AS | Ankit Sarawagi|Founder, CFOmatrix·July 2026·9 min read | Buyer-side compliance |
- It is a buyer obligation, not a supplier one. Every company that owes a micro or small supplier for more than 45 days must file MSME Form 1 with the ROC.
- Two dates to remember: 30 April (for the October to March half) and 31 October (for the April to September half).
- The V3 trap: if even one payment to a supplier crossed 45 days during the half-year, you now report all transactions with that supplier, even the ones you paid on time.
- Penalty is real: ₹20,000 plus ₹1,000 for every continuing day, on the company and its officers, under Section 405(4).
- It is not Section 43B(h). MSME-1 is a Companies Act filing; 43B(h) is an income-tax disallowance. A late payment can trigger both.
| Twice a year Half-yearly ROC return, due 30 April and 31 October | 45 days The overdue threshold that triggers a reporting duty | ₹1,000/day Continuing penalty for default (Section 405(4)) |
What MSME Form 1 Actually Is
MSME Form 1 (MSME-1) is a half-yearly return that a company files with the Registrar of Companies (ROC) to disclose money it owes to micro and small suppliers that has stayed unpaid for more than 45 days from the date of acceptance. The legal backbone is Section 405 of the Companies Act, 2013, read with the Specified Companies (Furnishing of Information about Payment to Micro and Small Enterprise Suppliers) Order, 2019. In plain terms, the government wanted a running, company-level record of who is squeezing micro and small vendors on payment terms, and MSME-1 is that record.
It is important to place it correctly: this is a Companies Act compliance filing, not a tax step and not a payment. Filing MSME-1 does not clear your dues, reduce your interest under the MSMED Act, or fix your income-tax position. It simply tells the ROC, on the record, that the overdue amount exists and why it is still unpaid.
MSME-1 tracks dues to micro and small suppliers only. Medium enterprises are outside it, and so are traders, who register on Udyam for lending purposes but are not treated as suppliers for this disclosure. Always confirm the supplier’s category from its Udyam registration before deciding whether a due is reportable.
Who Must File It
The obligation sits on companies, not on every business. If your enterprise is a proprietorship, a partnership firm or an LLP, MSME-1 does not apply to you. If you are a company registered under the Companies Act (private or public, of any turnover), the question is only whether you have reportable overdue dues. Walk the three checks below.
A practical warning: the trigger is the 45-day overdue status during the half-year, not the balance sitting on your books on the last day. A bill that went past 45 days and was then paid mid-period still counts. That is where the MCA V3 disclosure rule, covered below, catches people out.
The Two Due Dates
MSME Form 1 is filed twice a year, one filing for each half of the financial year. The due date always falls one month after the half-year closes.
| Oct 1 → Mar 31 reporting period | files by 30 Apr |
| Apr 1 → Sep 30 reporting period | files by 31 Oct |
Two filings a year, every year, for as long as you keep having overdue micro or small dues. Because the deadlines are fixed and independent of your annual accounts, they slip through the cracks easily. Put both dates on the compliance calendar the same way you treat the annual return.
The MCA V3 Disclosure Trap
When MSME-1 moved to the MCA V3 portal, the way you report changed in a way that surprises a lot of finance teams. On the older form, people tended to report only the balance still outstanding beyond 45 days. On the V3 form, the logic is broader: if even one payment to a given supplier breached the 45-day limit during the half-year, you must report all transactions with that supplier for the period, including the invoices you actually paid on time.
| Invoice | Days to pay | Reported in MSME-1? |
| Invoice A | 30 days (on time) | Yes |
| Invoice B | 40 days (on time) | Yes |
| Invoice C | 70 days (breached) | Yes |
“We paid it before the due date, so we do not need to report it” is the classic mistake. Under the V3 logic, a payment that breached 45 days and was later cleared still has to be disclosed, and it drags in the on-time invoices to that supplier as well. Reconcile per supplier, not per open balance.
How to File, and What You Need
MSME-1 is filed electronically on the MCA portal and signed with a director’s digital signature. There is no ROC fee for the form itself. The work is almost entirely in the preparation: pulling a clean, supplier-wise list of overdue micro and small dues for the half-year. Have this ready before you open the form.
Treat MSME-1 as an output of a process, not a twice-a-year fire drill. Tag every vendor in your accounting system with its Udyam status at onboarding, and run an aged-payables report filtered to micro and small suppliers before each due date. If your vendor master already knows who is micro or small, the return writes itself and you also stop tripping Section 43B(h) at year-end.
The Penalty for Not Filing
Because MSME-1 is required under Section 405, non-filing is punished under Section 405(4). It is not a token fee; it compounds by the day and it reaches the people running the company, not just the company itself.
| On the company | up to ₹20,000 |
| If the default continues | + up to ₹1,000 / day |
| On officers in default | same exposure, subject to a cap |
The same exposure attaches to filing a return that is false or incomplete, so a rushed, half-reconciled MSME-1 is not a safe shortcut. Given that the form carries no filing fee and the penalty runs at ₹1,000 a day, the economics are one-sided: file it, file it correctly, and file it on time.
