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

The government has taken significant measures for MSME (Micro, Small and Medium Enterprises), including measures to ensure they receive payments on time. As per a 2023 report by the Ministry of Corporate Affairs (MCA), over Rs. 10,000 crore payments to MSMEs were delayed beyond 45-day credit period provided by the government. 

Thus, the MCA introduced the Form MSME-1 to track the delayed payments. Companies having outstanding dues to the MSMEs have to file the particulars of all current outstanding dues in Form MSME-1 with the ROC (Registrar of Companies). 

What is Form MSME-1? 

Form MSME-1 must be filed by certain companies with the ROC to report the outstanding payments they have with MSME suppliers beyond 45 days. Companies need to identify if their suppliers are registered or not under the MSME Act, 2006. When the suppliers are registered under the MSME Act, and there are outstanding dues by a company to the MSME suppliers, it must file Form MSME-1. 

The MSME Development Act, 2006 (MSMED) strengthens the provisions relating to delayed payments to the MSMEs by providing the maximum credit period and penal interest for delay in payment. Section 15 of the MSMED Act states that where the suppliers render services or supply goods to any buyer, the buyers should make payment on or before the agreed date between them and the suppliers. 

When there is no agreed date for payment between the MSME supplier and buyer, the buyer must make payment before the appointed date. The appointed date means fifteen days from the date of acceptance. It also states that the period of credit granted by the seller should not exceed 45 days from the acceptance date or date of deemed acceptance. 

However, companies have to file this return only when they have payments outstanding for more than 45 days to the MSME supplier. The companies need not file a ‘Nil MSME-1 Return’ when there are no outstanding amounts with the MSME suppliers.

Who Should File Form MSME-1?

Specified companies should file Form MSME-1 when payments are due to MSME for more than 45 days from the date of acceptance of the services or goods, along with the reason for its delay. Specified companies are companies- 

• That have obtained goods or services from the MSME. 
• Whose payments to the MSMEs exceed 45 days from the date of acceptance or deemed acceptance of the goods or services.

Purpose of Filing Form MSME-1

Every company that has obtained services or goods from an MSME supplier and has outstanding payment for more than 45 days must disclose it to the ROC by filing the MSME-1 return. MSME Form-1 aims to: 

• Keep track of the companies that have outstanding dues towards MSMEs 
• Keep track of the MSME suppliers who need to receive payments
• Ensure timely payments to MSMEs
• Prevent financial loss to small enterprises

Details to be Reported in Form MSME-1

• CIN and PAN of the company
• Name, address and e-mail of the company
• Name and PAN of the suppliers
• Outstanding amount due against the supply of goods or services
• Date from which the amount is due
• Reason for delay in payment of the amount due

Due Date for Filing Form MSME-1

MSME-1 is a half-yearly return that the specified companies must file with the MCA. Below are the due dates for filing Form MSME-1:

How to File MSME Form-1?

Here is the step-by-step process to file Form MSME-1:

Step 1: Login to the MCA portal.

Step 2: Navigate to e-Forms and select the ‘MSME Form-1’.

Step 3: Fill the CIN and PAN of the company. 

Step 4: Enter the basic details of the company.

Step 5: Enter the details related to initial returns of outstanding dues to the MSE suppliers and regular returns of outstanding dues to the MSE suppliers.

Step 6: Enter the reason for the delay in payment.

Step 7: Attach documents and fill out the declaration.

Step 8: Digitally sign the form and submit.

Non-Compliance of Filing Form MSME-1

Non-compliance with filing MSME-1 by the specified companies will attract a penalty under Section 405(4) of the Companies Act, 2013. As per Section 405(4), if any company fails to file MSME-1, the company and every officer in default will be liable to a penalty of Rs.20,000. In case of continuing failure, the company and every officer in default will be liable for a further penalty of Rs.1,000 for each day the failure continues, subject to a maximum of Rs.3 lakh.

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