Regulatory & Compliance Advisory
MSME Form 1: A Complete Compliance Guide for Companies
Published: 15 April 2025
Category: MCA Compliance / Companies Act, 2013
By: Unified Professional Services
At a glance: MSME Form 1 is a half-yearly filing under Section 405 of the Companies Act, 2013, mandated by the MCA's 2019 notification. Any company with outstanding dues exceeding 45 days to Micro or Small Enterprise suppliers must file this return. This guide covers who must file, deadlines, the V3 portal changes, consequences of non-compliance, and worked case examples.
India's Micro, Small and Medium Enterprises (MSMEs) form the backbone of the country's economy, yet they frequently face the challenge of delayed payments from larger corporate buyers. To address this, the Ministry of Corporate Affairs introduced MSME Form 1 — a half-yearly compliance return that compels companies to disclose outstanding dues to Micro and Small Enterprise suppliers beyond the prescribed 45-day threshold.
Far from being a mere box-ticking exercise, this form is a direct enforcement mechanism tied to the payment obligations established under the MSMED Act, 2006, and backed by penalty powers under the Companies Act, 2013. Understanding its scope and nuances is essential for every compliance professional.
Legal Framework
Statutory provisions underpinning MSME Form 1
The requirement to file MSME Form 1 flows from two distinct pieces of legislation working in tandem.
Companies Act, 2013
Section 405 — Power to direct furnishing of information
Empowers the Central Government to direct any company or class of companies to furnish information or statistics in a specified form and within a specified period. MSME Form 1 was notified under this section via the Companies (Furnishing of Information about payment to Micro and Small Enterprise Suppliers) Order, 2019, dated 22 January 2019.
MSMED Act, 2006 — Section 15
Obligation to make payment within 45 days
A buyer must make payment to an MSME supplier within 45 days from the date of acceptance or deemed acceptance of goods or services. Where no agreement exists, payment must be made within 15 days.
MSMED Act, 2006 — Section 16
Compound interest on delayed payment
If payment is not made within the 45-day window, the buyer becomes liable to pay compound interest with monthly rests at three times the bank rate notified by the Reserve Bank of India — irrespective of any agreement to the contrary.
Applicability
Who is required to file MSME Form 1?
Any company — public or private, regardless of size or industry — must file MSME Form 1 if both of the following conditions are simultaneously satisfied:
- 1The company has received goods or services from suppliers who are registered as Micro or Small Enterprises under the MSMED Act, 2006.
- 2Payment to such MSME suppliers is outstanding for more than 45 days from the date of acceptance or deemed acceptance of such goods or services.
- 3Payment was made to MSME suppliers after 45 days from the date of acceptance or deemed acceptance during the relevant half-year period.
Important exclusion — Medium Enterprises
The filing obligation applies exclusively to dues owed to Micro and Small Enterprises. Outstanding payments to Medium Enterprises do not trigger the MSME Form 1 requirement, as the MCA's 2019 notification expressly covers only "Micro or Small enterprise suppliers."
Entities not required to file
The following entities are exempt from filing:
- Companies that have no dealings with Micro or Small Enterprises.
- Companies that have cleared all payments to MSMEs within the 45-day period.
- Companies with no outstanding dues exceeding 45 days as on the last day of the reporting period (31 March or 30 September).
Can an MSME itself be required to file?
Yes. A company's own MSME registration is irrelevant to this obligation. If that company purchases goods or services from other Micro or Small Enterprises and allows payment to remain outstanding beyond 45 days, it is equally required to file MSME Form 1 in its capacity as a buyer.
Timeline
Half-yearly reporting periods and due dates
MSME Form 1 must be filed with the Registrar of Companies twice a year, corresponding to the following periods:
Half-Year 1
April – September
Due: 31 October
Half-Year 2
October – March
Due: 30 April
Filing fees
MSME Form 1 carries no ROC filing fee — it is filed at nil cost. Notably, there is also no provision for additional fees on late filing. However, this does not mean non-filing is consequence-free; penalty liability under Section 450 of the Companies Act, 2013 still applies.
MCA Portal Update
Key changes introduced by the V3 portal
When the MCA migrated MSME Form 1 from the V2 to the V3 portal, the scope of information required expanded considerably. Under V2, companies only needed to report dues outstanding for more than 45 days at the end of the half-year. The V3 form now requires disclosure across four distinct categories:
Category 1
Micro & Small vendors to whom payment was made
during the half-year and within 45 days.
Category 2
Micro & Small vendors to whom payment was made
during the half-year but after 45 days.
Category 3
Micro & Small vendors whose payment is
outstanding at period-end but 45 days have not yet elapsed.
Category 4
Micro & Small vendors whose payment is
outstanding at period-end and 45 days have been exceeded.
Regulatory gap — clarification awaited
The original MCA Order of 2019 and the underlying Section 405 provisions only contemplate disclosure of overdue amounts (Categories 2 and 4 above). The V3 portal's requirement to also report Categories 1 and 3 effectively broadens the scope without any corresponding amendment to the statute or notification. This creates a compliance grey area, and MCA clarification on this discrepancy is awaited. Until then, companies should file in accordance with the V3 form requirements to avoid procedural objections.
