MSME Form 1 (Half-Yearly Return of Dues)

What Is MSME Form 1?

MSME Form 1 (also written MSME-1, and titled on the MCA21 portal "MSME - Half yearly return of Micro or Small Enterprise") is the half-yearly return a company files with the Registrar of Companies (ROC) disclosing amounts it owes to micro or small enterprise suppliers that have remained unpaid for more than 45 days after acceptance of the goods or services. The Ministry of Corporate Affairs (MCA) company forms listing describes the form as one "for furnishing half yearly return with the registrar in respect of outstanding payments to Micro or Small Enterprise," and the return type printed on the form itself is a "Regular half yearly return of outstanding dues (more than 45 days) to Micro or Small Enterprises Suppliers."

The form is not about registering as an MSME — that is Udyam Registration. MSME Form 1 runs the other way: it is filed by the buyer of goods or services, reporting how much it owes to its micro and small suppliers past the legal payment deadline, supplier by supplier.

Legal Basis

Section 405 of the Companies Act, 2013 and the January 2019 Order

The filing obligation comes from Orders 2 and 3 of the Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019, issued by the MCA on 22 January 2019 under section 405 of the Companies Act, 2013 — the provision letting the central government direct any company or class of companies to furnish information or statistics relevant to its functioning. MCA's own e-filing page for the form states its authority in exactly these words: "Pursuant to Order 2 and 3 dated 22 January, 2019 issued under Section 405 of the Companies Act, 2013." The same page carries a standing warning to filers: "Attention is drawn to provision of sub section 4 of section 405 of the Companies Act, 2013 which provide for punishment for any information or statistics which is incorrect or incomplete in any material respect."

Section 37 of the Income-tax Act, 2025 (section 43B(h) of the Income-tax Act, 1961)

The reporting duty has a tax-law twin. Section 37(2)(g) of the Income-tax Act, 2025 (section 43B(h) of the Income-tax Act, 1961) disallows, for the business paying it, "amount payable by the assessee to a micro or small enterprise beyond the time limit specified in section 15" of the MSMED Act, 2006 — the identical 45-day-class trigger that MSME Form 1 reports. Most other categories listed in section 37(2) get a grace period under section 37(3): if the amount is paid on or before the due date for filing the income tax return for the year, the deduction is still allowed in the year the liability was incurred. Section 37(3) expressly carves clause (g) out of that grace period. In practice this means that once a payment to a micro or small enterprise is still outstanding beyond the section 15 time limit at the close of the tax year, the deduction is lost for that year even if the buyer pays the supplier before the return is filed — the cost can only be deducted in the year it is actually paid. This point is routinely examined during the tax audit.

Who Files, and What Counts as Overdue

Any company — public or private — that buys goods or services from a supplier classified Micro or Small under the MSMED Act, 2006 and has not paid within forty-five days must report that supplier on MSME Form 1. The 2019 Order fixes the trigger on companies "whose payments to micro and small enterprise suppliers exceed forty five days from the date of acceptance or the date of deemed acceptance of the goods or services." Medium enterprises are outside its scope: both the order and the form use the phrase "Micro or Small Enterprise" only, never "Medium." The 45-day clock that MCA applies runs from the "date of acceptance or the date of deemed acceptance of goods/service" — the form's own field label — not from the invoice date or the purchase order date.

The Half-Yearly Filing Windows

MSME Form 1 is filed twice in every financial year, each return covering one half-year:

Order 3 of the 2019 Order sets both dates in one sentence: every specified company "shall file a return as per MSME Form I annexed to this Order, by 31st October for the period from April to September and by 30th April for the period from October to March."

Each half-yearly return sits alongside a company's other routine ROC filings, such as the Annual Return (MGT-7), on the Registrar of Companies's compliance calendar — but MSME Form 1 is unusual in recurring twice a year rather than once.

What the Form Requires

The filing captures the company's Corporate Identity Number (CIN) or Foreign Company Registration Number (FCRN), registered-office address, email address, and PAN, together with the "Type of Return" and the exact start and end dates of the period covered. For every supplier with an amount outstanding beyond 45 days, the company lists, using the form's own column headings: the supplier's name, the supplier's PAN, the amount due, the date of acceptance or deemed acceptance of the goods or service, and whether the amount is "Paid" or "Un-paid" as on the date of filing — so a supplier who was eventually paid late still has to be listed for the half-year in which the 45-day limit was crossed. A summary block totals the amount outstanding at the start of the period, the amount liquidated during the period, the amount newly added during the period, and the amount still outstanding beyond 45 days at the period's end. The form closes with a declaration that "the information given in the form and attachments are true and correct," directly followed by the section 405(4) penalty warning quoted above.

