Last reviewed: 19 August 2026. If your company bought goods or services from a Udyam-registered Micro or Small enterprise and took more than 45 days to pay, the law does not let that sit quietly on the books. Section 405 of the Companies Act, 2013 requires every such company to report it to the Registrar of Companies twice a year on Form MSME-1 — and the next window, covering dues outstanding as on 30 September 2026, closes on 31 October 2026. Reported ROC adjudication orders already show what happens when this is treated as a formality: penalties running into several lakhs of rupees, computed per missed return, with the officer in default paying alongside the company.
Building your ROC calendar around this and the other half-yearly and annual filings? Our FY 2026-27 compliance calendar tool lets you plot every due date, including MSME-1, AOC-4/MGT-7 and DIR-3 KYC, on one list.
Why Form MSME-1 exists — the legal chain
MSME-1 is not a standalone filing invented for its own sake; it sits at the end of a three-step legal chain. Section 15 of the Micro, Small and Medium Enterprises Development Act, 2006 caps the credit period a buyer can take for goods or services bought from a Micro or Small enterprise at 45 days from the date of acceptance, or deemed acceptance where no objection is raised within 15 days of delivery — regardless of what the purchase order says. Section 16 backs that cap with compound interest at three times the RBI-notified bank rate for every day of delay beyond it. To make sure that exposure does not stay hidden inside a company's books, the Ministry of Corporate Affairs used its powers under Section 405 of the Companies Act, 2013 to notify the Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019 (S.O. 368(E), dated 22 January 2019) — the instrument that created the half-yearly Form MSME-1 return. Read together, the three provisions are designed so that a delayed payment to a small supplier becomes visible to the Registrar even if the supplier itself never complains.
Who must file — the applicability test
Applicability turns on the supplier's Udyam classification, not the buyer's size. Even a large company with a single delayed payment to one small local vendor must file. The current unified classification (uniform for manufacturing and services since 2020) is what decides whether a supplier qualifies — see our Udyam registration guide for the full process and benefits:
| Category | Investment in plant & machinery/equipment | Annual turnover | MSME-1 relevant? |
|---|---|---|---|
| Micro | Up to ₹1 crore | Up to ₹5 crore | Yes |
| Small | Up to ₹10 crore | Up to ₹50 crore | Yes |
| Medium | Up to ₹50 crore | Up to ₹250 crore | No — Medium is excluded from Section 405 reporting |
Two exclusions worth flagging to clients: Medium enterprises are outside the reporting requirement — only Micro and Small suppliers count. And LLPs, proprietorships and partnership firms are outside Section 405 altogether, since that section binds companies under the Companies Act, not LLPs — though an LLP buyer still owes the Section 16 interest to its MSE supplier; it simply has no MSME-1 to file.
The two half-yearly windows
| Period | Covers dues outstanding as on | Filing due date |
|---|---|---|
| 1 April – 30 September | 30 September | 31 October |
| 1 October – 31 March | 31 March | 30 April |
For the current cycle, that means 31 October 2026 is the operative deadline, covering every Udyam Micro/Small invoice that crossed the 45-day mark during April–September 2026.
What exactly must be disclosed
| Field | What to capture |
|---|---|
| Supplier details | Name, PAN and Udyam Registration Number |
| Amount due | Total outstanding against the supplier for the half-year |
| Date from which due | The date the 45-day period lapsed on the relevant invoice(s) |
| Reason for delay | A brief, factual reason — cash-flow, dispute over quality/quantity, invoice discrepancy, etc. |
Worked example: counting the 45 days correctly
A Thane-based fabrication company receives goods from a Udyam-registered Small enterprise on 1 August 2026, invoice dated the same day, no objection raised. The purchase order states a 60-day credit period — but Section 15 overrides that and caps it at 45 days regardless of the contractual term, so the statutory due date is 15 September 2026, not the 60-day date the finance team may have diarised. If payment actually goes out on 25 September 2026, that is 10 days beyond the statutory cap: Section 16 interest has accrued for those 10 days, and — on the conservative reading most practitioners take — the invoice belongs in the MSME-1 return for the April–September half even though it was cleared before the half-year closed, because the interest liability and the reporting trigger both crystallise on day 46, not on the payment date.
