MSME Form-1: MCA Reporting of Outstanding Payments to MSMEs

A company may have paid most of its MSME suppliers on time, but if even one eligible micro or small enterprise payment remains outstanding beyond the statutory period, an MCA reporting requirement can arise.

MSME Form-1 is a half-yearly MCA filing relating to payments to micro and small enterprise suppliers. The reporting framework was introduced under the Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019, issued under Section 405 of the Companies Act, 2013.

The rules were significantly updated in 2024. The amendment clarified that only specified companies having payments pending to micro or small enterprises for more than 45 days from the date of acceptance or deemed acceptance of goods or services are required to furnish the information in MSME Form-1. The revised form also introduced more detailed disclosures regarding payments made and outstanding.

For companies in Delhi, Noida, Gurugram, Ghaziabad, Faridabad and across India, MSME Form-1 should therefore be treated as part of the company's regular ROC compliance calendar, particularly where the business regularly purchases goods or services from MSE suppliers.

What Is MSME Form-1?

MSME Form-1 is a half-yearly return filed with the Registrar of Companies concerning payments to micro and small enterprise suppliers.

The reporting requirement originates from the MCA's 2019 order issued under Section 405 of the Companies Act, 2013.

The original framework required specified companies to submit information about outstanding payments to micro or small enterprise suppliers and provided two reporting periods:

• April to September

• October to March

The corresponding filing dates are:

31 October for the April–September period

30 April for the October–March period.

The 2024 amendment changed the applicability condition and replaced the earlier MSME Form-1 with a more detailed version.

What Changed in 2024?

The Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Amendment Order, 2024, dated 15 July 2024, introduced two particularly important changes.

First: Applicability Was Clarified

Only specified companies that have payments pending to a micro or small enterprise for more than 45 days from the date of acceptance or deemed acceptance are required to furnish information in MSME Form-1.

Second: The Form Became More Detailed

The revised MSME Form-1 requires more comprehensive information concerning payments to MSE suppliers.

The revised disclosures include categories such as:

• Payments made within 45 days

• Payments made after 45 days

• Amounts outstanding for 45 days or less

• Amounts outstanding for more than 45 days

• Payment mode through TReDS

• Payment through other modes

• Supplier name

• Supplier PAN

• Reason for delay or outstanding amount

This means companies need better supplier-level payment records before preparing the return.

Who Needs to File MSME Form-1?

The important phrase is "specified company."

Under the amended framework, a specified company having payments pending to a micro or small enterprise for more than 45 days from the date of acceptance or deemed acceptance of goods or services must furnish the information in MSME Form-1.

The filing is therefore particularly relevant for companies that:

• Purchase goods from micro enterprises

• Purchase goods from small enterprises

• Obtain services from micro enterprises

• Obtain services from small enterprises

• Have unpaid invoices crossing the applicable 45-day period

The status of the supplier matters.

A company should not classify a supplier as an MSME merely because the supplier is a small business in ordinary commercial language.

The company should obtain appropriate evidence of the supplier's MSE status, such as the supplier's Udyam registration details where applicable.

Does MSME Form-1 Apply to Medium Enterprises?

The 2024 amendment specifically refers to payments pending to micro or small enterprises.

Therefore, companies should distinguish between:

Micro Enterprise

Small Enterprise

and

Medium Enterprise

The MSME Form-1 requirement under this order is focused on micro and small enterprise suppliers.

A supplier being classified as a "medium enterprise" does not automatically bring that supplier within this particular reporting requirement.

What Does "More Than 45 Days" Mean?

This is one of the most important concepts in MSME Form-1 compliance.

The 2024 amendment states that the relevant period is calculated from the date of acceptance or deemed acceptance of the goods or services under Section 9 of the MSMED Act, 2006.

This means the company should not simply calculate 45 days from:

• Invoice date

• Purchase order date

• Accounting entry date

• Payment request date

Instead, it needs to establish the legally relevant acceptance or deemed-acceptance date.

What Is Acceptance of Goods or Services?

For MSMED Act purposes, the timing of payment is linked to acceptance or deemed acceptance.

