Under the Ministry of Corporate Affairs (MCA) mandate, every specified company receiving goods or services from Micro and Small Enterprises must file MSME Form 1 half-yearly for payments outstanding beyond 45 days from the date of acceptance.
1. Statutory Timelines & Filing Deadlines
MSME Form 1 must be submitted electronically to the Registrar of Companies (ROC) twice every financial year:
- April to September Period: Due by 31st October.
- October to March Period: Due by 30th April.
2. Interest Penalties under MSMED Act, 2006
Section 16 of the MSMED Act specifies that failure to pay MSME vendors within agreed terms (max 45 days) attracts compound interest with monthly rests at three times the RBI bank rate. Furthermore, such interest is non-deductible under Section 37 of the Income Tax Act.
Key Takeaway for Business Leaders
Proactive compliance and structured financial governance mitigate legal penalties, optimize tax liabilities, and protect corporate enterprise value.
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