MSME-1 Form Filing: Who Must File, Due Dates, Applicability & Penalties

Last Updated on July 6, 2026

If your company buys goods or services from a small vendor and the payment gets delayed, the Ministry of Corporate Affairs likely wants to know about it. MSME Form 1 is a half-yearly disclosure that specified companies must file with the ROC whenever payments to Micro or Small Enterprise suppliers cross the 45-day mark.

This guide covers who needs to file, the current due dates, the documents required, and the penalties for skipping it.

What is MSME Form 1?

MSME Form 1 is an e-form filed with the ROC that discloses outstanding dues a company owes to its Micro or Small Enterprise suppliers, once those dues cross 45 days from the date of acceptance of goods or services. It was introduced through an MCA order dated 22nd January 2019, issued under Section 405 of the Companies Act, 2013.

In plain terms, it is a transparency tool showing which companies are sitting on MSME payments longer than the law allows and why. The form captures the outstanding amount, the supplier’s name and PAN, and the reason for the delay.

What is “Deemed Acceptance”?

Under Section 2(b) of the MSMED Act 2006, if a buyer neither accepts nor rejects goods or services in writing within 15 days of delivery, the delivery date itself becomes the deemed acceptance date, and the 45-day clock starts from there.

This matters because many companies calculate 45 days from the invoice date or payment terms date, which may be later than the actual delivery date. Starting the clock from the wrong date means you’re underreporting overdue payments in Form 1, which is an inaccurate filing and attracts the same penalty as non-filing.

Explore our guide on the New MSME 45-Day Payment Rule and understand how it impacts buyers and MSME suppliers.

First-Time Filers: The Initial Return Requirement

When the MCA order was first introduced in 2019, companies were required to file an initial one-time return disclosing all outstanding dues to MSME suppliers as of the date of the notification, regardless of the half-year cycle.

For companies that are newly incorporating or newly transacting with MSME suppliers for the first time, there is no separate “first filing” process today; the regular half-yearly cycle applies. However, if your company has never filed Form 1 despite having qualifying transactions in previous half-years, those are all separate defaults with separate penalties accumulating from each missed due date.

Why is MSME-1 Form Filing Important?

For MSMEs, delayed payments choke working capital and stall operations. This filing pressures larger buyers to clear dues on time, or at least be answerable for the delay in a public record.

For companies, it is not optional paperwork. It carries real legal weight, and the disclosures often get cross-referenced with tax filings. If a company reports delayed MSME payments in Form 1 but still claims a full expense deduction in its ITR, that mismatch can trigger scrutiny under Section 43B(h) of the Income Tax Act.

Section 43B(h): The Tax Consequence of Delayed MSME Payments

From FY 2023-24 onwards, Section 43B(h) of the Income Tax Act disallows the expense deduction for payments to Micro and Small Enterprise suppliers if the payment isn’t made within the time allowed under Section 15 of the MSMED Act, i.e., within 45 days (or the agreed credit period, whichever is shorter, subject to the 45-day cap).

In plain terms: if you owe ₹10 lakh to an MSME supplier and haven’t paid within 45 days by March 31, you cannot claim that ₹10 lakh as a deductible business expense in that financial year. You only get the deduction in the year you actually pay.

The cross-reference with Form 1 is direct: if your Form 1 shows delayed payments but your ITR claims full expense deductions for those same periods, that inconsistency is a red flag for income tax scrutiny.

Who needs to file the MSME-1 Form?

Any company fitting the description of a “specified company” must file MSME Form 1. This includes:

• Private and public limited companies
• One Person Companies (OPCs), where applicable
• Companies of any size, since there is no turnover threshold
• Any company that bought goods or services from a Micro or Small enterprise with payments outstanding beyond 45 days

It does not apply to LLPs, partnership firms, or sole proprietorships, since the obligation flows from the Companies Act, 2013, which governs only companies.

Eligibility / Requirements for MSME-1 Form Filing

Filing becomes necessary only when:

• The supplier is registered as a Micro or Small Enterprise under the MSMED Act (verified via Udyam Registration)
• The company received goods or services from that supplier
• Payment remained outstanding for more than 45 days from acceptance or deemed acceptance
• The transaction falls within the half-year being reported

If no MSME payments crossed 45 days in a given half-year, you are not required to file. There is no Nil filing requirement.

Agreed Credit Period vs 45 Days

Section 15 of the MSMED Act allows parties to agree on a payment period, subject to a hard ceiling. Even if your purchase agreement specifies 60 or 90 days’ credit, the maximum permissible period for MSME suppliers is 45 days. Any agreed period beyond 45 days is legally unenforceable against an MSME supplier.