A company should therefore maintain documentation showing when the goods or services were accepted.

Depending on the transaction, this may be supported by:

• Goods receipt note

• Delivery challan

• Purchase order

• Service completion record

• Work acceptance certificate

• Email confirmation

• Invoice processing record

• Contractual acceptance documentation

The exact evidence will depend on the nature of the transaction.

What Is Deemed Acceptance?

The MSMED Act also recognises circumstances where acceptance is deemed to have occurred.

This is important because a company cannot necessarily avoid the payment timeline simply by saying that it has not formally approved an invoice.

The company should therefore maintain clear records around:

• Delivery

• Inspection

• Acceptance

• Rejection

• Communication with the supplier

This becomes particularly important where the company disputes the quality or quantity of goods or services.

Example: Delhi Company With a Delayed MSME Payment

Suppose a Delhi company purchases machinery components from a registered small enterprise.

The goods are accepted on:

1 August

The invoice remains unpaid.

If the payment remains outstanding beyond the applicable 45-day period calculated from the relevant acceptance date, the company should examine whether it falls within the MSME Form-1 reporting requirement.

The company should maintain:

• Supplier's MSE/Udyam details

• Purchase order

• Invoice

• Goods receipt

• Acceptance record

• Payment status

• Reason for delay

The information can then be used while preparing the half-yearly return.

MSME Form-1 Filing Periods

MSME Form-1 is a half-yearly return.

The two reporting periods are:

April to September

The filing deadline is:

31 October

October to March

The filing deadline is:

30 April

The 2019 order establishes these two reporting periods and filing dates.

The 2024 amendment changed the applicability condition but did not replace this basic half-yearly filing structure.

Example of the Filing Calendar

Suppose a company has an eligible overdue MSE payment during the period:

1 April to 30 September

The corresponding MSME Form-1 filing should be considered for the:

31 October deadline.

For transactions falling into the next reporting period:

1 October to 31 March

the corresponding deadline is:

30 April.

Companies should therefore review their supplier ageing twice each year rather than waiting for the annual ROC compliance process.

What Information Is Reported in the Revised MSME Form-1?

The revised form requires substantially more information than the earlier version.

The MCA's 2024 changes introduced fields covering:

• Name of MSME supplier

• PAN of MSME supplier

• Number of transactions paid within 45 days through TReDS

• Amount paid within 45 days through TReDS

• Number of transactions paid within 45 days through other payment modes

• Amount paid within 45 days through other payment modes

• Number of transactions paid after 45 days

• Amount paid after 45 days

• Number of transactions outstanding for 45 days or less

• Amount outstanding for 45 days or less

• Number of transactions outstanding for more than 45 days

• Amount outstanding for more than 45 days

• Reason for delay or outstanding amount

This makes supplier-level accounting data particularly important.

Why Is Supplier PAN Required?

The revised MSME Form-1 requires the PAN of the MSE supplier.

This gives the company another reason to maintain accurate vendor master data.

For each relevant supplier, the accounts team should ideally maintain:

• Legal name

• PAN

• Udyam details, where applicable

• GSTIN, where relevant

• Address

• Invoice details

• Payment history

• Acceptance date

• Outstanding amount

A vendor database containing only a trade name may not be sufficient for smooth reporting.

What Does the Form Mean by Payments Within 45 Days?

The revised form distinguishes payments made within 45 days.

These disclosures are further divided based on the payment mechanism, including:

Through TReDS

and

Other modes of payment.

This means the accounts team should be able to identify the payment route for relevant transactions.

For example:

Invoice A: paid through TReDS

Invoice B: paid through NEFT

Invoice C: paid through another permitted payment method

The payment records should support the classification entered in the form.

What Are TReDS Transactions?

TReDS refers to the Trade Receivables Discounting System, an electronic platform mechanism used for financing trade receivables.

The revised MSME Form-1 specifically asks for information concerning payments made through TReDS.

A company using TReDS should therefore ensure that its accounts team can reconcile:

• Invoice

• Supplier

• TReDS transaction

• Amount

• Payment date

• Outstanding balance

with the accounting records.

What Does "Paid After 45 Days" Mean?

