MSME-1 Half-Yearly Return 2026: Due 31 October, Who Files and What Late Payment Costs

ROC Compliance | RegisCorp Team

Checked on 24 October 2026. If your company buys goods or services from a micro or small enterprise and pays later than the law allows, you may have to tell the Registrar of Companies about it twice a year, on Form MSME-1. The return for April to September 2026 is due on 31 October 2026, which is seven days from today. The form costs nothing to file on the current portal according to one page we read, but a missed return can lead to a penalty, and the same late payments can also cost you a tax deduction and interest. This post explains who files MSME-1, what it reports, how the 45-day rule works, what the penalties are, and how it connects to Section 43B(h) of the income tax law. It also lists what the sources disagree on and what we could not confirm.

RegisCorp Consultancy LLP is a digital-first legal and compliance firm in Kota, Rajasthan, working with businesses across India. We write these guides so you can check the rules before you pay anyone, including us.

Key takeaways

• The next date is 31 October 2026. MSME-1 covers 1 April to 30 September and is due by 31 October. The October to March return is due by 30 April. Pages we read say extensions are rarely granted.
• It is a company form. Private companies, public companies, One Person Companies, small companies and Section 8 companies file it. LLPs, partnership firms and sole proprietorships are reported to be outside it.
• Only micro and small suppliers count. Dues to medium enterprises are not reportable. The supplier's status is checked through its Udyam registration.
• The trigger is paying an MSE supplier later than 45 days. With a written agreement the payment term cannot exceed 45 days. Without one, payment is due in 15 days. The days run from acceptance of the goods or services, not from the invoice date.
• Sources disagree on what exactly triggers the return. One page says an overdue amount that was cleared before 30 September need not be reported. Another says that on the current portal even a single late payment during the half-year triggers disclosure, with all that supplier's transactions reported. We explain how to handle the doubt.
• The cost of filing is small, and the cost of missing it may not be. One page lists the portal fee as nil. The penalty for non-filing is reported as either Rs 20,000 plus Rs 1,000 a day up to Rs 3 lakh, or a fine up to Rs 25,000 with possible imprisonment for officers. The sources conflict, so we show both.
• MSME-1 is not the only consequence of late payment. Compound interest at three times the RBI bank rate is payable to the supplier, and an unpaid amount at the end of the financial year can lose its tax deduction under Section 43B(h).
• Check the portal on the day. A page we read says the last week of October is the heaviest load on the MCA portal. Do not leave it to the final day.

The key numbers and dates in one place

Why this return exists

The Micro, Small and Medium Enterprises Development Act, 2006 says a buyer must pay a micro or small supplier within a fixed time. Small suppliers often wait months for payment from larger buyers, and the law tries to make late payment visible and costly. MSME-1 is the visibility part. Twice a year, a company that owes money to micro and small suppliers beyond the allowed time has to report who it owes, how much and why.

The return is filed under Section 405 of the Companies Act. We have not read the section or the order under which the return operates, and the sources we used describe it only in summary.

Who must file

The pages we read agree on the core rule. You file MSME-1 if all of these hold for the half-year:

1. You are a company, and not an LLP, a partnership firm or a sole proprietor.
2. You received goods or services from a supplier that is a micro or small enterprise.
3. You paid that supplier later than the allowed time, or still owe it after the allowed time.

You do not file if you had no micro or small suppliers, if every payment to them was made within the allowed time, or if your dues were still inside the allowed time at the end of the period. Dues to medium enterprises are outside the return.

How to know if a supplier is micro or small

Check the supplier's Udyam registration. It shows the enterprise category. Classification depends on both investment in plant and machinery and annual turnover. One page gives the current limits as Rs 2.5 crore investment and Rs 10 crore turnover for micro, and Rs 25 crore and Rs 100 crore for small, citing a notification effective 1 April 2025. We have not read that notification.

If a supplier has no Udyam certificate, one page suggests getting a written declaration of its status. The law protects only suppliers that are registered as micro or small, so a supplier that never registered may fall outside the return. That is a point to settle with the supplier and your adviser. Do not assume.

