Deadline: 31st October 2025
Period Covered: April–September 2025
Ensure your company meets the MCA Form MSME-1 filing obligations with this comprehensive guide, combining legal background, procedural steps, portal workflow, penalties, exemptions, and best practices.
Why Form MSME-1 Is Non-Negotiable
Form MSME-1 was introduced via MCA’s 2019 notification under Section 405 of the Companies Act, 2013, to enforce transparency and timely payments to Micro and Small Enterprises (MSEs). Parallel provisions under the MSMED Act, 2006 mandate:
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Payment within 45 days of acceptance of goods/services, and
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Levy of compound interest at 3× RBI bank rate for delayed payments.
Additionally, Section 43B(h) of the Income-Tax Act, 1961 (effective AY 2024-25) defers deductions for late MSME payments to the year of actual settlement. Together, these create a dual-regulatory imperative for companies to track, report, and pay MSE vendors timely.
Who Must File?
Applicable to all companies (OPC, Private Ltd, Public Ltd, Listed/Unlisted) that:
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Procure goods/services from registered Micro or Small Enterprise vendors.
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Fail to pay any vendor within 45 days from acceptance (or deemed acceptance).
Clarifications:
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No minimum due threshold—even a small delayed payment triggers filing.
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MSME-registered buyers must file if they pay other MSMEs late.
Key Portal Upgrade: V3’s Four-Quadrant Disclosure
Since July 2024, the MCA V3 portal requires reporting across four categories:
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Payments made within 45 days.
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Payments made after 45 days during the half-year.
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Dues outstanding <45 days at period-end.
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Dues outstanding >45 days at period-end.
Important: Filing is triggered only if any payment breach of 45 days occurs, either mid-period or at period-end.
Information Required for Filing
Company Information
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CIN, PAN, GLN (if applicable)
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Name, registered address, email
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Half-yearly period
Vendor Details
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Name, PAN, Udyam Registration Number
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Nature of goods/services supplied
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Written confirmation of MSME status
Payment Data
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Invoice number/date, acceptance date
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Credit terms, due/aging/actual payment dates
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Structured reasons for delays (dropdown-based in V3 portal)
Authorized Signatory
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DIN/PAN of Director, CS, CEO, CFO
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Valid Digital Signature Certificate (DSC)
Step-by-Step Filing Workflow
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Vendor Verification: Collect and validate Udyam certificates; maintain an MSME supplier registry.
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Payment Analysis: Identify invoices crossing 45 days; prepare aging report.
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Data Compilation: Fill MCA’s Excel template for all four reporting categories.
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Portal Submission: Log in MCA V3 → e-Form MSME-1 → enter data → attach supporting documents.
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Digital Signing: Apply DSC; enter signatory DIN/PAN.
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Acknowledge & Archive: Download submission receipt; retain for audit and ROC purposes.
Revised MSME Classification (Effective 1 April 2025)
| Enterprise Category | Investment Limit | Turnover Limit |
|---|---|---|
| Micro | ₹2.5 crore | ₹10 crore |
| Small | ₹25 crore | ₹100 crore |
| Medium | ₹125 crore | ₹500 crore |
Impact: More suppliers qualify as MSMEs, potentially expanding reporting scope.
Exemptions & Nil Return Clarifications
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No dealings with MSMEs, or
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All payments made within 45 days, or
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Only dealings with Medium Enterprises.
No filing is required, and a "Nil Return" is not mandatory.
Penalties & Audit Implications
Company Penalty:
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₹20,000 initial, plus ₹1,000/day for continuing default
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Maximum: ₹2,00,000
Officer in Default:
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₹20,000 initial, plus ₹1,000/day
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Maximum: ₹3,00,000
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Alternative: Imprisonment up to 6 months or both fine and imprisonment
Other Implications:
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ROC can adjudicate under Section 454.
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Statutory auditors must report delayed payments and interest provisions in financial statements.
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Company Secretaries must note non-compliance in MGT-7.
Income-Tax Implications (Section 43B(h))
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Deduction deferral: Payments beyond 45 days allowed only in the year of actual payment.
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Interest nondeductible: Compound interest paid to MSMEs (3× bank rate) is not deductible.
Example: A delayed ₹5 lakh payment to an MSME can only be claimed as a deduction when paid, not in the year of accrual.
Best Practices for Flawless Compliance
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Maintain a verified MSME vendor registry with Udyam certificates.
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Automate 45-day payment alerts and half-yearly aging reviews.
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Document delay reasons and all supplier communications.
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Integrate accounts payable workflows with compliance software and DSC readiness.
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Conduct pre-deadline internal audits to ensure data accuracy.
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Coordinate with statutory auditors for proper financial statement disclosures.
Conclusion
Form MSME-1 is a dual-purpose compliance requirement:
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Ensures regulatory adherence under Companies Act, 2013.
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Protects and promotes India’s Micro and Small Enterprises by enforcing timely payments.
With the revised MSME classification effective April 2025 and MCA V3 portal’s four-category reporting, companies must adopt robust internal systems, accurate tracking, and timely filing. The 31st October 2025 deadline is imminent—early preparation avoids steep penalties, reputational risk, and tax disallowances.