The revised form separately captures payments made after 45 days.

For example:

Acceptance date: 1 April

Payment date: 25 May

If the payment crossed the applicable 45-day period based on the relevant acceptance/deemed-acceptance date, it should be reviewed for the appropriate reporting category.

The company should not rely solely on the invoice date to determine the ageing.

What Does "Outstanding for 45 Days or Less" Mean?

The revised form also distinguishes outstanding payments that have not crossed 45 days.

For example:

Acceptance date: 1 September

Reporting cut-off: 30 September

If the amount remains unpaid but has not crossed the applicable 45-day period, the transaction falls into a different ageing category from an amount outstanding for more than 45 days.

This distinction is important because the revised form requires ageing-based information.

What Does "Outstanding for More Than 45 Days" Mean?

This is the most important category for determining whether the company falls within the amended MSME Form-1 applicability condition.

Suppose:

Acceptance date: 1 July

Payment status at the reporting point: unpaid

If the amount has remained unpaid for more than 45 days from the relevant acceptance or deemed-acceptance date, the company should assess the MSME Form-1 filing requirement.

The company should also identify the reason for the delay or outstanding amount.

Reason for Delay in Payment

The revised form specifically requires the company to provide the reason for delay in payment or amount outstanding.

The explanation should be based on the actual circumstances.

Examples can include:

• Invoice discrepancy

• Quality dispute

• Quantity dispute

• Pending documentation

• Commercial reconciliation

• Payment processing issue

• Contractual dispute

• Internal approval delay

The company should avoid entering generic explanations that do not accurately describe the underlying situation.

Example: Gurugram Company With Invoice Dispute

A Gurugram company receives services from a small enterprise.

The supplier raises an invoice for:

₹4 lakh

The company disputes:

₹75,000

because part of the services were allegedly incomplete.

The company should maintain records explaining:

• What services were received

• Date of acceptance

• Amount accepted

• Amount disputed

• Communication with supplier

• Payment made

• Amount remaining outstanding

• Reason for the outstanding amount

The company should then determine the appropriate reporting treatment.

A simple accounting note saying "invoice disputed" may not be enough if supporting documentation is unavailable.

Does Every Company Have to File MSME Form-1?

No.

The 2024 amendment is important here.

It states that only specified companies having payments pending to micro or small enterprises for more than 45 days from the date of acceptance or deemed acceptance are required to furnish the information in MSME Form-1.

Therefore, companies should not automatically file merely because they have purchased something from an MSME supplier.

The company should first determine whether the amended applicability condition is satisfied.

Example: No Overdue MSE Payment

Suppose a company has 20 MSE suppliers.

During the half-year:

• All invoices were paid within the applicable period

• No amount remained pending beyond 45 days

• No qualifying overdue MSE payment existed

The company should review the applicability condition before assuming that MSME Form-1 is required.

The 2024 amendment specifically narrowed the filing requirement to specified companies having payments pending for more than 45 days.

Does Udyam Registration Matter?

Yes, supplier classification is important.

The MSMED Act framework recognises micro, small and medium enterprises, and the Ministry of MSME provides the Udyam registration system for MSME registration.

For a buyer company preparing MSME Form-1, obtaining and maintaining the supplier's MSME/Udyam information can help establish whether the supplier falls within the relevant MSE category.

However, the company should use the supplier's actual legal and registration information rather than assuming MSME status from the supplier's size or turnover.

MSME Form-1 and the MSMED Act

MSME Form-1 is an MCA reporting mechanism.

It should not be confused with the separate legal rights and remedies available to eligible micro and small enterprise suppliers under the MSMED Act, 2006.

The Ministry of MSME explains that Sections 15–24 of the MSMED Act deal with delayed payments to micro and small enterprise suppliers.

Therefore, companies should understand two separate aspects:

Buyer-side ROC reporting

and

Supplier-side delayed-payment rights

The MSME Form-1 filing does not itself replace the buyer's underlying payment obligations under the MSMED Act.

Payment Deadline Under the MSMED Act

The MSMED framework provides that where there is an agreed written payment period, it cannot exceed the statutory limit, and in the absence of an agreement, the payment framework operates around the acceptance/deemed-acceptance provisions.

