MSME-1: The Half-Yearly Return Most Companies Forget, Due 31 October

Of all the filings a private limited company owes, MSME-1 is the one most likely to be missed entirely. It is not tied to the AGM, so it escapes the annual-filing rhythm. It carries no fee, so nobody chases it. And it only applies when a particular condition is met, so many companies assume it does not apply to them without ever checking. The April–September return is due on 31 October.

Who has to file it

Every company — private or public, of any size — that has any amount outstanding for more than 45 days to a supplier registered as a micro or small enterprise must file MSME-1 for that half-year.

Three points decide applicability, and each is routinely misread:

• It is about the supplier, not you. Your own turnover is irrelevant. A two-person company that owes a registered micro vendor for 50 days must file.
• Medium enterprises are excluded. Only micro and small count. A supplier who is a registered medium enterprise does not bring you into the return.
• The supplier must actually be registered. A vendor who qualifies as micro or small but has never taken Udyam registration is outside it. This is why collecting Udyam numbers from vendors is the real work here.

What goes into it

The return asks for the total outstanding beyond 45 days, and then supplier-wise detail: name, PAN, the amount outstanding, the date from which it has been due, and the reason for the delay. That last column is worth thinking about — "dispute over quality" and "awaiting internal approval" read very differently, and this is a public filing.

The 45 days runs from acceptance or deemed acceptance of the goods or services. Where there is a written agreement the credit period cannot exceed 45 days for this purpose; without a written agreement the period is 15 days. A 60-day credit term agreed with a micro vendor does not displace the statutory position.

The tax consequence sitting behind it

This is why the return matters more than its zero fee suggests. The same lateness that triggers MSME-1 also triggers an income-tax disallowance: a payment to a registered micro or small enterprise made beyond the statutory period is not deductible in that year, and the deduction shifts to the year the payment is actually made.

So a company that pays a ₹5,00,000 micro-vendor bill from February in May has, in one move, created an MSME-1 disclosure and lost a ₹5,00,000 deduction for that year — paying tax roughly a year earlier than necessary on money it will eventually get relief for. Six weeks of attention in March would have avoided both.

There is also the commercial exposure: delayed payment to an MSME supplier carries a statutory interest obligation at a multiple of the bank rate with monthly rests, and the supplier can take the matter to the MSME Samadhaan facility.

What it costs to miss it

MSME-1 has no filing fee, which is precisely why it gets deprioritised — there is no payment to prompt anyone. The cost of missing it is not the fee but the penalty exposure: failure to file a required return carries a penalty on the company and on every officer in default, and because the obligation recurs twice a year, a company that has never filed has been accumulating instances rather than one lapse.

There is also a disclosure point that is easy to overlook. Your financial statements must separately disclose amounts due to micro and small enterprises, including interest paid and payable. An auditor reconciling that disclosure against a company that has never filed MSME-1 has an obvious question — and the two sets of numbers are produced from the same ledger, so an inconsistency between them is hard to explain away.

A workable routine

1. Collect Udyam numbers. Add a field to vendor onboarding and ask existing vendors once. Without this you cannot classify anybody and the whole thing is guesswork.
2. Flag micro and small vendors in the ledger so ageing can be filtered by status.
3. Run the ageing on 1 October and 1 April, filtered to registered micro and small suppliers beyond 45 days.
4. Clear what you can before the period closes — it reduces the disclosure and protects the deduction at the same time.
5. File by 31 October or 30 April, with reasons recorded honestly.
6. Repeat the ageing in March specifically for the tax disallowance, which runs on the financial year rather than the half-year.

Common mistakes

• Assuming it applies only to large companies. It applies to every company with a qualifying overdue payable.
• Not collecting Udyam numbers, then concluding that no vendor is registered.
• Including medium enterprises. Only micro and small are in scope.
• Treating an agreed 60-day credit period as controlling. For this purpose the ceiling is 45 days with a written agreement, 15 without.
• Filing MSME-1 and forgetting the tax side. They are two obligations fed by one ageing report.
• Skipping the return because nothing is overdue without documenting that conclusion. Keep the ageing as evidence of why you did not file.

If you would rather have the dates, the fill sheet and the ageing produced for you, the MCA Compliance Suite covers MSME-1 alongside the annual filings, with a dated calendar per company.

Frequently asked questions

Who has to file MSME-1?

Every company, of any size, that owes money to a supplier registered as a micro or small enterprise where the amount has been outstanding for more than 45 days. Applicability depends on the supplier's registered status, not on your own turnover, so small private companies are frequently in scope.

What is the due date for MSME-1?

It is half-yearly: 31 October for the April to September period, and 30 April for October to March. It is not linked to the AGM, which is why it is so often missed in companies that otherwise file on time.

Does MSME-1 apply to medium enterprises?

No. Only suppliers registered as micro or small enterprises are covered. A supplier registered as a medium enterprise does not bring you within the return, and neither does an unregistered supplier who would otherwise have qualified.

What if my agreement with the vendor allows 60 days credit?

For this purpose the maximum is 45 days where there is a written agreement, and 15 days where there is none. An agreed 60-day term does not displace that, so the amount still becomes reportable after 45 days and the income-tax disallowance for late payment can still apply.

General information for FY 2026-27, not professional advice for your specific case. Rules change — verify against the latest notification or ask a KyaTax expert.
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