Form MSME-1: Purpose, Filing, Reporting, and Due Date

Purpose of Form MSME-1

Form MSME-1 was introduced by the Ministry of Corporate Affairs (MCA) with the clear objective of enhancing transparency and protecting the interests of Micro, Small, and Medium Enterprises (MSMEs).
Its primary purpose is to capture details of outstanding payments due to MSME suppliers where such dues have remained unpaid for more than 45 days from the date of acceptance or deemed acceptance of goods or services.

Through this mechanism, the government seeks to:

• Monitor delays in payments to MSMEs,
• Ensure faster settlement of dues,
• Enable strict enforcement of the MSME Development Act, 2006,
• Create accountability among companies that procure goods and services from small businesses.

Ultimately, Form MSME-1 promotes a culture of timely payments and financial discipline within the corporate ecosystem.

Filing Requirement of Form MSME-1

The requirement to file Form MSME-1 applies to all companies — both public and private — that:

• Have procured goods or services from suppliers registered as MSMEs (Micro, Small, or Medium Enterprises),
  AND
• Have not made full payment to such suppliers within 45 days from the date of acceptance (or deemed acceptance) of the supply.

If these two conditions are satisfied, the company must file Form MSME-1 even if the delay is unintentional or the amount outstanding is minimal.
There is no exemption based on the size of the outstanding amount or the company’s turnover.

Important: If there are no such dues, filing of MSME-1 is not mandatory.

Reporting under Form MSME-1

When filing Form MSME-1, a company needs to report the following key information:

• Corporate Identity Number (CIN) and company details,
• Details of the MSME suppliers to whom payment is due,
• Invoice details (number, date, and amount),
• Date from which the payment is due,
• Reasons for the delay in payment (if any),
• Confirmation of whether the supplier is registered under the MSME Act (verified through the Udyam Registration Certificate).

The reporting is designed to be vendor-specific and invoice-specific, providing a detailed record of pending transactions.

Due Dates for Filing Form MSME-1

Companies must file Form MSME-1 twice every financial year in the following manner:

Thus, if any payments to MSME suppliers remain unpaid beyond 45 days during these periods, they must be reported within the prescribed deadlines.

Note: The MCA had also earlier required a one-time initial filing when Form MSME-1 was first introduced via notification in 2019, to report existing dues at that time.

When to file MSME Form 1?

There are two situations:

📌 In short: File twice a year if you have unpaid MSME dues beyond 45 days.

What information do you need to fill MSME Form 1?

Simple details like:

✅ Name of the MSME supplier
✅ Amount outstanding
✅ Invoice number and date
✅ Date from when payment is due
✅ Reason for the delay in payment (you must give a reason)

🔍 What Is MSME in Simple Terms?

MSME means Micro, Small, and Medium Enterprises – these are small businesses like local factories, service providers, startups, etc. The government gives them special benefits like cheaper loans, subsidies, protection from late payments, and help in getting contracts.

To enjoy these benefits, a business needs to be officially classified as a Micro, Small, or Medium Enterprise.

🆕 What Changed in Budget 2025?

The government increased the investment and turnover limits for MSME categories. In plain words, now bigger businesses can also be called MSMEs and still get all the benefits.

Here’s a simple table:

📅 Effective From: Expected from April 1, 2025

🎯 Why Did the Government Do This?

• To help small businesses grow bigger without losing benefits.
• To allow them to invest more in machines, tools, or technology.
• To encourage more exports and job creation.
• To simplify classification and reduce confusion.

📊 Example in Real Life

Let’s say you own a packaging factory.

• You have invested ₹2 crore in machines.
• Your annual sales (turnover) is ₹8 crore.

Under Old Rules:

You would not be a Micro unit (limit was ₹1 crore). You’d be classified as Small, and lose micro benefits.

Under New Rules:

You will now be a Micro Enterprise, since the new limit is ₹2.5 crore investment and ₹10 crore turnover.
✅ Result: You get extra benefits, lower taxes, loans at lower interest, and faster payments from customers.

What Is MSME Form 1?

MSME Form 1 is a return that companies have to file with the Ministry of Corporate Affairs (MCA), if they have:

• Bought goods/services from an MSME,
• And did not pay the MSME within 45 days.

This form ensures MSMEs are paid on time, or else the buying company must explain the delay.

Details Required to be Reported in Form MSME-1

When it comes to filing Form MSME-1, the devil truly lies in the details. Companies cannot just casually mention pending dues; the government demands a clear and structured disclosure. Every piece of information you report paints a full picture of your outstanding obligations toward your MSME vendors.

Here’s exactly what needs to be carefully reported:

1. Corporate Identity Number (CIN) and PAN of the Company

The first identifiers the Ministry wants are the company’s CIN — your unique company registration number issued by the Registrar of Companies — and your Permanent Account Number (PAN) for tax tracking.
These numbers act as your corporate “fingerprints” in the compliance world.

2. Name, Address, and Email ID of the Company

Beyond numerical IDs, you must spell out your company’s full legal name, official address, and a working email ID.
This information ensures that regulators know exactly where to find you for any clarifications, notices, or future communications.

3. Name and PAN of the Suppliers

Next, you must disclose the identities of your MSME vendors.
That means mentioning the full name of each supplier along with their respective PAN numbers — confirming that you are dealing with registered and traceable entities.

4. Outstanding Amount Due Against the Supply of Goods or Services

Here comes the heart of the matter:
You must clearly mention the exact amount that remains unpaid for the goods received or services availed.
Precision is key here — even rounding off or vague entries can invite scrutiny.

