Compliance Alert:
Companies must file MSME Form 1 by April 30, 2025, if they had payments due to Micro or Small Enterprises (MSEs) exceeding 45 days as of March 31, 2025. Late or non-filing may trigger penalties up to ₹3 lakh.
Timely payments to Micro and Small Enterprises (MSEs) are not just a good business practice—they are a legal obligation. In line with its ongoing efforts to support India’s MSME sector, the Ministry of Corporate Affairs (MCA) has made it mandatory for companies to disclose any delays in payments to MSEs through MSME Form 1.
With effect from July 15, 2024, the compliance landscape around Form MSME 1 has evolved. The amendments aim to tighten reporting norms, increase accountability, and ensure companies do not bypass their payment obligations under the MSMED Act, 2006. As we approach the filing deadline of April 30, 2025, this blog breaks down:
- What MSME Form 1 is
- Which companies need to file it
- What changes have been introduced in the 2024 amendment
- What risks exist for non-compliance
- And how your organization can stay fully compliant
Whether you’re a CFO, Company Secretary, Legal Head, or Compliance Officer, this guide will help you navigate the nuances of Form MSME 1 with clarity and confidence.
What is MSME Form 1?
MSME Form 1 is a mandatory return under Section 405 of the Companies Act, 2013, applicable to companies that owe payments to MSE vendors for more than 45 days. The form is filed with the Registrar of Companies (RoC) and helps monitor delayed payments under the MSMED Act, 2006.
Revised Definition of Micro and Small Enterprises (2025 Update)
As per the 2025 amendment to the MSMED Act (applicable w.e.f. April 1, 2025), an enterprise qualifies as an MSE if it meets the criteria below:
| Classification | Investment in Plant & Machinery / Equipment | Annual Turnover |
|---|---|---|
| Micro Enterprise | ≤ ₹2.5 crore | ≤ ₹10 crore |
| Small Enterprise | > ₹2.5 crore and ≤ ₹25 crore | > ₹10 crore and ≤ ₹100 crore |
Applicability: Who Needs to File?
MSME Form 1 is applicable to all companies (public or private, large or small) that:
- Have availed goods or services from MSE vendors, and
- Have dues outstanding beyond 45 days at any point during the half-yearly period, even if settled before the period-end.
If payment to any vendor (even single) is/ was pending for more than 45 days, MSME Form 1 is required to be filed.
Due Dates for Filing MSME Form 1
| Period Covered | Filing Due Date |
|---|---|
| October – March | April 30 |
| April – September | October 31 |
Upcoming Due Date: April 30, 2025 (for October 2024 – March 2025)
Rationale: Why This Matters
- Regulatory Compliance: Ensures alignment with the Companies Act and MSMED Act
- Governance & Transparency: Shows accountability in vendor management
- Risk Mitigation: Avoids penal exposure for delayed reporting or non-filing
- Vendor Confidence: Reinforces trust with MSME stakeholders
Key Amendments (Effective from July 15, 2024)
The revised MSME Form 1 introduces:
- Mandatory disclosure of all payment delays >45 days, even if cleared during the period
- Reporting of payments within 45 days (include all payments made within 45 days to the vendor, whose any payment was made after 45 days)
- Amount outstanding for 45 days or less (include the payments to be made to the vendor whose payments are due for 45 days or even less but any payment to him was made beyond 45 days)
- Amount outstanding for more than 45 days
- Justification for delay in each case
- Disclosure even in absence of outstanding dues as on cut-off date, if any payment was made after 45 days.
Information to be Furnished
- Name & PAN of MSME vendor
- Paid within 45 days & after 45 days
- Outstanding amount for 45 days or less & for more than 45 days
- Reason for delay in payment or amount outstanding
Penalty for Non-Compliance
| Offender | Penalty Structure |
|---|---|
| One time | ₹20,000 flat |
| Continuing failure | ₹1,000 per day (up to ₹3 lakh max) |
Filing Process (Step-by-Step)
- Reconcile MSME vendor data
- Collect invoice & payment trail for the period
- Prepare Form MSME-1 (latest version from MCA portal)
- Provide explanations for delays, if any
- Sign digitally using DSC of a director or company secretary
- File online via MCA V3 Portal
Frequently Asked Questions (FAQs)
1. Is filing required if dues were paid later but delayed?
Yes. Even if payments were made before March 31, 2025, the delay (beyond 45 days) must be reported.
2. Are payments to all vendors required to be entered in MSME Form 1?
No. It is optional on the part of the Company. Only those vendors are required to be considered whose any payment was made beyond 45 days.
3. Is filing needed if there are no MSE dues at period-end?
Yes, if there were any delayed payments during the period—even if settled later.
4. Do LLPs or partnerships need to file?
No. Only companies incorporated under the Companies Act, 2013 are covered.
5. Is a NIL return required?
Not compulsory unless delays occurred. However, many companies file a NIL return as good governance practice.
6. Are group companies or subsidiaries required to file consolidated MSME Form 1 returns?
No. Each company must file separately.
7. What if a company mistakenly omits a vendor from the MSME Form 1 report?
Omission can be considered non-compliance and attract penalties if discovered during scrutiny.
8. What if there are multiple invoices and partial payments to a single MSE vendor?
All such invoices must be tracked individually. The 45-day limit applies invoice-wise, not vendor-wise. Even a single invoice crossing 45 days triggers reporting.
9. Is there a threshold amount for reporting (e.g., dues above ₹1 lakh only)?
No. There is no materiality threshold under the MSMED Act.
10. Can MSME Form 1 be revised after submission?
As of now, the MCA portal does not allow revision once the form is filed. Companies must ensure internal review and audit of Form 1 before submission.
Summary
With the amended MSME Form 1 requirements now in force, companies must proactively:
- Identify MSME vendors
- Track invoice aging and overdue payments
- File accurate disclosures by April 30, 2025
This isn’t just about ticking boxes—it’s about building a transparent, responsible vendor ecosystem in line with the government’s thrust on MSME empowerment.
Call to Action: Stay Ahead of MSME Compliance
MSME Form 1 is more than a routine filing—it’s a signal of your company’s commitment to ethical vendor practices and regulatory transparency. With the revised rules now in effect, it’s critical for finance, legal, and compliance professionals to act early and stay audit-ready.
Follow our blog for more updates on quarterly, half yearly and annual filings.
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