Tax & Accounting

MSME Return (MSME Form-1)

Form MSME-1 is a half-yearly return filed with the Registrar of Companies under Section 405 of the Companies Act, 2013. A company that has outstanding payments to micro or small enterprise suppliers for more than 45 days from acceptance of goods or services must report the amount and the reasons for delay. Due dates are 31 October for April to September and 30 April for October to March.

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Service Overview

What is MSME Return (MSME Form-1)?

MSME Form 1 is the e-form by which specified companies disclose to the ROC the dues pending beyond 45 days to micro and small enterprise suppliers. It links to Section 15 of the MSMED Act, 2006, which requires buyers to pay MSMEs within 45 days or the agreed shorter period. It covers only micro and small suppliers, not medium enterprises.

A related provision, Section 43B(h) of the Income Tax Act, can disallow the expense for unpaid MSME dues beyond the permitted period. Penalty for non-filing under Section 405(4) is Rs 20,000 on the company and on every officer in default, according to ClearTax.

MSME Return (MSME Form-1)

Who Needs This Service

Companies buying goods or services from MSME vendors, especially manufacturers, retailers and service companies with large payables, need MSME-1.

Startups that outsource to small vendors should track payment dates carefully.

Companies that pay all MSME vendors on time may not need to file, though some sources say a nil return is required, so check current practice.

If you have overdue payables, clearing them before the half-year end can avoid filing and tax issues.

Key Benefits

Correct identification of MSME vendors and dues
Timely MSME-1 filing
Avoids Section 405 penalties
Awareness of Section 43B(h) tax impact
Supplier relationships protected

Next Steps & Related Services

After filing, plan to clear dues.

Related services: ROC Compliance, Annual Compliance, Accounting and Udyam registration.

Common Mistakes

Not verifying vendors' MSME status.
Missing the half-yearly dates.
Ignoring tax consequences.
Omitting reasons for delay.
Assuming medium enterprises are covered.

Timeline, Costs & Practical Tips

Filing windows are twice a year.

Practical tip: maintain an MSME vendor list with Udyam numbers and payment dates.

Additional Information

Section 405 of the Companies Act and the MSMED Act, 2006 protect small suppliers from delayed payments.

Practical Scenarios

Scenario 1:

A manufacturer reports unpaid dues to a small vendor.

Scenario 2:

A startup files after clearing dues.

Scenario 3:

A company reviews vendor status.

Written By

Raghav Sharma

Operations Executive

10+ Years Experience

As seen on

Raghav Sharma has 10+ years of experience covering Company Registration - Operation, MCA Services - Operation, Corporate Operation, Import Export Services - Operation, Goverment Licence Services - Operation, FSSAI - Operation, SEBI - Operation, Labour Compliance - Operation, Fund Raising - Operation, Licence & Certificate - Operations.

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Frequently asked questions

Need clarity?

When is MSME-1 due?

31 October for April-September and 30 April for October-March.

Who needs to file?

Companies with MSME dues beyond 45 days.

What is the penalty?

Rs 20,000 on the company and officers per ClearTax.

Is a nil return needed?

Sources differ.

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