A caution about traders

Retail and wholesale traders can register on Udyam. One page says pure traders are generally treated as outside the delayed-payment protection of the MSMED Act, because their benefit is limited to priority sector lending. We could not confirm this from a primary source. If a large part of your payables goes to trading firms, ask your adviser how to classify them before you leave them out of the return.

The 45-day rule

The rule has two limbs, and the sources agree on both.

• With a written agreement, the agreed term applies, but it cannot exceed 45 days. A contract that says 60 or 90 days does not extend the statutory limit.
• Without a written agreement, payment is due within 15 days.

The period is counted from the day of acceptance of the goods or services. If the buyer is deemed to have accepted them, for example by not objecting within 15 days, the period runs from deemed acceptance. It is not counted from the invoice date.

Why this matters beyond MSME-1

Three consequences follow from one late payment, and a company that files MSME-1 has met all three.

1. The disclosure. MSME-1 reports the dues to the Registrar.
2. The interest. Section 16 of the MSMED Act requires compound interest with monthly rests at three times the RBI bank rate. One page puts the current effective rate at 16.5 percent a year, on the basis of a bank rate of 5.50 percent. We could not verify the bank rate. That interest is not deductible for income tax, per Section 23 of the Act.
3. The tax deduction. Under Section 43B(h) of the Income-tax Act, an amount payable to a micro or small enterprise that stays unpaid beyond the allowed time is deductible only in the year it is actually paid.

Our earlier post on Udyam registration and the 45-day payment rule goes into the buyer's side of the rule in detail. This post concentrates on the return.

What MSME-1 reports

The pages we read list these fields for each supplier.

• The name and PAN of the supplier, and its Udyam registration number.
• The date from which the amount was due, and the acceptance date.
• The principal amount due and the amount outstanding at the end of the half-year.
• The interest due and payable.
• The reason for the delay.

One page says that on the current portal a company must report all transactions with a supplier for the half-year if even one payment breached the limit. Another page describes the return as listing only dues outstanding beyond 45 days at period end. These are two different readings, and we could not settle them from the form.

How to handle the doubt

Think about the two readings in terms of risk.

• If the narrow reading is right and you report more than needed, you have filed a fuller return than required. That is usually harmless.
• If the wider reading is right and you report only the amounts still unpaid, you have filed an incomplete return.

The cautious path is to prepare the list of every payment to micro and small suppliers during the half-year, note which ones were made after the allowed time, and then read the form's instructions on the day. Ask the company secretary or chartered accountant who files for you which approach they follow. One page says certification by a practising company secretary or chartered accountant is part of the process. Another does not mention it, so confirm.

How to build the list in one afternoon

You can prepare the data from the purchase ledger.

1. List your micro and small suppliers. Start from your vendor master and check each supplier's Udyam status.
2. Pull every invoice for 1 April to 30 September 2026 from those suppliers.
3. Note the acceptance date for each. If you do not record it, use the receipt of goods or completion of service. Where you cannot tell, ask the buyer's team.
4. Compute the allowed time. Use 45 days if there is a written agreement with a term of 45 days or more, the agreed shorter term if there is one, and 15 days if there is none.
5. Compare with the payment date. Mark invoices paid late or still unpaid.
6. Add the interest at three times the bank rate for each late invoice.
7. Write the reason for each delay in a sentence. "Disputed quality" and "cash flow" are different reasons, and the Registrar will see them.

If your accounts software cannot produce this, a spreadsheet works. The hard part is the acceptance dates, not the arithmetic.

Fees and penalties

Filing fee

One page lists the portal fee for MSME-1 as nil and says there is no late-fee multiplier at checkout. We could not check the fee screen. If it is right, the cost of filing is professional fees only.

The penalty for not filing

This is where the sources disagree.

We read the sections of none of them. The amounts differ, but the direction is the same: a continuing default is expensive and officers can be personally named. A penalty of this kind is imposed through adjudication. A company that files late and explains the delay is in a better position than one that has never filed.

Interest and the MSMED Act

The interest to the supplier is separate. It is owed whether or not you file MSME-1. A supplier can claim it, and a company that is audited will see it in the notes. Also, the interest cannot be deducted from taxable income.

