MSME FORM 1
A Comprehensive Compliance Guide
Under Section 405 of the Companies Act, 2013
1. Overview & Summary
MSME Form 1, introduced under Section 405 of the Companies Act, 2013 by the Ministry of Corporate Affairs, is a half-yearly compliance requirement applicable to companies that have outstanding dues to Micro and Small Enterprises beyond 45 days from acceptance of goods or services. The form ensures transparency and enforces timely payments in line with the MSMED Act, 2006, which also mandates interest on delayed payments. Filing is triggered only when such delayed payments exist, and it excludes Medium Enterprises and companies with no outstanding dues. Under the revised V3 portal, reporting requirements have expanded to include additional categories of transactions, creating ambiguity as formal amendments are awaited. Non-compliance attracts penalties under Section 405, including daily fines on companies and officers. The framework emphasizes financial discipline, accountability, and protection of MSME cash flows through structured disclosure and monitoring mechanisms.
Key Objective
To ensure transparency and enforce timely payments to Micro and Small Enterprises, in accordance with the MSME Development Act, 2006 — which mandates payment within 45 days of acceptance of goods or services. If payments are delayed beyond this period, the form serves as a statutory declaration of such dues.
2. Legal Provisions & Statutory Framework
Section 405 — Companies Act, 2013
This is the primary statutory provision that empowers the Central Government to direct companies to furnish information or statistics.
Section 405(1) — Statutory Text
“The Central Government may, by order, direct any company or class of Companies to furnish such information or statistics as may be specified in the order within such time and in such form and manner as may be specified therein.”
MSME Form 1 is notified under this section via the Companies (Furnishing of Information about Payment to Micro and Small Enterprise Suppliers) Order, 2019, dated 22nd January 2019.
Related Provisions — MSME Development Act, 2006
| Section 15 | Obligation to Make Payment: A buyer must make payment to the supplier within 45 days from the date of acceptance or deemed acceptance of goods or services. |
| Section 16 | Interest on Delayed Payment: If a buyer fails to make payment within 45 days, they are liable to pay compound interest with monthly rests at three times the bank rate notified by the Reserve Bank of India (RBI). |
3. Who Is Required to File MSME Form 1?
Any company — public or private — regardless of its size or nature, is required to file MSME Form 1 if it satisfies both of the following conditions:
1. The company has received goods or services from suppliers who are registered as Micro or Small Enterprises (MSEs) under the MSMED Act, 2006; AND
2. Payment to such MSME suppliers is outstanding for more than 45 days from the date of acceptance or deemed acceptance.
3. Payment was made to MSME suppliers after 45 days from the date of acceptance or deemed acceptance during the half-year.
Who Is NOT Required to File?
- Companies that have no dealings with Micro or Small Enterprises.
- Companies that have made all payments to MSMEs within 45 days.
- Medium Enterprises are not covered — only Micro and Small enterprises trigger this obligation.
4. Changes Introduced in V3 Portal (MCA)
Previous Requirement — V2 Portal
Under the V2 portal, Companies were required to report only those outstanding dues that remained unpaid to Micro and Small Enterprise vendors for more than 45 days at the close of each half-year. Consequently, Companies that had cleared all dues before the half-year end — even if payment was delayed beyond 45 days — were exempt from filing, as there were no outstanding amounts to report.
New Requirements — V3 Portal
The revised V3 form requires additional disclosures. All four categories of MSME vendor transactions must now be reported:
4. Vendors paid during the half-year within 45 days
5. Vendors paid during the half-year after 45 days
6. Vendors with outstanding dues as at end of half-year, but 45 days not yet elapsed (i.e., outstanding for less than 45 days)
7. Vendors with outstanding dues as at end of half-year, and 45 days have already elapsed (i.e., outstanding for more than 45 days)
V2 vs V3 — Comparative Summary
| Reporting Requirement | V2 Portal | V3 Portal |
| Payments made within 45 days | x Not Required | x Not Required |
| Payments made after 45 days during half-year | √ Required | √ Required |
| Outstanding < 45 days at end of half-year | x Not Required | x Not Required |
| Outstanding > 45 days at end of half-year | √ Required | √Required |
Important Note
The MCA has expanded the reporting scope in V3 without formally amending the underlying provisions, circulars, or the original 2019 Order. This creates ambiguity, and professionals are awaiting official clarification from the MCA on the expanded scope of the V3 form.
5. Filing Period & Due Dates
Every company to which this form is applicable must file MSME Form 1 with the Registrar of Companies (ROC) twice a year, in accordance with the following schedule:
| Half-Year Period | Due Date for Filing |
| April to September | 31st October |
| October to March | 30th April |
Filing Fees
There are no ROC fees for filing MSME Form 1. The form is filed free of cost. Even if filed after the due date, no additional fees are prescribed. However, late filing may attract penalties under Section 450 of the Companies Act, 2013 (see Section 7 below).
6. Frequently Asked Questions (FAQs)
Q: If payment is made to an MSME vendor within 45 days during the half-year, or payment is pending at the end of the half-year but 45 days have not elapsed — is MSME Form 1 still required?
A: No. MSME Form 1 is NOT required in such cases under the original provisions of the 2019 Order. The filing obligation arises only when outstanding payments to Micro or Small Enterprises exceed 45 days as on 31st March or 30th September.
