MSME Form 1: Everything You Need to Know

The Indian government has taken significant steps to protect Micro, Small, and Medium Enterprises (MSMEs) from delayed payments. According to a 2023 report by the Ministry of Corporate Affairs (MCA), over ₹10,000 crore worth of payments to MSMEs were delayed beyond the permissible 45-day credit period. To address this issue, the MCA introduced MSME Form 1, a mandatory compliance requirement for companies that owe outstanding payments to MSMEs beyond the specified period.

This blog provides an in-depth guide on MSME Form 1, its purpose, due dates, penalties for non-compliance, and a step-by-step filing process.

What is MSME Form 1?

MSME Form 1 is a half-yearly return that specified companies must file with the Registrar of Companies (ROC) to report outstanding payments exceeding 45 days to MSME suppliers. This regulation helps track delays in payments to small businesses and ensures transparency in corporate dealings.

Who Should File MSME Form 1?

A company must file MSME Form 1 if:

• It has procured goods or services from an MSME supplier.
• The payment to the MSME supplier has exceeded 45 days from the date of acceptance or deemed acceptance of the goods/services.

Purpose of Filing MSME Form 1

The MSME Development Act, 2006, mandates that companies make payments to MSMEs within the agreed timeframe. If no timeline is specified, payments must be made within 15 days from the date of acceptance. MSME Form 1 aims to:

• Ensure timely payments to MSMEs.
• Track companies with outstanding dues.
• Enforce compliance and prevent financial distress in small enterprises.

Details Required in MSME Form 1

When filing MSME Form 1, the following details must be included:

• Corporate Identification Number (CIN) and PAN of the company.
• Company Name, Address, and Email ID.
• Supplier Details (Name and PAN of MSME supplier).
• Outstanding Payment Details (Amount and Date from which due).
• Reason for Payment Delay.

Due Dates for Filing MSME Form 1

The form must be filed twice a year as per the following schedule:

Companies with no outstanding dues exceeding 45 days are not required to file MSME Form 1.

Penalties for Non-Compliance

Non-compliance with MSME Form 1 attracts penalties under Section 405(4) of the Companies Act, 2013:

• Penalty for Company: ₹20,000
• Penalty for Defaulting Officers: ₹20,000 each
• Additional Penalty: ₹1,000 per day for continued non-compliance, up to a maximum of ₹3 lakh

Step-by-Step Guide to Filing MSME Form 1

Step 1: Login to MCA Portal 

Visit the MCA (Ministry of Corporate Affairs) website.

Step 2: Download MSME Form 1 

Navigate to the e-forms section.

Step 3: Fill Company Details 

Enter CIN, PAN, Name, Address, and Email ID.

Step 4: Enter Supplier & Payment Details 

Provide MSME supplier details and outstanding amounts.

Step 5: Specify Payment Delays 

Mention the due date and reasons for non-payment.

Step 6: Attach Supporting Documents 

Upload relevant documents if required.

Step 7: Digitally Sign and Submit 

The form must be digitally signed by an authorized company officer and submitted online.