Mandatory MSME Form 1 Filing
Compliance Solutions by SetindiabizIs your company struggling with MSME Form 1 compliance? Are you worried about missing deadlines and facing hefty penalties? Setindiabiz offers specialised ROC filing services to ensure your business complies with all MSME payment reporting requirements.
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Applicability to file MSME Form 1 to ROC
MSME Form 1 is a mandatory half-yearly return that every "Specified Company" must file with the Registrar of Companies (ROC) within its due date regarding outstanding payments to Micro and Small Enterprises. This legal requirement stems from the Ministry of Corporate Affairs' commitment to protecting MSMEs from delayed payments, which can significantly impact their financial stability and growth.
Specified Company: The requirement of MSME Form 1 is on every company incorporated under the Companies Act 2013, whether it is OPC, Private Limited, Public Limited, Listed company or unlisted company, regardless of size or industry, if has delayed payment to any Micro or Small enterprises beyond 45 days from the receipt of goods or services.
Most important information about MSME Form 1
| No | Particulars | Important Information |
|---|---|---|
| 1 | Which type of MSME is covered? | Only Micro and Small entrepreneurs |
| 2 | Applicability | Every company incorporated under the Companies Act 2013 |
| 3 | Reporting Period | Half Yearly
|
| 4 | Nature of Filing | Mandatory if delayed payment to Micro and Small entrepreneurs |
| 5 | MCA Portal | V3 |
| 6 | Minimum Threshold | There is no specified minimum amount. Any outstanding payment to a registered Micro or Small Enterprise that has been overdue for more than 45 days necessitates reporting. |
NIL MSME Form -1 Return Filing.
Earlier, a 'Nil MSME-1 Return' was generally not required if there were no outstanding dues to MSME suppliers at the end of the reporting period. However, the rules have changed with the recent amendments effective July 15, 2024 (Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Amendment Order, 2024). According to the amendment above, a company must file MSME Form 1 if payments to micro or small enterprises remain unpaid for more than 45 days during the reporting period, even if there is no outstanding amount at the end of the half-year.
So, even if your company has cleared all MSME dues by the end of the half-yearly reporting due date, if there was any instance where a payment to a micro or small enterprise was delayed beyond 45 days during that period, you would still need to report it in MSME Form 1. The focus has shifted to capturing all instances of delayed payments to ensure greater transparency.
Due Date of Filing MSME Form 1
Every company that has delayed payment to any micro or small enterprises must report such a delay or non-payment to the micro and small enterprises to the ROC by filing MSME Form 1. The due date for filing the MSME Form 1 is within 30 days of the end of each half-year. Following is the table of due date
| No | Period Covered | Due Date |
|---|---|---|
| 1 | October - March | 30th April |
| 2 | April - September | 31st October |
Process of Filing MSME Form 1 to ROC V3 Portal
To ensure compliance with the regulations, the companies that have procured goods or availed services from micro or small enterprises must follow a systematic process for filing MSME Form 1 on the MCA V3 portal. The key steps involved are:
Step - 1
Identify MSME Vendors and Classify
The first step is to identify all suppliers and verify if they are registered as Micro or Small Enterprises under the MSMED Act, 2006, based on the current criteria for investment and turnover. Companies should obtain their MSME registration certificate containing the Udyam Registration Number to maintain accurate records.
Step - 2
Review Accounts Payable Ledger
Conduct a thorough review of the accounts payable ledger to identify all outstanding invoices from the MSME vendors identified in the previous step. Make a list of Micro and Small Entrepreneurs' ledgers based on the MSME Definition, as the filing of MSME Form 1 is only with respect to them.
Step - 3
Identify Instances of Non-Payment or Delay
For each MSME vendor, examine the invoice dates, agreed-upon due dates (which should not exceed 45 days from the date of acceptance of goods or services), and the actual payment dates. Identify all instances where payments have been delayed beyond 45 days or are currently outstanding for more than 45 days as of the end of the half-year.
Step - 4
Filing MSME Form 1 on the MCA V3 Portal
Our compliance experts will help you file the MSME Form 1, which includes logging in to the MCA portal using your company credentials and navigating to the MSME Form 1 filing section. Carefully enter your company details, including CIN, PAN, and registered address, followed by inputting the required information for each MSME supplier along with payment details. The MSME Form 1 is an online digital form and is submitted after digitally signing the form using a valid DSC (Digital Signature Certificate) on the V3 portal of MCA.
Step - 5
Ongoing Compliance
Ongoing compliance monitoring tracks changing regulations and requirements, ensuring your company remains compliant with all amendments to MSME reporting rules throughout the year.
