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.

💥 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.