The Ministry of MSME states that where a buyer fails to make payment to an MSE supplier within the applicable period, the supplier may have recourse to the Micro and Small Enterprises Facilitation Council, and delayed payment can attract statutory interest.

This is why companies should not view MSME Form-1 as merely an MCA filing deadline.

The underlying payment compliance matters as well.

Delayed Payment Interest

Section 16 of the MSMED Act provides for interest consequences on delayed payments to eligible micro and small enterprise suppliers.

The Ministry of MSME states that delayed payment attracts compound interest with monthly rests at three times the bank rate notified by the Reserve Bank, subject to the statutory framework.

Therefore, if a company has overdue MSE invoices, the financial impact may extend beyond the amount originally invoiced.

This makes timely payment and accurate ageing particularly important.

MSME Form-1 vs MSME Samadhaan

These are different mechanisms.

MSME Form-1

A company-side MCA compliance return concerning applicable payment information to micro and small enterprise suppliers.

MSME Samadhaan

A mechanism through which eligible MSE suppliers can pursue delayed-payment matters before the appropriate MSE Facilitation Council framework.

The Ministry of MSME states that MSME Samadhaan facilitates online filing of delayed-payment applications by eligible MSE suppliers.

Therefore:

MSME Form-1 ≠ MSME Samadhaan

They address different parts of the delayed-payment framework.

Common Mistake: Treating Every MSME Supplier as Covered

A supplier calling itself an "MSME" does not automatically mean every transaction should be treated identically.

The company should verify:

• Supplier's legal status

• Micro/small classification

• Registration details

• Nature of supply

• Acceptance date

• Payment date

• Outstanding balance

This is particularly important where a business has hundreds of vendors.

Common Mistake: Including Medium Enterprises

The amended MSME Form-1 framework specifically refers to micro and small enterprises.

Companies should therefore avoid including medium-enterprise suppliers simply because they are covered by the broader MSME terminology.

The reporting requirement needs to be assessed against the specific statutory category.

Common Mistake: Calculating 45 Days From Invoice Date

This can lead to incorrect ageing.

Suppose:

Invoice date: 1 April

Goods accepted: 10 April

The company should not automatically treat 1 April as the starting point merely because that is the invoice date.

The 2024 amendment specifically refers to acceptance or deemed acceptance under Section 9 of the MSMED Act.

The company should therefore maintain evidence of acceptance.

Common Mistake: Ignoring Deemed Acceptance

A company may say:

"We never formally accepted the goods."

That does not automatically mean the 45-day period never started.

The statutory framework includes deemed acceptance concepts.

Therefore, the company should examine the actual delivery, inspection, rejection and communication records.

Common Mistake: Poor Vendor Master Data

If the accounts department does not maintain:

• PAN

• Udyam details

• Supplier category

• Invoice number

• Acceptance date

• Payment date

the half-yearly MSME return can become unnecessarily difficult.

Companies with a large supplier base should ideally maintain an MSME vendor register throughout the year.

Common Mistake: Not Reconciling Accounts Payable

Before filing MSME Form-1, the company should reconcile the return against its accounts payable ledger.

For example:

Accounts payable to MSE suppliers: ₹80 lakh

The compliance working should explain:

• Which suppliers make up the ₹80 lakh

• Which invoices are within 45 days

• Which are beyond 45 days

• Which have been paid

• Which remain outstanding

• Which suppliers are not actually micro/small enterprises

This reduces the risk of inconsistent reporting.

Common Mistake: Using the Old MSME Form-1 Format

This is particularly relevant after the 2024 amendment.

The revised form introduced additional fields for:

• TReDS payments

• Other payment modes

• Payments within 45 days

• Payments after 45 days

• Outstanding up to 45 days

• Outstanding beyond 45 days

• Supplier PAN

• Reasons for delay/outstanding amounts

Companies should therefore avoid using old Excel templates without checking the current MCA form.