Recent Amendments and Key Updates
Recent amendments to the regulatory landscape for reporting MSME payments have enhanced transparency and ensured more comprehensive disclosures. Effective July 15, 2024, the Specified Companies (Furnishing of information about the payment to micro and small enterprise suppliers) Amendment Order, 2024, made substantial changes in the MSME Form 1 filing requirement for companies. The table below summarises the pre- and post-amended positions.
| Feature | Previous Requirement (V2) | New Requirement (V3 & 2024 Amendment) |
|---|---|---|
| Reporting Scope | Reporting of outstanding payments exceeding 45 days as of the end of the half-year | Reporting of payments made within 45 days, payments made after 45 days but within the half-year, payments outstanding for 45 days or less, and payments outstanding for more than 45 days as of the end of the half-year. Reporting is triggered if payments remain unpaid for more than 45 days during the reporting period |
| Nil Return | Companies with no outstanding dues exceeding 45 days were not required to file. | The concept of a 'Nil Return' is no longer applicable in the same way. Reporting is required if any payments are delayed beyond 45 days during the period. |
| Detail of Disclosure | Amount due, date from which due, reason for delay | Comprehensive disclosures, including the ageing of dues (amounts outstanding for different durations) |
| Effective Date | Introduced via MCA circular on 22nd January 2019 | V3 version and Amendment Order effective from 15th July 2024 |
Penalty for non-compliance due to failure to file MSME Form 1
Failure to file the MSME Form 1 by a company, if applicable, due to any delay in paying dues to the micro and small entrepreneurs attracts penalties under Section 405(4) of the Companies Act, 2013 1. The penalties for non-compliance are as follows:
| Penalty for Company | Penalty for Defaulting Director or KMP | Additional Penalty for Continuing Failure | Maximum Additional Penalty |
|---|---|---|---|
| ₹20,000 | ₹20,000 each | ₹1,000 per day | ₹3 lakh |
These penalties underscore the seriousness with which regulators view timely payment to micro and small entrepreneurs and reporting of delayed payments. For effective compliance, the companies must maintain proper books of account and vendor records. The virtual CFO service of setindiabiz is designed to help businesses remain compliant and avoid penalties.
Updated Definition of MSME and Classification
The MSME classification is based on an "either/or" criterion, meaning that an enterprise qualifies for a specific category by meeting either the investment or turnover threshold. The definition of MSME has evolved over time. For a detailed discussion of the current and past classification criteria for MSMEs, please refer to https://www.setindiabiz.com/blog/msme-definition.
Revised MSME Classification Criteria (Effective 1st April 2025)
| Enterprises Type | Investment in plant and machinery or equipment | Turnover During the Previous FY |
|---|---|---|
| Micro Enterprises | ₹2.5 crore | ₹10 crore |
| Small Enterprises | ₹25 crore | ₹100 crore |
| Medium Enterprises | ₹125 crore | ₹500 crore |
Frequently Asked Questions
Any company (public or private) that has purchased goods or services from registered Micro or Small Enterprises and has unpaid payments for more than 45 days at any point during the reporting period must file MSME Form 1. This applies to all companies regardless of size or industry.
The MSME Form 1 is a mandatory reporting for those companies that have procured goods or availed services from micro or small enterprises and either have not paid or delayed their payment beyond 45 days. The deadline is within 30 days of the end of the half-year. The due date is as under.
- For the October-March period: Due by April 30
- For the April-September period: Due by October 31
The MSME Form 1 is filed on the V3 Portal of MCA, where the company has to furnish the following information.
- Company details (CIN, PAN, address)
- MSME supplier details (name, PAN, registration number)
- Payment amounts paid within 45 days during the half-year
- Payment amounts paid after 45 days but within the half-year
- Outstanding amounts (45 days or less) at the end of the half-year
- Outstanding amounts (more than 45 days) at the end of the half-year
- Specific reasons for payment delays
Yes. With the V3 transition effective July 2024, companies must report if any payments remained unpaid for more than 45 days during the reporting period, even if there are no outstanding dues at the end of the half-year. The concept of 'Nil Return' has changed significantly.
Registered MSMEs will have a Udyam Registration Number (URN) or UAM Number. You should request this documentation from your suppliers. Micro and Small Enterprises are classified based on investment in plant and machinery/equipment and annual turnover as per the revised criteria effective July 1, 2020.
The Non-compliance resulting from the non-filing or inaccurate filing of MSME Form 1 attracts penalties under Section 405(4) of the Companies Act:
- ₹20,000 penalty for the company
- ₹20,000 for each defaulting officer
- Additional ₹1,000 per day for continuing failure (up to ₹3 lakh)
No. MSME Form 1 filing is only required for outstanding payments to registered Micro and Small Enterprises. Payments to Medium Enterprises do not need to be reported in this form, regardless of payment timeline.
The V3 version (effective July 15, 2024) requires more comprehensive disclosure:
- Companies must now report all payment activities with MSME suppliers
- Detailed ageing analysis of payments is required
- Reporting is triggered by delays during the period, not just outstanding amounts at period-end
- More detailed categorisation of payments based on timing and status
After successful filing, you'll receive an acknowledgement that should be preserved as proof of fling. ROC uses the information filed in MSME Form 1 to monitor payment practices towards Micro and small entrepreneurs and may take regulatory action in cases of persistent defaults.
The form requires the digital signature of an authorised person, such as a director, CEO, CFO, or company secretary. While your finance or compliance team can do the preparation work, an authorised signatory must authenticate the final submission.