The deduction under Section 43B(h)

This rule applies to the buyer's tax return, not the Registrar. One page says it applies for FY 2025-26 under the Income-tax Act, 1961, and from FY 2026-27 under the Income-tax Act, 2025, in a provision it numbers as Section 37(2)(g). We could not check that reference.

The mechanics, from the same page:

• If the amount is paid within the allowed time, the deduction is available for the year the cost was incurred.
• If it is paid after the allowed time but before 31 March, the deduction is still available for that year.
• If it is unpaid on 31 March, the deduction is deferred to the year of actual payment.
• Paying the amount after 31 March but before the return is filed does not restore the deduction. The usual relief for other Section 43B items does not apply to this clause, per the page.

Tax audit reports also carry a clause that asks for the amounts owed to micro and small suppliers, the amounts paid within time, and those not paid within time. Your auditor will ask for the same list.

A worked example: one invoice, three consequences

Take a Kota company that buys packaging material from a micro enterprise. The numbers are illustrative.

• The supplier delivers goods worth Rs 2,00,000 on 1 August 2026, and the company accepts them the same day. There is a written agreement with a 45-day term.
• The allowed time ends on 15 September 2026.
• The company pays on 20 October 2026, which is 35 days late.

What happens?

• MSME-1. The payment was late in the April to September half-year. On the wider reading of the form, it is reportable, even though it was settled after 30 September. On the narrower reading, the amount was still outstanding at 30 September, so it is reportable too. Both readings point to reporting this one.
• Interest. At a rate of 16.5 percent a year, simple arithmetic gives about Rs 3,160 for 35 days (Rs 2,00,000 times 16.5 percent times 35 over 365). The Act compounds monthly, which changes the figure only slightly over this short period. The company owes it to the supplier and cannot deduct it.
• Tax deduction. The invoice was paid within the financial year, so the cost remains deductible for FY 2026-27, according to the rule described above. If it had been unpaid on 31 March 2027, the deduction would move to the next year.

The late payment cost about Rs 3,160 in interest plus the professional time for the return. The real risk is a pattern: if a hundred invoices are paid late, the interest, the return and the tax deferrals add up.

A second worked example: the invoice that is still unpaid

A company accepts services worth Rs 5,00,000 from a small enterprise on 10 February 2027 under a 45-day term. The allowed time ends on 27 March 2027. The company has a cash shortage and has not paid by 31 March 2027.

• The amount is unpaid on 31 March 2027, so the Rs 5,00,000 expense is not deductible for FY 2026-27. It becomes deductible in the year it is paid. On a tax rate of 25 percent, the deferral costs about Rs 1,25,000 of tax in cash terms in the current year, though the deduction is recovered later.
• The amount is reportable on the October to March MSME-1 due 30 April 2027.
• Interest runs from 27 March 2027 until payment.

The better move is to pay the amount before 31 March, even a few days late, to preserve the deduction. The company still owes interest for the delay, but it keeps the tax deduction for the year.

Calendar: how MSME-1 sits with other dates

See our posts on AOC-4 and MGT-7 and LLP annual compliance for the other two dates.

Common mistakes

• Assuming an LLP files it. LLPs are reported to be outside MSME-1, but they are still covered by the 45-day rule and Section 43B(h).
• Not knowing a supplier's Udyam status. You cannot decide what to report without it.
• Counting from the invoice date. The period runs from acceptance.
• Believing a long contract term helps. A written term above 45 days does not extend the statutory limit.
• Reporting only unpaid invoices when the form asks for more. Read the instructions on the day.
• Leaving the reason blank. The form asks for it, and a clear reason is better than none.
• Ignoring the tax angle. An invoice unpaid on 31 March loses its deduction for the year.
• Treating interest as a negotiable gift. The supplier may waive it, but the law makes it payable, and you cannot deduct it.
• Waiting for the last day. The portal is busiest in the last week of October.

Frequently asked questions

What is MSME-1?

A half-yearly return that companies file with the Registrar of Companies to report amounts owed to micro and small suppliers beyond the allowed time, with the reasons.

What is the due date of MSME-1 for April to September 2026?

31 October 2026. The return for October to March is due 30 April.

Who has to file it?

Companies that bought goods or services from micro or small enterprises and paid them later than 45 days, or still owe them beyond that time. LLPs, partnership firms and sole proprietorships are reported to be outside the form.