Why MSME Form 1 Matters for Foreign Companies

A foreign-owned Indian subsidiary is squarely inside this Order the moment it starts buying from Indian micro or small vendors — contract manufacturers, component suppliers, logistics providers, and many local services vendors qualify. Two consequences follow that a foreign parent's finance team, used to different vendor-payment norms, can easily miss. First, extending payment terms of 45 days or more to a micro or small supplier — routine in many jurisdictions — becomes a disclosed, filed fact on the public MCA21 record, searchable against the company's CIN. Second, the same 45-day trigger converts an ordinary trade payable into an unplanned tax cost: under section 37 of the Income-tax Act, 2025, the deduction for that expense is denied for the year in which the payment was outstanding past the limit, regardless of when it is eventually paid. A subsidiary running head-office-style net-60 or net-90 vendor terms with an Indian MSME supplier risks both outcomes at once.

Common Mistakes

• Confusing "Micro or Small" with "Medium." The Order and the form apply only to Micro and Small enterprise suppliers; Medium enterprises are not covered, even though the MSMED Act, 2006 defines all three tiers together in one registration system.
• Measuring the 45 days from the invoice date. The form's own field is the "date of acceptance or the date of deemed acceptance of goods/service" — not the invoice date, and not the purchase order date.
• Assuming payment before the income-tax return due date restores the deduction. That grace period exists for most section 37(2) categories, but section 37(3) expressly excludes clause (g) — MSME dues. The deduction is available only in the year the amount is actually paid.
• Treating the filing as a single annual disclosure. MSME Form 1 is two separate returns a year, each with its own due date and its own reference period; a company cannot merge them into one annual filing.
• Dropping a supplier from the return once it is finally paid. The form's "Paid/Un-paid" status field shows that a late payment made within the half-year still has to be reported for that period — the trigger is that the 45-day limit was crossed, not that the amount remains unpaid today.

Practical Example

Meridian Devices India Pvt Ltd, the Indian subsidiary of a Canadian medical-device group, buys precision-machined components from a Pune-based micro enterprise. The batch is delivered and accepted on 10 June. Meridian's standard vendor terms are net-60, so it pays the invoice on 9 August — 60 days after acceptance, 15 days past the section 15 time limit.

In its MSME Form 1 for the April–September half-year (due 31 October), Meridian must list this supplier, the amount, the date of acceptance, and mark the entry "Paid," because the 45-day limit was crossed even though the invoice was settled within the half-year. On the tax side, section 37 of the Income-tax Act, 2025 governs the deduction for that component cost: since clause (g) carries no return-filing-date grace period, any part of a similar payment still outstanding at the company's year end would be disallowed for that year regardless of when it is paid afterward.

Frequently Asked Questions

Who has to file MSME Form 1?

Any company, public or private, with an amount owed to a Micro or Small enterprise supplier that is still outstanding beyond forty-five days from the date of acceptance or deemed acceptance of the goods or services must report that supplier. MCA describes the filing as covering "outstanding payments to Micro or Small Enterprise," made under section 405 of the Companies Act, 2013.

Does MSME Form 1 cover Medium enterprises too?

No. Both the underlying MCA order and the form itself use the phrase "Micro or Small Enterprise" only. A supplier's Udyam registration certificate shows whether it is classified Micro, Small, or Medium, and only the first two categories fall inside this reporting duty.

What are the MSME Form 1 due dates?

The form is filed twice a year: the return for the April–September half-year is due by 31 October, and the return for the October–March half-year is due by 30 April. Each return covers only the amounts that crossed the 45-day limit, or remained outstanding beyond it, during that half-year.

Does paying before the income-tax return due date save the deduction?

Not for MSME dues. Section 37(3) of the Income-tax Act, 2025 lets most section 37(2) categories keep the deduction if paid before the income tax return due date, but clause (g) — payments to micro or small enterprises beyond the section 15 time limit — is expressly excluded from that relief. The deduction is available only in the year the amount is actually paid.

What happens if a company files MSME Form 1 late or gets it wrong?

MCA's own filing instructions for the form point directly to sub-section (4) of section 405 of the Companies Act, 2013, which penalizes furnishing information that is incorrect or incomplete in any material respect, or failing to furnish it. The declaration on the form itself requires the filer to confirm the details given are "true and correct."

See also: MSME / Udyam Registration, Registrar of Companies (ROC) and MCA, and the Compliance Calendar for other ROC filing deadlines.

Need help tracking MSME payment terms and filing half-yearly returns on time? Beacon Filing's compliance outsourcing service manages ROC filings, including MSME Form 1, for foreign-owned Indian companies.