Note: However, the revised V3 form now appears to require filing even in these scenarios. The MCA is yet to issue a formal clarification, and the V3 form currently overrides the original circular provisions.
Q: If payment is made to an MSME vendor within 45 days during the half-year, or payment is pending at the end of the half-year but 45 days have not elapsed — is MSME Form 1 still required?
A: No. MSME Form 1 is NOT required in such cases under the original provisions of the 2019 Order. The filing obligation arises only when outstanding payments to Micro or Small Enterprises exceed 45 days as on 31st March or 30th September.
Note: However, the revised V3 form now appears to require filing even in these scenarios. The MCA is yet to issue a formal clarification, and the V3 form currently overrides the original circular provisions.
Q: If outstanding dues relate to a Medium Enterprise vendor, is filing of MSME Form 1 required?
A: No. MSME Form 1 is NOT required for dues payable to Medium Enterprises. The obligation is limited strictly to Micro and Small Enterprises. This is explicitly stated in the MCA Notification dated 22nd January 2019, which covers only outstanding dues to Micro or Small enterprise suppliers.
Q: If there were transactions with MSME vendors during the half-year but no outstanding dues remain at the end of the half-year — is filing required?
A: No, as per the original provisions. Filing is required only when (1) goods or services were procured from Micro or Small Enterprises, AND (2) payment remains outstanding for more than 45 days as on 31st March or 30th September.
Note: Under the revised V3 portal, the form is now required even where outstanding dues are NIL at the end of the half-year, provided there were transactions with MSME vendors. Clarity from the MCA is still awaited.
Q: If a company is itself registered as an MSME (Micro or Small), is it required to file MSME Form 1?
A: Yes, it may be required to file MSME Form 1 — but only in its capacity as a buyer (i.e., if it has procured goods or services from other Micro or Small Enterprises and has outstanding dues exceeding 45 days). Its own MSME registration as a supplier does not exempt it from the filing obligation as a buyer.
7. Consequences of Non-Filing / Non-Compliance
Additional Fees
Since MSME Form 1 carries no prescribed ROC fees, no additional fees are levied for late filing. The Central Government has not specified any late fee for this form.
Penalty Under Section 405 — Companies Act, 2013
Non-compliance with Section 405 is punishable under Section 405(4) of the Companies Act, 2013, as follows:
| Entity | Base Penalty | Daily Default (Per Day) | Maximum Penalty |
| Company | ₹20,000 | ₹1,000 per day | ₹3,00,000 |
| Officer in Default / Director | ₹20,000 | ₹1,000 per day | ₹3,00,000 |
8. Case Study — Samsung R&D Institute India Bangalore Pvt. Ltd.
Adjudication Order
This case illustrates the practical consequences of delayed filing of MSME Form 1 and serves as an important precedent for corporates.
Facts of the Case
8. The company was required to file MSME Form 1 for the period April 2022 to September 2022 by 31st October 2022, and for October 2022 to March 2023 by 30th April 2023.
9. On 25th July 2023, the company filed both returns belatedly, resulting in a default of 266 days (for the first period) and 85 days (for the second period), respectively.
10. The non-compliance periods were calculated as 1st November 2022 to 25th July 2023, and 1st May 2023 to 25th July 2023, respectively.
Penalty Imposed
| Default Instance | Period of Default | Days of Delay | Penalty Imposed |
| Instance I | 01-Nov-2022 to 25-Jul-2023 | 266 days | Company + Directors penalised |
| Instance II | 01-May-2023 to 25-Jul-2023 | 85 days | Company + Directors penalised |
Key Takeaway
This adjudication order underscores the importance of timely filing. Even a single delayed filing can attract compounding daily penalties, significantly increasing the total liability for both the company and its officers. Proactive compliance is far less costly than regulatory penalties.
9. Quick Reference — Filing Scenarios
The table below summarises whether MSME Form 1 is required under various payment scenarios:
| Scenario | MSME Form 1 Required? |
| Payment made to MSME vendor after 45 days, but before 31st March / 30th September | √ Yes |
| Payment still outstanding as on 31st March / 30th September and delay > 45 days | √Yes |
| Payment made within 45 days (irrespective of the date) | X No |
10. Conclusion
Form MSME-1 serves as a crucial compliance mechanism introduced by the Ministry of Corporate Affairs to ensure timely payments to Micro and Small Enterprises, in line with the objectives of the Micro, Small and Medium Enterprises Development Act, 2006. By mandating half-yearly disclosures from companies regarding outstanding dues to MSMEs, the government aims to enforce financial discipline and promote the economic well-being of smaller enterprises.
From a governance and compliance standpoint, Form MSME-1 is not merely a filing obligation — it is a reflection of a company’s commitment to ethical business practices and statutory accountability. Non-compliance can attract penalties under both the Companies Act, 2013 and the MSMED Act, 2006, and may expose companies to reputational and regulatory risks.
As professionals, it is our duty to guide corporates in maintaining accurate vendor classification, ensuring prompt payments, and filing timely disclosures. A proactive approach to MSME-1 compliance not only safeguards the interests of MSME creditors but also strengthens corporate governance and upholds the integrity of India’s business ecosystem.
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Author: CS Divesh Goyal GOYAL DIVESH & ASSOCIATES, Company Secretary in Practice, New Delhi Email: csdiveshgoyal@gmail.com
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