Common Mistake: Waiting Until the Filing Deadline

Suppose the deadline is:

31 October

The accounts team begins checking MSE suppliers on:

28 October

It discovers that:

• Several supplier PANs are missing

• Udyam details are unavailable

• Acceptance dates are unclear

• Three invoices are under dispute

• Payment records do not reconcile

The company may then struggle to prepare an accurate return on time.

A better approach is to start the review well before the deadline.

A Practical MSME Form-1 Working Sheet

Companies can maintain a working sheet containing:

This internal working paper can then be reconciled with the accounts payable ledger before the MCA filing.

Practical Example: Delhi Trading Company

A Delhi company purchases packaging material from multiple suppliers.

At the end of September, the accounts team identifies:

• 40 micro/small suppliers

• 25 suppliers paid within 45 days

• 10 suppliers with balances outstanding for 45 days or less

• 5 suppliers with balances outstanding for more than 45 days

The company should review the five overdue suppliers carefully.

For each supplier, it should verify:

• MSE status

• PAN

• Acceptance/deemed acceptance date

• Invoice amount

• Payment status

• Reason for delay

• Supporting records

If the amended applicability condition is met, the company should prepare MSME Form-1 using the current format.

Practical Example: Noida Manufacturing Company

A Noida manufacturer purchases components from a small enterprise.

The goods are accepted on:

1 August

Invoice value:

₹8 lakh

The payment remains outstanding beyond the applicable 45-day period.

The company should identify:

• Supplier MSE status

• PAN

• Acceptance date

• Outstanding amount

• Reason for non-payment

• Whether any portion has subsequently been paid

• Payment mode

• Applicable reporting category

The information should then be incorporated into the half-yearly compliance review.

Practical Example: Gurugram IT Company

A Gurugram IT company receives software development services from a micro enterprise.

The service milestone is accepted on:

5 June

The invoice is:

₹3 lakh

The company pays ₹2 lakh within the applicable period but ₹1 lakh remains unpaid.

The accounts team should not simply classify the entire invoice as unpaid.

It should reconcile:

• Original invoice

• Amount paid

• Date of payment

• Remaining amount

• Acceptance date

• Ageing of the outstanding balance

• Reason for the remaining amount

The revised MSME Form-1's supplier-level disclosures make this reconciliation particularly useful.

MSME Form-1 Filing Workflow

A practical process can be:

Step 1: Identify MSE suppliers

Prepare the supplier list based on the company's vendor records and available MSE/Udyam information.

Step 2: Verify supplier status

Confirm whether each relevant supplier is a micro or small enterprise.

Step 3: Determine acceptance dates

Identify acceptance or deemed-acceptance dates for relevant supplies.

Step 4: Age outstanding invoices

Calculate the relevant payment ageing.

Step 5: Identify overdue amounts

Find payments pending beyond 45 days.

Step 6: Collect supplier PAN

Ensure the revised form has the required supplier identification information.

Step 7: Reconcile payment data

Match invoices with bank/payment records.

Step 8: Categorise transactions

Separate payments within 45 days, payments after 45 days and outstanding amounts by ageing.

Step 9: Record reasons for delay

Document the actual reason for overdue amounts.

Step 10: Prepare MSME Form-1

Use the current MCA form.

Step 11: Review

Cross-check the return against accounts payable and supporting records.

Step 12: File with MCA

Submit within the applicable half-yearly deadline.

Step 13: Preserve records

Keep the filed form, acknowledgement and supporting working papers.

MSME Form-1 Compliance Calendar

Companies can add MSME Form-1 to their ROC compliance calendar as follows:

These filing dates come from the original 2019 order and continue under the amended framework.

The company should create an internal deadline earlier than the statutory deadline so that supplier verification and reconciliation can be completed in advance.

What Records Should Companies Maintain?

A company should maintain an MSME payment compliance file containing relevant records such as:

• Supplier master

• Udyam details, where available

• Supplier PAN

• Purchase orders

• Invoices

• Goods receipt records

• Service acceptance records

• Payment proofs

• Bank statements

• Accounts payable ageing

• Dispute correspondence

• Credit notes

• Debit notes

• Reconciliation statements

• MSME Form-1 working

• Filed return

• MCA acknowledgement

These records can be useful during:

• Statutory audit

• Internal audit

• Tax audit

• Due diligence

• Financial review

• ROC compliance review

MSME Form-1 and Accounting Teams

Although MSME Form-1 is an MCA compliance filing, much of the information originates in the accounts payable system.

