MSME Form 1 Filing for Companies – Step-by-Step Guide

MSME Form 1 is a mandatory half-yearly return that certain companies in India need to file with the Ministry of Corporate Affairs (MCA). It mandates companies to disclose delayed payments to Micro and Small Enterprises (MSEs) if those payments have not been made within 45 days from the date of acceptance or deemed acceptance of the goods or services.

The objective of form MSME 1 is to achieve timely payments to MSME supplier units, as the MSME sector sustains the economy, and a smoother cash flow or operational stability is needed for the very same sector. The filling of MSME Form 1 leans towards ensuring clarity and transparency between the company and their MSME vendors while also acting as a preventive measure against delayed payments to smaller corporations. This is a fundamental regulatory requirement per the MSME Development Act, 2006, for all companies—be it public or private—or having outstanding dues to MSME suppliers for the period beyond the stipulated period.

Purpose and Importance of MSME Form 1 Filing –

1. MSME Form 1 is a regulatory mandate to provide explicit details of pending payments, ensuring that Micro, Small, and Medium Enterprises (MSMEs) receive payments in a timely manner.
2. This submission enhances transparency and accountability in commercial transactions, which helps to avoid cash flow problems that MSMEs have frequently experienced recently as a result of delayed payments.
3. The mandatory periodic reporting requirements of the e-Mandate form lead the companies towards following through on timelines for payments, which ultimately works in favor of MSMEs in terms of good health of cash flow and continuity in business operations.
4. Benefits of MSME Form 1: MSME Form 1 is a vital tool to help regulators keep track of compliance, create timely payments and develop a balanced trade landscape, thereby reinforcing the MSME domain’s role in GDP growth and employment generation.

MSME Form 1 must be filed by all companies—public or private—that have outstanding payments to suppliers registered as Micro or Small Enterprises (MSEs) exceeding 45 days from the date of acceptance or deemed acceptance of goods or services. This requirement applies regardless of the company’s type or size, as long as the payment delay condition is met.

Companies that have outstanding payments to Micro and Small Enterprises (MSEs) exceeding 45 days must file MSME Form 1 biannually. The filing deadlines are –

1. Corporate identification number (CIN) and PAN of the company. These are unique identification numbers for the company.
2. Company Name, Address and Email ID – Basic company contact details
3. Supplier Details: The name, PAN and GSTIN of the MSME supplier for correct identification of the creditor
4. Amount due to each MSME Supplier (Principle amount + Interest due to delay)
5. The due date of payment to the business (the date of acceptance or considered acceptance of the product/service).
6. An explanation of why payment is delayed, like invoice disputes, technical issues, or something else that makes sense.
7. Financial Year applicable for reported dues.
8. Sector-specific confirmation of accuracy from the company and compliance with the MSMED Act.

Step-by-Step Procedure to File MSME Form 1 –

• Visit MCA Portal Visit the Ministry of Corporate Affairs (MCA) portal and download the form for the MSME Form 1 filing process.
• Choose Return Type Choose whether you are filing the initial return or a half-yearly return.
• Prefill Company Details Fill in your company’s Corporate Identification Number (CIN), Global Location Number (GLN), and PAN. Use the prefill option to auto-populate company information such as name, registered office address, email ID, and contact details.
• Enter Supplier Data List all Micro and Small Enterprise (MSE) suppliers with outstanding dues exceeding 45 days. For each supplier, enter: Name and PAN of the supplier, the financial year period (from and to), the amount due, the date from which the amount is overdue, and the reasons for delay in payment.
• Attach Documents (Optional) Upload any relevant documents that support the reasons for delayed payments, if applicable.
• Digital Signature The form must be digitally signed by an authorized signatory such as a Director, Manager, Company Secretary, CEO, or CFO.
• Online Submission Review all details carefully, then submit the form online through the MCA portal.
• Download Receipt After successful submission, download and save the acknowledgement receipt for your records.

• Digital Signature Certificate (DSC) Authorized signatories like Directors / CEO / CFO / Company Secretary / Manager to digitally sign the form.
• List of MSME Creditors It is recommended but not required to maintain a list of all Micro and Small Enterprise suppliers used, along with their PAN and GSTIN, and submit it as an annexure on the portal.
• Details of Outstanding Payments The form must provide complete information about the amount owing in total, overdue payments beyond 45 days, the date past which the payment is overdue, reasons for delay of payment, etc.
• Supporting Documents (Optional) Companies can include supporting documents that would help to correlate or explain delays in payments, like any correspondence, invoices, or dispute resolutions, but are not required as part of the filing.

1. Any late submissions result in penalties and fines. Section 405(4) of the Companies Act specifies penalties for failure to file on time.
2. Wrong information about dues, vendor PAN, or reason for delay could lead to rejection or penalties. Always verify everything before submission.
3. Partial reporting or ignoring MSME suppliers whose payments are accumulating not only causes reporting issues but also compliance issues. A company must disclose all overdue payments exceeding 45 days.
4. Failure to verify MSME registration of the supplier may result in incorrect reporting. Verify what entity is registered with the supplier prior to the claim being filed.
5. Those companies that have nothing outstanding with MSME only need to file a NIL return (if any), but they miss a few companies, which leads to violation of the law.
6. The form should be digitally signed by the respective authorized signatories. DSC Missing or Invalid can lead to the filing being invalid.
7. Mistakes in submitted forms cannot be corrected later. Keep accurate records and ensure information is checked thoroughly before submission.

Penalty for Not Filing MSME Form 1 –

Non-compliance with MSME Form 1 filing attracts penalties under Section 405(4) of the Companies Act, 2013. The key penalties include –

Recent updates to MSME Form 1, particularly with the introduction of the V3 version on the MCA portal, have significantly expanded the scope and reporting requirements for companies. Key changes include –

MSME Form 1 filing is a critical compliance requirement that not only fulfills a legal obligation but also promotes transparency, timely payments, and responsible corporate governance in dealings with Micro and Small Enterprises. By adhering to the step-by-step filing process and meeting deadlines, companies can avoid substantial penalties, strengthen relationships with MSME vendors, and contribute to a healthier business ecosystem. Proactive and accurate compliance with MSME Form 1 ultimately supports the sustainable growth of MSMEs and reinforces a company’s reputation for ethical and transparent business practices.

From company registration to full compliance, we provide expert legal and business services tailored for entrepreneurs, startups, and established companies in India. Our comprehensive solutions ensure your business is set up seamlessly and stays compliant, helping you focus on growth and success without regulatory hassles.

From Company Registration to full compliance, we provide expert legal and business services tailored for entrepreneurs, startups, and established companies in India. Our comprehensive solutions ensure your business is set up seamlessly and stays compliant, helping you focus on growth and success without regulatory hassles.

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