This means credit terms that your legal team negotiated and your finance team relies on may be void if the supplier is Micro or Small. Payment must happen within 45 days regardless of what the contract says, and the Form 1 clock runs from the earlier of acceptance or the contractually agreed date (capped at 45 days).

MSME Classification Thresholds

Under the revised MSMED Act classification (effective July 2020):

Category	Investment in Plant & Machinery	Annual Turnover
Micro	Up to ₹1 crore	Up to ₹5 crore
Small	Up to ₹10 crore	Up to ₹50 crore
Medium	Up to ₹50 crore	Up to ₹250 crore

MSME Form 1 covers only Micro and Small suppliers. Medium enterprises are excluded; payments delayed to Medium enterprises don’t trigger Form 1 filing obligations or Section 43B(h) disallowance.

This distinction matters practically: a supplier who was Small last year may have crossed into Medium this year, meaning delays on their invoices no longer require Form 1 reporting. Always verify the current Udyam classification, not last year’s certificate.

Documents Required for MSME-1 Form Filing

Before filing, gather the following:

Company Identity

• Corporate Identification Number (CIN)
• PAN of the company
• Registered email ID and contact details

Business Records

• List of Micro and Small suppliers with outstanding dues
• Invoice amount and date
• Date of acceptance or deemed acceptance of goods/services

Supporting Documents

• Reason for delay against each transaction
• Udyam certificate or written declaration confirming supplier’s MSME status

Looking to download your Udyam Registration Certificate? Read our complete guide to learn the online process, required details, and troubleshooting tips for downloading your certificate.

Authorisation

• Digital Signature Certificate (DSC) of the director, CS, CEO, or CFO who will sign the form

Having these ready before you log in saves a lot of back-and-forth once the filing window opens.

Step-by-Step Process to File Form MSME-1

Step 1. Preparation

Identify suppliers registered under the MSMED Act and review payment records to spot dues pending beyond 45 days.

Step 2. Application

Log in to the MCA V3 portal, go to MCA Services > e-Forms, select MSME Form 1, and enter company- and supplier-wise transaction data.

Step 3. Verification

Cross-check amounts, dates, and delay reasons against your books.

Step 4. Approval

Get the form digitally signed by an authorised director, CS, CEO, or CFO with a valid DSC.

Step 5. Post Approval

Submit the form, download the SRN acknowledgement, and track status under View Public Documents.

Fees / Cost for filing MSME Form 1

There is no separate government fee prescribed for filing MSME Form 1, since it is a disclosure return, not an application requiring statutory charges. Companies typically incur:

• Professional fees, if a CA, CS, or compliance firm prepares and files the return
• DSC renewal cost, if the signing authority’s Digital Signature Certificate has expired

Actual professional charges vary with the number of transactions being reported, so it is best to get a quote based on your filing volume.

Timeline & Due Date for MCA Form MSME-1

Reporting Period	Due Date
April – September	31st October
October – March	30th April

Companies occasionally see extensions when the MCA issues a circular deferring the deadline, so it is worth checking the portal closer to the due date each cycle.

Compliance Requirements

Filing is not a one-time task. It is an ongoing half-yearly obligation for as long as the company transacts with Micro or Small suppliers:

• File the return for every half-year with a qualifying delay
• Maintain updated Udyam status records for all vendors
• Preserve invoice and payment records supporting the reported figures
• Reconcile Form 1 disclosures with your books and tax filings

Penalty / Consequences

Non-compliance is taken seriously under company law. If a specified company fails to file on time:

• Legal: The company and every officer in default are liable under Section 405(4) of the Companies Act, 2013
• Financial: A penalty of Rs. 20,000 applies initially, plus Rs. 1,000 per day of continuing default—subject to a maximum cap of Rs. 3,00,000.
• Business: Repeated non-compliance can affect the company’s standing during due diligence or ROC scrutiny
• Compliance: Incorrect or incomplete filings attract the same penalty as non-filing

Given how quickly the daily penalty adds up, it is far cheaper to file on time than to explain a delay later.

MSME Samadhaan: Where Your Suppliers Can File Complaints

The government’s MSME Samadhaan portal (samadhaan.msme.gov.in) allows Micro and Small suppliers to file delayed payment complaints directly against buyer companies. Once a complaint is filed, it goes to the MSME Facilitation Council, which has quasi-judicial powers to adjudicate and award the dues plus Section 16 interest.

Companies whose names frequently appear on Samadhaan are also more likely to attract ROC scrutiny of their Form 1 filings or to be questioned about discrepancies between what they reported and what the supplier claimed. Maintaining clean payment records is the simplest defence against both.

