What is the penalty for a late MSME-1?
A late MSME-1 draws the penalty in section 405(4) of the Companies Act: ₹20,000 on the company and ₹20,000 on every officer in default, plus ₹1,000 for each further day, each capped at ₹3 lakh. The form itself reports payments to micro and small suppliers that are still outstanding more than 45 days after acceptance.
What does MSME-1 report?
The Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019, was made under section 405. A specified company is one that has taken goods or services from a micro or small supplier and whose payment has crossed 45 days from acceptance or deemed acceptance under the MSMED Act.
The form states the amount due and the reason for the delay, with the supplier’s name and PAN. A medium enterprise is not a supplier for this return. Which business is micro or small is on the Udyam registration page.
When is it due?
| Period | Due date |
|---|---|
| April to September | 31 October |
| October to March | 30 April |
Those are the same dates on the private company compliance page. The return is half-yearly. It is not part of the annual MGT-7.
What penalty does section 405 impose?
Section 405(4) applies when the company fails to comply with the order, or files information that is incorrect or incomplete in a material particular. The company is liable to a penalty of ₹20,000. Every officer in default is liable to a penalty of ₹20,000. If the failure continues, a further penalty of ₹1,000 applies for each day after the first, subject to a maximum of ₹3 lakh.
Twenty thousand, then a thousand a day. Section 405(4) caps each of those penalties at ₹3 lakh.
How is the delay avoided?
The company keeps a list of micro and small suppliers and the date each invoice was accepted. An amount that crosses 45 days goes into the next MSME-1, with the reason. Paying the supplier does not remove a period that was already outstanding on the half-year date. The form still reports that outstanding position as the order requires.
Frequently asked questions
Four questions cover who files, a medium enterprise, section 405, and who pays.
Does every company file MSME-1?
The return is for a specified company that has taken goods or services from a micro or small supplier and still owes that supplier more than 45 days after acceptance. A company with no such outstanding payment is outside the return.
Does a medium enterprise belong on the form?
No. The 2019 order covers micro and small suppliers. A medium enterprise is outside MSME-1. The ceilings that decide micro and small are on the Udyam page.
Is the penalty the general penalty in section 450?
No. The order was made under section 405. The penalty for failing to comply, or for a return that is wrong or incomplete in a material particular, is the penalty in section 405(4).
Who pays the penalty?
The company is liable to ₹20,000, and every officer in default is liable to ₹20,000. A continuing failure adds ₹1,000 for each day after the first, and each of those penalties stops at ₹3 lakh.
Sources
The return is the Specified Companies Order, 2019, made under section 405. The supplier’s category is on the Udyam page.