MSME Form 1 Compliance Guide under Section 405
MSME Form 1: Compliance Guide under Section 405 of the Companies Act, 2013
If your company purchases goods or services from Micro, Small, and Medium Enterprises (MSMEs), understanding MSME Form 1 compliance is extremely important. The Government of India has made it mandatory for certain companies to report delayed payments to MSME suppliers to ensure that small businesses receive their payments on time.

This detailed guide explains what MSME Form 1 is, who needs to file it, due dates, penalty provisions, practical examples, and FAQs in simple language.
1. What is MSME Form 1?
MSME Form 1 is a half-yearly return that must be filed with the Ministry of Corporate Affairs (MCA) by companies that have outstanding payments to MSME suppliers beyond the permitted time limit.
This requirement has been introduced under Section 405 of the Companies Act, 2013, read with the provisions of the MSME Development Act to protect small businesses from delayed payments.
The objective of this form is to ensure MSMEs maintain healthy cash flow and are not negatively affected due to payment delays by large companies.
2. Who is Required to File MSME Form 1?
  • The company has received goods or services from an MSME supplier registered under Udyam Registration.
  • Payment has not been made within 45 days from the date of acceptance of goods or services.
Example – Applicability of MSME Form 1

ABC Private Limited purchases raw material from XYZ Enterprises (MSME registered).

Invoice Date: 1 June 2026
Payment Due Date: 16 July 2026
Actual Payment Date: 10 September 2026

Since payment is delayed beyond 45 days, MSME Form 1 filing is required.
3. Payment Time Limit under MSME Law
  • With written agreement – payment within agreed period (maximum 45 days)
  • Without agreement – payment within 15 days
Example – Timeline

With agreement: Invoice 1 Aug → Due 31 Aug
Without agreement: Invoice 1 Aug → Due 16 Aug
4. Due Dates for Filing MSME Form 1
Period Reporting Months Due Date
April – September Half Year 31 October
October – March Half Year 30 April
5. Details Required for Filing MSME Form 1
  • Company CIN
  • Company PAN
  • Supplier name
  • Supplier PAN
  • Outstanding amount
  • Due date
  • Reason for delay
  • Invoice details
Example – Required Information

Company: ABC Pvt Ltd
Supplier: XYZ Enterprises
Amount: ₹2,50,000
Reason: Cash flow delay
6. Penalty for Non-Compliance
Company penalty: ₹25,000 to ₹3,00,000

Officer penalty:
Imprisonment up to 6 months OR fine OR both
7. Importance of MSME Form 1 Compliance
  • Ensures timely payment to MSMEs
  • Avoids penalties
  • Improves vendor relationship
  • Builds business credibility
  • Promotes transparency
Practical Scenarios
  • Payment within 45 days – no filing required
  • Partial payment – outstanding amount reported
  • Non MSME supplier – not applicable
Frequently Asked Questions (FAQs)
Is MSME Form 1 applicable to all companies?
No, only companies with delayed MSME payments must file.
How often is MSME Form 1 filed?
Half yearly.
Is filing required if payment is made on time?
No.
Is MSME Form 1 applicable to LLP?
No.
Can MSME Form 1 be revised?
Yes.
Is MSME Form 1 required for small amount?
Yes, if payment delay exceeds 45 days.
MSME Form 1 ensures timely payment to MSMEs and promotes fair business practices. Companies should track MSME vendors and avoid payment delays to prevent penalties.