Common Mistakes

• Assuming every small vendor is automatically an MSME without checking Udyam Registration
• Reporting only year-end outstanding balances, and missing transactions paid late but cleared before the half-year closed
• Treating Medium enterprises the same as Micro or Small suppliers, when they are excluded from this form
• Not reconciling Form 1 data with Section 43B(h) disclosures in the ITR
• Missing the deadline because the signing officer’s DSC had expired

Benefits of MSME-1 Form Filing

• Keeps the company compliant and avoids escalating daily penalties
• Builds a documented payment history that supports vendor relationships
• Reduces the risk of tax scrutiny from inconsistent disclosures
• Signals sound governance to investors and lenders during due diligence

Practical Scenario

Consider a manufacturing company sourcing components from a Udyam-registered small enterprise. One invoice worth Rs. 8 lakh was accepted on 10th June, but payment was released only on 20th August, 71 days later and past the 45-day limit. Even though the amount was fully paid before the half-year ended on 30th September, the company must still report this transaction in its April-September Form 1, along with the reason for the delay. Many businesses wrongly assume that clearing the payment before the reporting date removes the filing obligation.

Expert Tips / Best Practices

• Set a quarterly review of vendor payment ageing, rather than scrambling before the due date
• Collect Udyam certificates from vendors at onboarding, not after a dispute arises
• Maintain a simple tracker logging invoice, acceptance, and payment dates for every MSME vendor
• Align Form 1 data with your tax team before filing ITR to avoid mismatches under Section 43B(h)

How Kanakkupillai Can Help?

Tracking supplier classifications, monitoring the 45-day clock across invoices, and filling the V3 form correctly can get tedious, especially with a large vendor base. Kanakkupillai’s compliance team handles the process end-to-end, verifying Udyam status, reconciling records, and filing on time, so you can stay focused on running the business.

Conclusion

MSME Form 1 may look like a small compliance item, but the penalties for ignoring it add up quickly, and its disclosures connect directly to your tax filings. Once you have a system to track vendor payment timelines, filing becomes routine rather than stressful. If you are unsure whether your company qualifies as a specified company this half-year, it is worth a quick review before the next due date.

FAQs

1. Is MSME Form 1 applicable to LLPs and partnership firms?

No, this filing requirement applies only to companies registered under the Companies Act, 2013. LLPs, partnership firms, and sole proprietorships fall outside its scope since Section 405 governs company law compliance specifically.

2. Do we need to file a Nil return if there are no delayed payments?

No. MSME Form 1 needs to be filed only when at least one payment to a registered MSME supplier has remained outstanding beyond 45 days during the half-year.

3. Does this form cover Medium enterprises as well?

No, the form only covers payments made to Micro and Small Enterprise suppliers. Medium enterprises, which have higher investment and turnover thresholds under the MSMED Act, are excluded from this reporting requirement.

4. How do we confirm if a supplier qualifies as an MSME?

The most reliable way is to request the supplier’s Udyam Registration certificate, which confirms their classification as Micro, Small, or Medium.

5. What happens if the form is filed late?

Late filing attracts a penalty under Section 405(4) of the Companies Act, 2013. The company and every officer in default are liable for Rs. 20,000 initially, plus an additional Rs. 1,000 for each day the default continues, up to a maximum of Rs. 3,00,000.

6. Who is authorised to sign MSME Form 1?

The form must be digitally signed by a director, Company Secretary, CEO, or CFO of the company who holds a valid Digital Signature Certificate.

7. Can incomplete filings attract penalties too?

Yes, an incomplete or inaccurate filing is treated on par with non-filing under the compliance framework. This means the same penalty provisions under Section 405(4) apply even if the form was submitted but contained errors or missing information.

8. Where is MSME Form 1 filed?

MSME Form 1 is filed electronically on the MCA V3 portal, under the MCA Services > e-Forms section.

9. Can an MSME supplier recover interest on delayed payments without going to court?

Yes. Under Section 16 of the MSMED Act, compound interest at three times the RBI bank rate accrues automatically on delayed payments. The supplier can file a complaint on the MSME Samadhaan portal, which routes the matter to the MSME Facilitation Council, a quasi-judicial body that can award the principal plus interest without a full court process.

10. If a supplier’s Udyam registration lapses or they upgrade to Medium, do we still need to report delays?

No. Your obligation is based on the supplier’s MSME classification at the time of the transaction. If a supplier was classified as Small during the invoice period but later crossed into Medium, the transactions during the Small period still require Form 1 reporting. Always document the supplier’s Udyam status at the time of each transaction, not just at year-end.