Outstanding dues to MSME

Category: ROC & Annual Compliance. From ₹1,999. Typical timeline: Half-yearly.

Overview

MSME-1 is a half-yearly return that companies file with the ROC disclosing outstanding payments to micro and small enterprise suppliers that have remained unpaid for more than 45 days from the date of acceptance of goods or services. It was introduced to improve payment discipline toward MSME vendors and give the government visibility into delayed payments across corporate India.

Who needs it

• Companies purchasing raw materials or services from MSME-registered (Udyam-registered) vendors
• Manufacturing or trading companies with extended payment cycles to small suppliers
• Companies onboarding new MSME vendors who need to track payment ageing from the date of acceptance

Eligibility

• All specified companies that have outstanding dues to micro or small enterprise suppliers beyond 45 days
• Applicable regardless of company size — private, public or listed — as long as MSME dues are outstanding
• Not required if the company has no outstanding payments to MSME suppliers beyond the 45-day window

Documents required

• List of MSME suppliers with Udyam registration details
• Invoice-wise ageing of outstanding payments beyond 45 days
• Reasons for delay in payment
• Board authorisation for filing

Process

1. Identify MSME vendors — Confirm which suppliers hold Udyam registration and are therefore covered under the MSME Development Act.
2. Ageing analysis — Compile invoices outstanding for more than 45 days from acceptance of goods or services for the half-year.
3. Prepare the return — Draft Form MSME-1 with amounts due and reasons for delay for each supplier.
4. File with ROC — Submit the form for the April–September period by 31 October and for October–March by 30 April.

Government fees

• Form MSME-1 filing fee: Nil filing fee; additional fee applies only on delayed filing

Professional fee

Our fee starts at ₹1,999 per half-yearly return, covering vendor classification, ageing analysis and filing.

Timeline

Preparation typically takes 3–5 working days once the accounts team shares the vendor ageing data; statutory due dates are 30 April and 31 October each year.

Deliverables

• Filed Form MSME-1 with SRN
• Supplier-wise ageing schedule used for the filing

Frequently asked questions

Do we need to file MSME-1 if we have no MSME suppliers?

No, the return is only triggered when there are outstanding dues to Udyam-registered micro or small enterprises beyond 45 days.

What counts as the 45-day period?

It runs from the date of acceptance (or deemed acceptance) of goods or services, not from the invoice date, if the two differ.

Does this apply to medium enterprises too?

No, MSME-1 covers only micro and small enterprise suppliers, not medium enterprises.

Common mistakes

• Not verifying supplier Udyam registration status before excluding them from the return
• Calculating the 45-day period from invoice date instead of acceptance date
• Missing the half-yearly deadlines because the filing is seen as low-priority
• Failing to disclose MSME dues in the financial statements notes as well

Penalties for non-compliance

• Fine on the company and every officer in default for non-filing or false filing, as prescribed under the Companies Act
• Compounded interest liability to the MSME supplier at three times the RBI-notified rate for delayed payment under the MSME Development Act
• Reputational risk with MSME vendors and potential Facilitation Council references

Legal references

• Companies Act, 2013 — Section 405 empowers the government to call for this return
• MSMED Act, 2006 — Section 15 and 16 govern payment timelines and interest on delayed payment
• MCA Order dated 22 January 2019 — prescribes the MSME-1 half-yearly filing