MSME-1 vs 43B(h) vs the Sec 22 Disclosure
Three different obligations all key off the same event, a late payment to a micro or small supplier, and founders routinely blur them into one. They are not. They sit in different laws, do different things, and can all bite on the same overdue invoice at the same time. Keep them separate.
| MSME Form 1 | Section 43B(h) | MSMED Sec 22 | |
| Which law | Companies Act 2013 (Sec 405 + 2019 Order) | Income Tax Act 1961 | MSMED Act 2006 |
| What it is | A half-yearly ROC return of overdue micro and small dues | A tax rule: no deduction until the year of actual payment, if paid late | A disclosure of unpaid MSME dues and interest in the financial statements |
| The consequence | Penalty for not filing (Sec 405(4)) | Higher taxable profit and tax this year | Interest accrued is shown and is disallowed for tax |
| Applies to | Companies only | Any buyer computing business income | Any buyer preparing financial statements |
The short version: MSME-1 is a filing (do it or pay a penalty), 43B(h) is a tax cost (pay late and lose the deduction this year), and the Section 22 disclosure is an accounting entry in your financial statements. For a full walkthrough of the tax side, → read our Section 43B(h) explainer. If you are building the wider process end to end, our MSME buyer-compliance playbook ties MSME-1, 43B(h) and vendor tagging together, and the Udyam guide explains how to confirm which suppliers are micro or small. For the full picture of the delayed-payment regime, see our MSME delayed-payment pillar guide.
“MSME-1 does not cost a rupee to file and it does not fix your dues. It just puts the delay on the government’s record. The only way to lose money on it is to forget it, and then it costs ₹1,000 a day.”
Ankit Sarawagi, CFOmatrixFrequently Asked Questions
What is MSME Form 1?
MSME Form 1 (MSME-1) is a mandatory half-yearly return that companies file with the Registrar of Companies (ROC) under Section 405 of the Companies Act 2013 and the Specified Companies Order of 2019. It discloses amounts a company owes to micro and small suppliers that have stayed unpaid for more than 45 days from the date of acceptance, along with the reasons for the delay. It is a Companies Act compliance filing, separate from any income-tax step.
Who has to file MSME Form 1?
Every company (private or public, of any size) that has any amount payable to a micro or small enterprise outstanding for more than 45 days from acceptance during the half-year must file MSME Form 1. Whether the supplier is micro or small is confirmed from its Udyam registration. Companies with no such overdue micro or small dues in the half-year are generally not required to file. Suppliers who are medium enterprises or traders do not count.
What are the due dates for MSME Form 1?
MSME Form 1 is filed twice a year. For the October to March half-year, the due date is 30 April. For the April to September half-year, the due date is 31 October. So each year has two filings, covering the two halves, each due one month after the half-year closes.
Do I file a nil MSME Form 1 if there are no overdue dues?
MSME Form 1 is a return of overdue micro and small dues, so if a company has no amount payable to a micro or small supplier outstanding beyond 45 days at any point in the half-year, there is generally nothing to report and no filing is required. There is no separate nil-return obligation for companies that simply have no reportable dues. When in doubt, confirm the current MCA position with your professional, because the form and its instructions are periodically updated.
What is the penalty for not filing MSME Form 1?
Because MSME Form 1 is required under Section 405, the penalty under Section 405(4) applies: the company is liable to a penalty of up to ₹20,000, and if the default continues, a further penalty of up to ₹1,000 for each day of continuing default, subject to a cap. The same penalty exposure falls on the officers of the company who are in default. Filing an incorrect or incomplete return carries similar risk.
How is MSME Form 1 different from Section 43B(h)?
They live in two different laws. MSME Form 1 is a Companies Act disclosure: a half-yearly return telling the ROC which micro and small dues are overdue beyond 45 days, with a penalty for not filing. Section 43B(h) is an Income Tax Act rule: it disallows the buyer’s tax deduction for a micro or small purchase until the year it is actually paid, if paid late. One is a filing obligation, the other is a tax cost. A late payment to a micro or small supplier can trigger both at once.
Sources: Companies Act, 2013, Section 405 and Section 405(4); Specified Companies (Furnishing of Information about Payment to Micro and Small Enterprise Suppliers) Order, 2019; MCA V3 MSME Form 1; Income Tax Act, 1961, Section 43B(h) (renumbered Section 37(2)(g) from Tax Year 2026-27); MSMED Act, 2006, Sections 22 and 23; supplier classification per Udyam registration. Form fields, thresholds and instructions are periodically revised on the MCA portal.
This is general educational information, current to mid-2026, and not legal or tax advice. Rates, forms and procedures change; verify the current position or consult a professional before acting on a specific matter.
AS | Founder, CFOmatrix | Finance Strategy & Equity Compliance CFOmatrix is a knowledge platform focused on how finance actually works inside growing companies. This guide draws on hands-on experience with MSME compliance on both sides of the invoice, alongside the current statutory position. |