tracks the two MSME-1 windows alongside the rest of the calendar and flags them from the half year end. For the other recurring filings, see the annual compliance checklist and the ROC compliance calendar, and our guide to DPT-3, the other return that turns on how money owed is classified.