MSME-1
What MSME-1 means, how it works, a worked example, the mistakes we see and the questions founders ask.
DefinitionMSME-1 is the half-yearly return a company files with the MCA, by 30 April and 31 October, listing payments to micro and small enterprise suppliers that were outstanding for more than 45 days.
The MSMED Act requires buyers to pay micro and small enterprises within 45 days, and MSME-1 is how the government polices it. Every company that had any amount due to a Udyam-registered micro or small supplier for more than 45 days during a half-year must file the return, naming the supplier, the amount and the reason for the delay. Companies with no such dues do not file. You meet it in April for the October to March half and in October for April to September, and the data comes from your creditors ageing tagged by the supplier's Udyam status. What it means for you: collect Udyam certificates from vendors at onboarding, because late payments to them also attract compound interest at three times the bank rate and are disallowed as an expense until paid under Section 43B(h).
How MSME-1 works
MSME-1 is the half-yearly return in which a company reports the suppliers registered as micro or small enterprises whose dues have been outstanding for more than 45 days from the date of acceptance of goods or services. The return for April to September is due by 31 October and the one for October to March by 30 April.
The 45-day clock comes from the MSMED Act, which also charges compound interest at three times the bank rate on late payments to micro and small suppliers, and since April 2024 income tax law disallows such a payment as a business expense until it is actually made. MSME-1 is where the Registrar sees which companies carry overdue MSME dues; the return names each supplier, the amount and the reason for the delay.
Only micro and small suppliers count, not medium ones, and only those with a Udyam registration, which is why every supplier onboarding should ask for the Udyam number. A company with no such outstanding dues at the end of the half year has nothing to file.
A Noida electronics company buys components from a Udyam-registered small enterprise on 60-day terms. On 30 September, two invoices accepted on 1 and 10 August remain unpaid, both past 45 days. The company must file MSME-1 by 31 October listing that supplier and the two amounts. It also loses the tax deduction for those invoices in the year unless it pays them before 31 March.
Mistakes we see with MSME-1
- Agreeing 60 or 90-day terms with a small supplier and assuming the contract overrides the 45-day statutory limit; it does not.
- Not collecting Udyam numbers at onboarding, so finance cannot tell which creditors fall under the return.
- Filing nil out of habit while the creditors ledger shows MSME invoices past 45 days.
Last updated 19 October 2026. Checked against the MCA, GST, Income-tax and Trade Marks rules in force for October 2026.
Where you will meet this term
- Company Annual FilingsPrivate Limited Companies, OPCs and LLPs that want every ROC filing done on time, with the AGM and audit coordinated.from ₹9,999/year
- Accounting & MISFounders who want the books closed every month and a one-page MIS they can actually read, with GST and TDS data ready on time.from ₹4,999/month
Questions founders ask about MSME-1
When is MSME-1 due?
31 October for the half year April to September and 30 April for October to March. It is filed only if micro or small suppliers' dues were outstanding beyond 45 days at the end of the half year.
Does MSME-1 cover medium enterprises?
No. The 45-day rule and the return apply to micro and small enterprises only, as classified under their Udyam registration.
What is the tax consequence of paying an MSME supplier late?
Under Section 43B(h) of the income tax law, an amount owed to a micro or small enterprise is deductible only in the year it is actually paid, if it was paid after the MSMED Act time limit. A payment within the 15 or 45-day limit is deductible in the year of accrual.