Does it apply if my supplier is a medium enterprise?

No. Dues to medium enterprises are not reportable.

How do I know if my supplier is micro or small?

Check its Udyam registration, which shows the category. If it has none, ask for a written declaration of its status.

What if I paid the supplier late but before 30 September?

The sources differ. One page says an overdue amount cleared before the end of the half-year need not be reported. Another says a late payment during the half-year triggers disclosure. Ask your company secretary or chartered accountant how the current form treats it.

Is there a fee for filing MSME-1?

One page says the fee is nil on the current portal. Check the fee screen.

What is the penalty for not filing?

Reported amounts differ: Rs 20,000 plus Rs 1,000 a day up to Rs 3 lakh in some pages, and a fine up to Rs 25,000 with possible imprisonment for officers in another. We could not confirm either.

Can the due date be extended?

Pages we read say extensions are rare. We found no extension for the April to September 2026 return.

What interest is payable to the supplier?

Compound interest with monthly rests at three times the RBI bank rate under Section 16 of the MSMED Act. It is not deductible for income tax.

How does Section 43B(h) connect to this?

If you owe an amount to a micro or small enterprise beyond the allowed time and it is unpaid on 31 March, you can claim the deduction only in the year you pay it. See the worked examples above.

Does a company that has no MSME suppliers file nil?

The sources say companies with no micro or small suppliers, or no late payments, are not required to file. We did not find a requirement to file a nil return. Confirm with your adviser.

Do I need a professional to file it?

One page says certification by a practising company secretary or chartered accountant is part of the process. Another does not mention it. Most companies use a professional because the form is filed through the MCA portal with digital signatures.

Where do I get the acceptance date?

From your goods receipt note, the date the service was completed, or the date you confirmed the delivery. If you did not object within 15 days, acceptance may be deemed. Keep these records.

What to do next

1. List your micro and small suppliers and confirm each one's Udyam category.
2. Pull the April to September 2026 invoices and payments for those suppliers and mark any paid late or still unpaid.
3. Write the reason for each delay in a sentence.
4. Ask the person who files for you which reading of the form they follow, and file by 30 October.
5. Pay overdue micro and small suppliers before 31 March 2027, to protect the Section 43B(h) deduction.
6. Put 30 April 2027 in the calendar for the next return.

If you want help with MSME-1, ROC filings or a payables review for micro and small suppliers, contact RegisCorp.

This post is general information, not legal or tax advice. Rules change, so check your facts with a qualified professional before you act.

Sources and what we could not verify

Sources used

• CalcGuru, MSME-1 half-yearly return: applicability, due dates, penalty description and the Section 43B(h) link. Published 19 August 2026, modified 14 October 2026.
• Patron Accounting, MSME Form 1 guide: who files, fields reported, the described portal changes and the penalty pattern. Dated 8 April 2026.
• TaxGuru, MSME-1 filing compliance guide: the 45-day and 15-day rule, due dates and reported fields. Published 11 April 2026.
• CorpLawUpdates, MSME-1 fee calculator: fee, entity types and penalty. Marked updated for FY 2026-27.
• Busy, Section 43B(h) MSME payment rule: deduction mechanics, classification limits, interest and the worked dates. Published 12 August 2026, updated 17 August 2026.
• TaxGST, annual filing checklist: the MSME-1 date of 31 October 2026 in a calendar. Dated 24 October 2026.

All of these are secondary or commercial sources, and several promote the publisher's own services. We did not open the MCA portal, the Companies Act, the MSMED Act or the Income-tax Acts.

What we could not verify

• The text of the order and form that govern MSME-1, and whether the form reports all transactions with a late-paid supplier or only dues outstanding at period end.
• The amount of the penalty for non-filing. Two incompatible descriptions are given above.
• Whether certification by a practising professional is required, and whether a nil return is required.
• The nil filing fee on the current portal.
• The RBI bank rate used for the 16.5 percent figure.
• The micro and small limits and the notification cited for them.
• The treatment of trading firms under the delayed-payment rules.
• The section number of the equivalent of Section 43B(h) in the Income-tax Act, 2025.
• Any extension or relaxation for the April to September 2026 return after 24 October 2026.