MSME Form 1 Half-Yearly Return – Reporting Delayed Payments to MSME Suppliers

Introduction

Timely payment to Micro and Small Enterprises (MSEs) is a key objective of the Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act). To promote transparency and protect the interests of MSME suppliers, the Ministry of Corporate Affairs (MCA) requires certain companies to file MSME Form 1, a half-yearly return reporting outstanding payments due to Micro and Small Enterprises beyond the prescribed time limit.

Failure to comply with these reporting requirements may result in penalties under the Companies Act, 2013. This article explains the applicability, due dates, reporting requirements, filing process, and key compliances relating to MSME Form 1.

What is MSME Form 1?

MSME Form 1 is a half-yearly return that must be filed with the Registrar of Companies (ROC) by specified companies having outstanding payments to Micro and Small Enterprises (MSEs) for more than 45 days from the date of acceptance or deemed acceptance of goods or services.

The return enables the Government to monitor delayed payments to MSMEs and ensure compliance with the MSMED Act, 2006.

Legal Basis

The requirement to file MSME Form 1 arises under the Specified Companies (Furnishing of Information about Payment to Micro and Small Enterprise Suppliers) Order, 2019, issued under the Companies Act, 2013.

Who is Required to File MSME Form 1?

A company is required to file MSME Form 1 if:

It has obtained goods or services from a Micro or Small Enterprise registered under the MSMED Act; and

Any payment to such supplier remains outstanding for more than 45 days from the date of acceptance or deemed acceptance of goods or services.

Which Companies are Covered?

The requirement generally applies to:

Private Limited Companies

Public Limited Companies

One Person Companies (OPCs)

Section 8 Companies

Producer Companies

Other companies registered under the Companies Act, 2013

Which Suppliers are Covered?

The reporting requirement applies only to suppliers classified as Micro or Small Enterprises under the MSMED Act.

It does not apply to:

Medium Enterprises

Large Enterprises

Suppliers that are not registered as Micro or Small Enterprises under the MSMED Act

Accordingly, companies should obtain and maintain valid MSME registration details (such as Udyam Registration) from their vendors.

What is the 45-Day Rule?

Under the MSMED Act:

Payment should generally be made within the agreed credit period.

However, the agreed credit period cannot exceed 45 days from the date of acceptance or deemed acceptance of goods or services.

If payment remains outstanding beyond this period, the amount becomes reportable in MSME Form 1.

Due Dates for Filing MSME Form 1

MSME Form 1 is filed twice every financial year.

Half-Year	Reporting Period	Due Date
April – September	1 April to 30 September	31 October
October – March	1 October to 31 March	30 April

Companies should verify the applicable due dates notified by the MCA for the relevant reporting period.

Information Required in MSME Form 1

The following details are generally required:

Corporate Identification Number (CIN)

Company Name

Registered Office Address

Name of the MSME Supplier

PAN of the Supplier (where applicable)

Amount Outstanding

Date from which payment became due

Reasons for delay in payment

Documents to be Maintained

Although no documents are attached with the e-form, companies should maintain:

Vendor invoices

Purchase orders

Goods receipt notes

Payment records

Vendor confirmation

Udyam Registration Certificate of the supplier

Ledger accounts

Bank payment proofs

These records may be required in case of regulatory verification.

Filing Process

Step 1

Identify all vendors registered as Micro or Small Enterprises.

Step 2

Verify outstanding balances as on the reporting date.

Step 3

Determine whether any payment has remained outstanding for more than 45 days.

Step 4

Compile supplier-wise information and reasons for delay.

Step 5

Prepare and digitally sign MSME Form 1.

Step 6

File the form electronically with the Registrar of Companies (ROC).

Consequences of Delayed Payment

Apart from the reporting requirement, delayed payment to Micro and Small Enterprises may also result in:

Liability to pay interest under the MSMED Act.

Potential disputes before the Micro and Small Enterprises Facilitation Council (MSEFC).

Financial and legal implications for the company.

Penalties for Non-Compliance

Failure to furnish MSME Form 1 or furnishing incorrect information may attract penalties under the Companies Act, 2013 and the applicable rules.

Companies should therefore ensure timely identification of reportable dues and accurate filing of the return.

Best Practices for Companies

To ensure compliance:

Obtain Udyam Registration details from all vendors.

Identify whether each supplier qualifies as a Micro or Small Enterprise.

Regularly review accounts payable ageing.

Monitor invoices approaching the 45-day limit.

Clear outstanding dues promptly wherever possible.

Maintain complete documentation supporting payments and delays.

File MSME Form 1 within the prescribed due dates.

Frequently Asked Questions (FAQs)

Is MSME Form 1 mandatory for every company?

No. It is required only if a company has outstanding payments exceeding 45 days to suppliers that are registered as Micro or Small Enterprises under the MSMED Act.

Is MSME Form 1 filed annually?

No. It is a half-yearly return and is generally filed twice each financial year.

Are payments to Medium Enterprises reportable?

No. MSME Form 1 applies only to Micro and Small Enterprises.

Is interest payable on delayed payments to MSMEs?

Yes. Delayed payments may attract interest under the MSMED Act, subject to the applicable legal provisions.

What if the company has no delayed payments?

If there are no reportable outstanding payments to Micro or Small Enterprise suppliers beyond 45 days, MSME Form 1 is generally not required to be filed.

Conclusion

MSME Form 1 is an important corporate compliance requirement aimed at improving payment discipline towards Micro and Small Enterprises. Companies should proactively identify MSME suppliers, monitor ageing of outstanding invoices, and ensure timely payments to avoid both reporting obligations and potential liability under the MSMED Act.

Maintaining proper vendor records, periodically reviewing outstanding balances, and filing MSME Form 1 within the prescribed timelines will help companies remain compliant with the Companies Act, 2013 and support a transparent business environment.