This means the compliance team should work closely with the accounts department.

The accounts team usually has access to:

• Vendor balances

• Invoice dates

• Payment dates

• Bank transactions

• Outstanding ageing

The compliance team can then use this information to determine the statutory reporting position.

MSME Form-1 and Procurement Teams

The procurement department can also play an important role.

Procurement teams may maintain:

• Vendor onboarding documents

• Purchase orders

• Contract terms

• Supplier declarations

• Delivery records

• Quality inspection records

These documents can help establish the acceptance or deemed-acceptance position.

A strong MSME compliance process therefore involves:

Procurement + Accounts + Compliance + Management

rather than only the company secretary or finance manager.

Why Timely Payment Matters Beyond MSME Form-1

The MCA return is only one part of the compliance picture.

The underlying MSMED Act contains protections concerning delayed payments to eligible micro and small enterprises.

The Ministry of MSME states that MSE suppliers can approach the relevant MSE Facilitation Council in cases involving delayed payments and that delayed payment can attract statutory interest.

Therefore, companies should not treat MSME Form-1 as simply a reporting obligation.

The better objective is:

accurate supplier classification + timely payment + accurate ageing + correct ROC reporting.

MSME Form-1 Compliance Checklist

Before filing, a company should check:

• Does the company fall within the specified-company framework?

• Does it have payments pending to micro or small enterprises?

• Has any payment remained pending for more than 45 days?

• Is the 45-day period calculated from acceptance/deemed acceptance?

• Has the supplier's MSE status been verified?

• Is supplier PAN available?

• Are invoice details correct?

• Are acceptance dates documented?

• Are payment dates reconciled?

• Are TReDS payments separately identified?

• Are other payment modes correctly captured?

• Are payments made after 45 days identified?

• Are outstanding amounts up to 45 days identified?

• Are outstanding amounts beyond 45 days identified?

• Are reasons for delay properly documented?

• Does the data reconcile with accounts payable?

• Is the current 2024 MSME Form-1 being used?

• Is the filing being prepared for the correct half-year?

• Is the filing deadline tracked?

• Has the final filing acknowledgement been preserved?

Final Takeaway

MSME Form-1 is a half-yearly MCA reporting requirement connected with payments to micro and small enterprise suppliers.

The 2024 amendment significantly changed the compliance approach by clarifying that only specified companies having payments pending to MSEs for more than 45 days from acceptance or deemed acceptance are required to furnish the information. It also introduced substantially more detailed disclosures in the revised form.

The filing calendar remains:

April–September → 31 October

October–March → 30 April

Companies should therefore maintain an ongoing MSE supplier register instead of trying to reconstruct the information immediately before the deadline.

The practical approach is:

Identify MSE suppliers → verify status → establish acceptance dates → age invoices → reconcile payments → identify overdue amounts → prepare revised MSME Form-1 → file within the deadline → preserve records.

For businesses in Delhi, Noida, Gurugram, Ghaziabad, Faridabad and across India, integrating MSME payment tracking into the regular accounting and ROC compliance process can make the half-yearly filing significantly easier.

Need Help With MSME Form-1 Filing?

If your company needs assistance with MSME Form-1, MSE supplier payment reconciliation, outstanding payment reporting or broader ROC/MCA compliance, FilingSuvidha can help coordinate the applicable compliance process.

Website: FilingSuvidha
Phone: +91-9625995981
Email: info@filingsuvidha.com

Our focus is on transparent pricing and on-time delivery.

Disclaimer

This article is intended for general informational purposes only and should not be treated as legal, accounting, company-secretarial or professional advice. MSME Form-1 applicability and payment obligations depend on the company's facts, supplier classification, acceptance/deemed-acceptance dates and the laws and MCA requirements applicable at the time. Companies should verify the latest MCA notifications, forms, the Companies Act and the MSMED Act before filing.