Companies May Face Penalty Up to ₹3 Lakh for Not Filing MSME-1 on Delayed Payments
Companies required to file MSME-1 for payments delayed beyond 45 days to MSME suppliers or face penalties up to ₹3 lakh under the Companies Act.
penalty – Not Filing – MSME-1 – taxscan
penalty – Not Filing – MSME-1 – taxscan
All companies in India that have outstanding payments to Micro and Small Enterprises (MSMEs) for more than 45 days are required to file Form MSME-1 with the Ministry of Corporate Affairs (MCA). This filing obligation is part of the government’s effort to ensure timely payments to MSME-registered suppliers, as per the provisions of the MSME Development Act, 2006, and the Companies Act, 2013.
The requirement was recently confirmed through a notification issued by the Ministry of Micro, Small, and Medium Enterprises on March 25, 2025. The notification states that companies must submit a half-yearly return providing details of:
- The amounts due to MSME suppliers.
- The reasons for any payment delays beyond 45 days.
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What is Form MSME-1?
Form MSME-1 is a report that companies must file if they have unpaid dues to MSME-registered suppliers that remain pending for more than 45 days from the date of acceptance of goods or services. The filing is required only when such delayed payments exist. If there are no outstanding payments, companies are not required to file the form (Nil return is not applicable).
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The updated MSME-1 form on the MCA V3 platform asks companies to provide more detailed information, including:
- Amounts paid within 45 days and after 45 days.
- Reasons for the payment delay.
Filing Deadlines for MSME-1:
- For the period April to September: The form must be filed by October 31st.
- For the period October to March: The form must be filed by April 30th.
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Penalty for Non-Compliance
As per Section 405(4) of the Companies Act, 2013, non-filing of MSME-1 or submitting incorrect information may lead to a penalty of:
- Up to ₹3 lakh for the company.
- Additional penalties for the company’s officers in default.
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