A company orders custom fabrication from a small Udyam-registered vendor. Cash is tight that quarter, so the invoice gets paid on day 75. "We paid them, it is settled," the accounts team assumes, and moves on. That single late payment pulls the company into MSME Form 1 — and under the current portal the filing has to lay out every transaction with that vendor for the half-year, including the ones paid on time.
Any company that let a payment to a Micro or Small supplier run past 45 days must file MSME-1 for that half-year, by 31 October for April to September and 30 April for October to March.
The bottom line
Who: any company that received goods or services from a Micro or Small enterprise, not Medium, and let a payment run beyond 45 days from acceptance.
By when: twice a year — 31 October for the April to September half, and 30 April for October to March.
Miss it: ₹20,000 on the company and every officer in default under Section 405(4), plus ₹1,000 a day for continuing default, capped at ₹3 lakh.
What the return is for
MSME-1 is a half-yearly return through which specified companies tell the Registrar about payments to Micro and Small Enterprise suppliers that ran past 45 days. It comes from Section 405 of the Companies Act, 2013 and the Specified Companies Order dated 22 January 2019.
The MCA introduced it after data showed thousands of crores in MSME payments stuck beyond the legal credit period. The return creates regulatory visibility, and pressure, on buyers who delay.
It is a disclosure of behaviour rather than of an outstanding balance. That distinction is the whole game, and it is where most companies get the filing wrong.
Who has to file
A specified company is any company that bought goods or services from a Micro or Small enterprise and let the payment cross 45 days from acceptance.
Two things get missed. Medium enterprises are out — the form covers only Micro and Small suppliers, so a delayed payment to a Medium enterprise does not trigger it. And the supplier's status is what matters, not yours. Whether you are registered under the MSMED Act is irrelevant; whether your supplier is a Udyam-registered Micro or Small enterprise is decisive.
Which makes the practical first step knowing which of your vendors are Micro or Small, usually by collecting their Udyam registration number or a written declaration. Udyam registration is what puts a supplier inside this regime.
Where 45 days comes from
The line is set by Section 15 of the MSMED Act, 2006, not by the Companies Act.
- With a written agreement, pay within the agreed period, which cannot exceed 45 days from acceptance.
- Without a written agreement, pay within 15 days.
- Deemed acceptance applies if you do not object in writing within 15 days of delivery, so the clock can start earlier than the accounts team assumes.
The same line has a second sting under tax law. Section 43B(h) of the Income-tax Act disallows the deduction for any sum owed to a Micro or Small supplier that is not paid within the MSMED time limit. A late payment can cost you the expense deduction and a Registrar filing at once — two regulators, one behaviour.
The V3 change that catches people
Under the old V2 form you reported only amounts still outstanding beyond 45 days at the end of the half-year. Pay everyone off before 30 September and you filed nothing.
The V3 form changed that. If even one payment to a Micro or Small vendor crossed 45 days during the half-year — even where you have since paid it — the filing is triggered, and you must disclose all transactions with that vendor in the period: amounts paid within 45 days, amounts paid after 45 days, and anything still outstanding.
Companies still running on V2 logic under-report systematically, and are now being adjudicated for it.
Due dates, and whether a NIL return is needed
| Half-year | Period | Due date |
|---|---|---|
| First half | 1 April – 30 September | 31 October |
| Second half | 1 October – 31 March | 30 April |
The October 2025 to March 2026 return was due 30 April 2026. The next, for April to September 2026, is due 31 October 2026. Build the vendor review into your half-year close rather than the last week before filing.
On NIL returns: where no payment to any Micro or Small supplier breached 45 days during the half-year, a NIL return is not required. That is a conclusion to reach deliberately after a vendor review, not a default assumption to fall back on.
What missing it costs
Non-filing, or filing incorrect or incomplete information, makes the company and every officer in default liable under Section 405(4) to ₹20,000 plus ₹1,000 for every day the default continues, subject to a maximum of ₹3 lakh.
Registrars are actively adjudicating these now that V3 gives them better data to work from.
One further point: MSME-1 cannot be revised once submitted. Get the vendor classification and the transaction list right before filing, because there is no correction route.
A worked example
In the April to September half-year, a company deals with three Udyam-registered Micro or Small vendors.
- Vendor A: ₹4,00,000, paid on day 38. On time.
- Vendor B: ₹2,50,000, paid on day 72. Late.
- Vendor C: ₹1,20,000, still unpaid at 30 September, on day 50. Late.
Because Vendors B and C breached 45 days, MSME-1 is triggered. Under V3 the return must report Vendor B's full transaction history for the half-year and Vendor C's outstanding dues, giving the complete picture rather than a single unpaid figure.
Filing only Vendor C's balance — the instinct from the V2 days — would be an incomplete return, exposed to the Section 405(4) penalty.
Common mistakes
- Assuming that paying the vendor closes the matter. Since V3, a payment made late during the half-year triggers the return even where the balance is now zero.
- Counting Medium enterprises. Only Micro and Small suppliers are in scope.
- Not knowing which vendors are Micro or Small. Without Udyam numbers or declarations on file you cannot tell whether the form applies at all.
- Reporting only the outstanding balance rather than the vendor's full history once a breach has occurred.
- Assuming it can be corrected later. MSME-1 cannot be revised after submission.
A working routine
- At each half-year close, list every vendor that is a Micro or Small enterprise.
- For each, check whether any payment in the half-year crossed 45 days from acceptance.
- Where even one did, pull that vendor's full transaction set for the period.
- Capture the reason for delay against each late payment, which the form asks for.
- File by 31 October or 30 April and keep the SRN.
- Where nothing breached 45 days, document that conclusion. No NIL filing is required.
Frequently asked questions
Do I file for delayed payments to a Medium enterprise? No. Only Micro and Small enterprise suppliers are covered.
Is a NIL return required if nothing was late? No. Where no payment to a Micro or Small supplier exceeded 45 days in the half-year, you do not file — but reach that conclusion after a vendor review.
How do I know if my supplier is a Micro or Small enterprise? Ask for the Udyam registration number, or a signed declaration of MSME status, and keep it on file.
Does it matter that we are not registered under the MSMED Act? No. The supplier's status decides it, not the buyer's.
Can I revise MSME-1 after filing? No. It cannot be revised once submitted.
We paid late but before the half-year ended. Do we still file? Yes. Under the V3 form the breach triggers the return regardless of the closing balance.
Primary sources
- Section 405, Companies Act, 2013, and Section 405(4) for the penalty
- Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019, dated 22 January 2019
- Section 15, MSMED Act, 2006, for the 45-day rule
- Section 43B(h), Income-tax Act, on the deduction disallowance