Common Questions
Frequently asked questions
Is MSME Form 1 required if payment to an MSME was delayed beyond 45 days but cleared before the half-year end?
✓ Filing Required
As per the current V3 portal requirements, yes — such delayed payments (even if cleared before 31 March or 30 September) fall under Category 2 and must be reported. Under the strict reading of the 2019 MCA Order, this would not have been required in the V2 era, but the V3 form now captures this data.
Does an outstanding due to a Medium Enterprise trigger the filing requirement?
✕ No Filing Required
No. The MCA Order expressly covers only Micro and Small enterprise suppliers. Outstanding dues to Medium Enterprises do not attract the MSME Form 1 obligation, regardless of how long they have been outstanding.
What if there are MSME transactions during the half-year but no dues outstanding at period-end?
✓ V3 Filing Advised
Under the original 2019 Order, no filing would be required in such a case. However, with the V3 form requesting data on payments made within 45 days (Category 1), companies that have transacted with MSMEs may be prompted to file even where all dues are cleared. Given the ambiguity, filing a NIL or informational return through the V3 portal is the prudent approach until MCA provides formal clarification.
Is a company itself registered as an MSME still required to file?
✓ Potentially Required
Yes, if it qualifies as a buyer with delayed payments to its own MSME vendors. The filing obligation is based on the company's role as a buyer, not on its own MSME status. An MSME company that purchases goods or services from other Micro or Small Enterprises and delays payment beyond 45 days is equally subject to the filing requirement.
Payment is outstanding at period-end but the 45-day period has not yet elapsed — is filing needed?
✕ No Filing Under Original Law
Under the provisions of the 2019 Order, such dues do not attract the filing requirement as the 45-day threshold has not been breached. However, the V3 form captures this under Category 3. Companies should report such amounts in the V3 portal to avoid incomplete filings, while noting that the regulatory basis for this disclosure remains unclear.
Quick Reference
Filing requirement — scenario summary
| Scenario |
Position under 2019 Order |
Position under V3 Form |
| Payment made within 45 days during the half-year |
Not Required |
Disclosure Required |
| Payment made after 45 days but before period-end |
Required |
Required |
| Outstanding at period-end — 45 days not elapsed |
Not Required |
Disclosure Required |
| Outstanding at period-end — 45 days exceeded |
Required |
Required |
| Due to a Medium Enterprise (any duration) |
Not Required |
Not Required |
Consequences of Non-Compliance
Penalties for non-filing or late filing
Non-filing of MSME Form 1 constitutes a default under Section 405 of the Companies Act, 2013. Section 450 prescribes the following penalties for such defaults:
| Defaulting Party |
Initial Penalty |
Continuing Default |
Maximum Penalty |
| Company |
₹10,000 |
₹1,000 per day |
₹2,00,000 |
| Officer in Default / Director |
₹50,000 |
₹1,000 per day |
₹2,00,000 |
No additional filing fees on late submission
Unlike many other MCA forms, MSME Form 1 does not attract SRN-based additional fees for late filing. The consequences of delay are limited to the penalty structure above under Section 450 — but these can add up quickly for extended delays, as demonstrated by the case below.
Enforcement in Practice
Adjudication order — Samsung R&D Institute India Bangalore Pvt. Ltd.
This adjudication order illustrates the real-world penalty exposure that arises from delayed MSME Form 1 filings.
Facts: The company was required to file MSME Form 1 for two consecutive half-year periods. Both returns were filed on 25 July 2023, well past their respective due dates of 31 October 2022 and 30 April 2023.
Default Instance I — April to September 2022
Filing due date31 October 2022
Actual filing date25 July 2023
Delay266 days
Default period computed1 November 2022 – 25 July 2023
Default Instance II — October 2022 to March 2023
Filing due date30 April 2023
Actual filing date25 July 2023
Delay85 days
Default period computed1 May 2023 – 25 July 2023
Key takeaway
Penalties were levied separately for the company and for the officer in default in respect of each default instance. The case underscores that even a single missed filing can result in compounding daily penalties for both the entity and its responsible officer.
Conclusion
MSME Form 1 is far more than a routine half-yearly filing. It is a policy instrument designed to enforce financial discipline in corporate India's supply chain, protect the liquidity of Micro and Small Enterprises, and create an auditable trail of payment behaviour. With the transition to the V3 portal, the disclosure requirements have expanded — even in cases where no dues were outstanding at the period-end — creating new compliance questions that MCA is yet to formally address.
From a governance standpoint, proactive MSME compliance signals a company's commitment to ethical procurement and statutory accountability. It also mitigates the risk of penalty proceedings, which can run to ₹2 lakh per default instance for both the company and responsible officers — as vividly illustrated by the Samsung R&D adjudication order.
Compliance professionals are well-placed to guide their clients in maintaining accurate vendor classification, computing the 45-day window correctly, and ensuring that MSME Form 1 returns are filed punctually — regardless of whether outstanding dues exist at the reporting date.
Need guidance on MSME Form 1 compliance, vendor classification, or MCA filings? Our regulatory and governance advisory team is here to help.
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