Is a Nil return required?
If a company genuinely has no Udyam Micro/Small dues that crossed 45 days in the half-year, there is nothing to file — the Order and the MCA V3 form only activate when a qualifying default exists; there is no separate "Nil MSME-1" e-form to submit. That said, we recommend running the 45-day ageing check every half-year regardless, and keeping a short, dated, signed working paper on file even in a genuinely nil period. If the ROC ever asks why no MSME-1 was filed for a period, that working paper — not a memory of having checked — is what demonstrates the company applied its mind and was not simply silent.
Step-by-step: getting from AP ledger to filed return
- Pull the accounts-payable ledger as on period-end (30 September or 31 March).
- Cross-check every vendor against udyamregistration.gov.in for Micro/Small status as on the invoice date — not just today's status, since classification can change.
- Flag any invoice where the gap between acceptance (or deemed acceptance) and payment — or period-end, if still unpaid — exceeds 45 days.
- Compile the supplier-wise schedule: name, PAN, Udyam number, amount, date from which due, reason for delay.
- Have the board note the filing, or at minimum have it signed off by the director/CFO responsible for compliance — this record matters if an officer-in-default question ever arises.
- File Form MSME-1 on the MCA V3 portal under a valid digital signature, within the due date.
- Retain the filed SRN, the acknowledgement and the underlying working paper for at least eight years, in line with general Companies Act record-retention practice.
The cost of getting this wrong
| Party | Penalty under Section 405(4), Companies Act 2013 (as amended) |
|---|---|
| The company | ₹20,000, plus ₹1,000 for every day the default continues, capped at ₹3,00,000 — per missed return |
| Every officer in default | ₹20,000, plus ₹1,000 for every day the default continues, capped at ₹3,00,000 — per missed return |
The Companies (Amendment) Act, 2020 (effective 21 December 2020) removed the imprisonment limb that Section 405(4) earlier carried — this is now a purely monetary, ROC-adjudicated penalty, not a prosecution. That has not made it a soft one. In a reported ROC Kerala adjudication order dated 29 December 2023 against a garment manufacturer, the company was penalised ₹8,09,000 and its Managing Director a further ₹8,00,000 — a combined ₹16,09,000 — for failing to disclose roughly ₹18.58 lakh of dues owed to a single MSE supplier over 2020-21. The company had simply not filed MSME-1 for the relevant half-years, and each missed return was treated as a separate default stacking toward its own ₹3,00,000 cap. Other reported orders in the ₹11–12 lakh range confirm this is a settled ROC enforcement pattern, not an outlier. The practical lesson: the ₹3,00,000 figure is not a one-time worst case — it resets with every half-year a company stays silent.
Two other provisions riding the same 45-day clock
MSME-1 rarely operates alone. A buyer that crosses 45 days on an MSE invoice also risks disallowance of that expense for income-tax purposes under Section 43B(h) — the deduction is pushed to the year of actual payment, which can materially change the tax computation for the year of purchase; see our Section 43B(h) buyer-side risk checklist for how to build a 43B(h)-safe vendor process. On the supplier's side, the recently passed MSME Development (Amendment) Bill, 2026 leaves the 45-day rule itself untouched but sharply speeds up how a supplier can enforce it through mediation and arbitration — our MSME Amendment Bill 2026 explainer has the full recovery ladder. For a buyer, the compliance answer to all three provisions is the same: track the ageing honestly, disclose it, and pay within 45 days wherever cash flow allows.
A vendor-compliance checklist for buyers
- Tag every vendor master record with Udyam status and category (Micro/Small/Medium/Not registered); re-verify at least annually.
- Build 45-day ageing as a standing AP report, not a year-end scramble before the MSME-1 due date.
- Route MSE invoices for priority internal approval so sign-off delay does not itself eat into the 45 days.
- Provide for Section 16 interest in the books the moment 45 days is crossed, whether or not it has been paid.
- File MSME-1 within the half-yearly window and retain the SRN and working paper.