5. Date from Which the Amount is Due

Just knowing how much is unpaid isn’t enough — you must also report the specific date from which the amount became due.
This detail helps the authorities determine if the 45-day credit window under the MSMED Act has been breached.

6. Reason for Delay in Payment of the Amount Due

Finally, the company must provide a valid and specific reason explaining why the payment has not been cleared within the prescribed timeline.
Generic justifications like “internal issues” won’t cut it — the reason must reflect real circumstances, such as disputes, cash flow problems, or operational delays.

Why These Details Matter

Each of these details serves a purpose:
✅ Accountability for the company’s financial behavior,
✅ Protection of the MSME sector from unnecessary payment delays,
✅ Transparency for regulators to act if needed.

Form MSME-1 is not just a compliance form — it’s a serious declaration that shows whether a company is honoring its commitments to small businesses who depend on timely payments to survive and grow.

💥 Impact of New MSME Definition on MSME Form 1 Filing

👉 More Businesses Will Qualify as MSMEs

• Earlier, only very small suppliers came under MSME.
• Now, many medium-sized suppliers will also become MSMEs.

👉 Companies Must Be Extra Careful Now

• If you delay payments to a supplier who is now classified as MSME under new limits,
  you have to report it in MSME Form 1.
• Penalties may apply if you don’t file correctly or on time.

👉 For Suppliers (MSMEs):

• If you newly qualify as MSME, get Udyam registration.
• Inform your buyers that you are MSME – they must follow 45-day rule.
• You can file complaints and get legal protection for delayed payments.

✅ 1. Sample MSME Declaration Letter (from Vendor to Buyer)

This letter helps MSME vendors formally inform their clients that they are registered as an MSME and are eligible for 45-day payment protection.

[On Vendor’s Letterhead]

To,
[Name of the Buyer Company]
[Address]
[City, State, Pin Code]

Subject: Declaration of MSME Status

Dear Sir/Madam,

This is to inform you that [Vendor’s Business Name] is registered under the Micro, Small, and Medium Enterprises (MSME) category as per the latest definition under the MSMED Act, 2006.

Below are the details of our MSME registration:

• Name of Enterprise: [Your Business Name]
• Udyam Registration Number: [Enter Udyam Number]
• Category: Micro / Small / Medium (Select one)
• Date of Registration: [DD/MM/YYYY]
• PAN: [PAN Number]
• GSTIN: [GST Number, if applicable]

As per the MSMED Act, any payment for goods or services supplied by an MSME must be made within 45 days of acceptance. We kindly request you to adhere to this provision for all future transactions.

Please update your records accordingly and feel free to reach out for any further clarification.

Thank you for your support.

Warm regards,
[Authorized Signatory Name]
[Designation]
[Contact Number]
[Email Address]

✅ 2. Checklist for MSME Form 1 Filing (for Buyers)

This checklist helps companies stay compliant and avoid penalties when filing MSME Form 1.

✅ Before Filing MSME Form 1

• Identify all vendors who have Udyam Registration.
• Check if payment to any MSME vendor is pending beyond 45 days.
• Collect invoices and contracts for reference.
• Confirm that the vendor is registered on Udyam Portal.

✅ Details Required

• Name and PAN of your company.
• List of all MSME vendors with pending dues.
• Invoice number, date, and amount due.
• Reason for delay in payment (if applicable).

✅ Important Points

• File MSME Form 1 half-yearly (April–September & October–March).
• File even if you have no delayed payments (NIL return).
• Filing is done on the MCA portal using company DSC (Digital Signature).

✅ 3. Step-by-Step MSME Form 1 Filing Guide (on MCA Portal)

Here’s a simple guide to help companies file the MSME Form 1 online:

🔹 Step 1: Go to the MCA Website

Visit: https://www.mca.gov.in

🔹 Step 2: Log in

• Use your MCA21 login ID and password.
• If you’re not registered, create an account.

🔹 Step 3: Download MSME Form 1

• Go to “MCA Services” > “Company Forms Download”.
• Find and download MSME Form 1 (Active Form).

🔹 Step 4: Fill the Form

Use PDF version of the form and fill in:

• CIN (Corporate Identification Number)
• PAN of the company
• Contact details
• Period of return (April–Sept or Oct–March)
• List of MSME vendors with:
  • Name of vendor
  • Udyam Reg. Number
  • Invoice Date
  • Invoice Amount
  • Days delayed
  • Reason for delay

🔹 Step 5: Attach DSC

• Attach the Director’s Digital Signature (DSC).
• Validate the form.

🔹 Step 6: Upload to MCA Portal

• Go to MCA Services > E-Filing > Upload e-Forms
• Select MSME Form 1 and upload.

🔹 Step 7: Get SRN

• After uploading, you will get an SRN (Service Request Number) for tracking.

🔹 Step 8: Keep a Copy

• Save a copy of the filed form and acknowledgement for your records.

✅ Summary – What You Need to Do Now

For MSME Businesses:

• Check if you now qualify as Micro, Small, or Medium as per the new limits.
• If yes, apply for Udyam Registration before April 1, 2025.
• Enjoy benefits like easy loans, faster payments, tenders, and tax help.

For Companies Buying from MSMEs:

• Identify your vendors – are they MSMEs under the new rules?
• Track payments – if delayed beyond 45 days, file MSME Form 1.
• Avoid penalties and show compliance.