- Loop the tax team into the Section 43B(h) computation before the tax audit closes — the MSME-1 working paper and the 43B(h) disallowance schedule should reconcile, not be prepared independently.
Companies juggling AOC-4, MGT-7 and other ROC filings around the same season may also find our ROC annual filing guide to AOC-4 and MGT-7 due dates useful for sequencing the full compliance calendar.
Frequently asked questions
Is Form MSME-1 the same as Udyam registration?
No. Udyam registration is the supplier's own one-time MSME registration on udyamregistration.gov.in. Form MSME-1 is a half-yearly return that the BUYER company files with the Registrar of Companies, disclosing payments to Udyam-registered Micro or Small suppliers that have crossed the 45-day statutory credit period. A company can be a diligent payer and still have a filing obligation if even one invoice slips past 45 days.
Does the 45-day period run from the invoice date or the delivery date?
Neither automatically. Section 15 of the MSMED Act, 2006 caps the credit period at the date agreed between buyer and supplier in writing, and in no case beyond 45 days from the day of acceptance, or deemed acceptance where no objection is raised within 15 days of delivery. If the purchase order specifies 60 or 90 days, that clause does not override the statutory 45-day cap for Udyam-registered Micro and Small suppliers.
The supplier never told us it was Udyam-registered. Are we still liable?
Applicability turns on the supplier's actual Udyam status on the date of the transaction, not on whether it was disclosed to you. As a practical safeguard, insist on the Udyam Registration Number on every vendor onboarding form and re-verify annually on udyamregistration.gov.in — a supplier's classification can change, and a stale record is not a defence in an ROC adjudication.
Is there a turnover or paid-up capital threshold below which a company is exempt from filing?
No. The Specified Companies Order, 2019 applies to every company — private, public or Section 8 — irrespective of size, the moment it has a qualifying delayed payment to a Micro or Small supplier. Only Limited Liability Partnerships, proprietorships and partnership firms fall outside Section 405 of the Companies Act, since that section binds companies, not LLPs, though LLPs still carry the Section 16 interest exposure.
We paid the supplier late but cleared the dues before the half-year closed. Do we still report it?
This is genuinely contested in practice. A literal reading of the Order (report what is 'due and outstanding' as at period-end) suggests no disclosure is needed once cleared. Many practitioners, including this firm, take the more conservative position of disclosing any invoice that crossed 45 days during the period even if subsequently paid, since Section 16 interest crystallises the moment the 45 days lapses and the return's stated purpose is transparency on payment behaviour, not just period-end balances. Given the penalty exposure on the aggressive reading, the conservative position is the defensible one.
Can the penalty fall on a non-executive or independent director?
'Officer in default' under Section 2(60) of the Companies Act is drawn narrowly — ordinarily the whole-time director, CFO, company secretary or a director specifically charged with the compliance in board minutes. A non-executive or independent director is unlikely to be treated as an officer in default for a routine MSME-1 lapse unless the board has specifically fixed responsibility on them, but ROC orders do examine board minutes closely, so clear delegation on record matters.
Where and how is Form MSME-1 filed?
On the MCA V3 portal (www.mca.gov.in), under the digital signature of an authorised director or company secretary, within 31 October for the April-September half and 30 April for the October-March half. Keep the filed SRN and the underlying vendor-ageing working paper on record — that working paper is what an ROC adjudication will ask for first.
Somesh Chandak & Associates, Thane, helps companies build a defensible 45-day vendor-ageing process, prepares and files Form MSME-1, and aligns it with Section 43B(h) tax computations so the two never contradict each other.
43B(h) & MSME-1 Compliance ROC Filings Book a consultationThis article is for general information and education only and is not professional advice. It reflects Section 405 of the Companies Act, 2013 as amended by the Companies (Amendment) Act, 2020 (effective 21 December 2020), the Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019, and reported ROC adjudication orders as publicly available. The treatment of payments cleared within the half-year but after 45 days reflects a conservative, defensible practitioner position, not a settled judicial ruling — please verify the current MCA V3 filing process and confirm your specific facts with us before filing.