Executive Summary:
The Ministry of Corporate Affairs addresses actions against companies failing to pay dues to Medium and Small Enterprises (MSEs). Specified companies must disclose outstanding dues to MSE suppliers via the MSME 1 form, filed semi-annually. Penalties exist for non-compliance or incorrect reporting. The government supports MSMEs through various initiatives, including the SAMADHAAN Portal and MSEFCs.
Key Points / Main Content:
MSME 1 Form and Reporting:
* Specified companies must file the MSME 1 form twice yearly, by October 31st (April-September) and April 30th (October-March), disclosing outstanding dues to Micro or Small enterprise suppliers. MSME1 form was renotified on 15.07.2024.
* The Companies Act, 2013 does not cover settlement of dues of creditors including MSMEs.
* As of March 2025, 46,562 companies reported dues of approximately Rs. 61,770 crores pending for less than 45 days and Rs. 22,730 crores pending for more than 45 days.
Penalties for Non-Compliance:
* Companies failing to comply with Section 405 or providing incorrect information face a penalty of Rs. 20,000.
* A continuing failure incurs an additional penalty of Rs. 1,000 per day after the first, up to a maximum of Rs. 3 lakh.
Government Support Initiatives:
* SAMADHAAN Portal (launched 30.10.2017) facilitates grievance filing for delayed payments to MSEs; pending applications total Rs. 22,363.40 crore as of 17.07.2025.
* 161 MSEFCs have been established in States/UTs to address delayed payments.
* A special sub-portal within SAMADHAAN was created on 14.06.2020 for Central Ministries/Departments/Public Sector Enterprises to report dues and monthly payments to MSMEs.
* Section 43B(h) of the Income-tax Act 1961 allows deduction on actual payment made beyond the MSMED Act 2006 specified time limit (max 45 days).
* CPSEs and companies with a turnover of Rs. 250 Crore or more are instructed to onboard the Trade Receivables Discounting System.
Impact Analysis:
Specified Companies:
* Impact: Required to disclose outstanding payments to MSEs via the MSME 1 form, subject to penalties for non-compliance or incorrect reporting.
* Action Required: File MSME 1 form semi-annually, ensuring accurate and timely reporting of dues to MSEs.
Micro and Small Enterprises (MSEs):
* Impact: Benefit from government initiatives (SAMADHAAN Portal, MSEFCs) designed to address delayed payments and facilitate resolution of dues.
* Action Required: Utilize the SAMADHAAN Portal to file grievances regarding outstanding dues and engage with MSEFCs for dispute resolution.
Central Ministries/Departments/Public Sector Enterprises:
* Impact: Required to report dues and monthly payments to MSMEs through the SAMADHAAN Portal.
* Action Required: Utilize the special sub-portal within SAMADHAAN to report dues and monthly payments to MSMEs.
CPSEs and Large Companies (Turnover >= Rs. 250 Crore):
* Impact: Required to onboard the Trade Receivables Discounting System (TReDS).
* Action Required: Onboard the TReDS platform to facilitate discounting of trade receivables of MSMEs.
Key Entities Referenced
Medium and Small Enterprises: Refers to businesses of a certain size, playing a key role in the Indian economy and a focal point of government support initiatives.
Companies Act, 2013: An Indian legislation that governs company law and corporate affairs, including provisions for disclosures related to MSME dues.
MSME1 form: A mandatory form for specified companies to disclose details of outstanding payments to Micro and Small Enterprise suppliers.
SAMADHAAN Portal: A portal launched by the Ministry of MSME for filing grievances related to delayed payments to Micro and Small Enterprises.
MSMED Act, 2006: The Micro, Small and Medium Enterprises Development Act, 2006, an Indian legislation promoting the development and competitiveness of MSMEs.
Micro Small Enterprises Facilitation Councils: Councils established in various States and Union Territories of India to address cases of delayed payments to Micro and Small Enterprises.
Incometax Act 1961: The principal act governing income tax in India, including provisions related to deductions for payments to MSMEs.
Trade Receivables Discounting System: An electronic platform for facilitating the discounting of trade receivables of MSMEs through multiple financiers, aiming to improve MSME cash flow.
GOVERNMENT OF INDIA
MINISTRY OF CORPORATE AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO. 177
ANSWERED ON Monday, July 21, 2025
Ashadha 30, 1947 (Saka)
Action Against Companies Not Paying Dues
177. Shri Dr. Thirumaavalavan Tholkappiyan
Will the Minister of CORPORATE AFFAIRS
be pleased to state:
(a) whether the Government has any data about the amount due to the
Medium and Small Enterprises by Companies that are to submit MSME-I
form;
(b) if so, the details thereof;
(c) the actions taken against the companies that have been keeping the
dues unpaid for a period exceeding 45 days; and
(d) if so, the details thereof?
ANSWER
Minister of State in the Ministry of Corporate Affairs; Minister of State in
the Ministry of Road Transport and Highways
(Shri Harsh Malhotra)
(a) to (d): The Government has taken a number of initiatives to support the
MSMEs:
(i) In terms of section 405 of the Companies Act, 2013 r/w notification no.
S.O. 368(E) dated 22.01.2019, MSME 1 form has been prescribed for
specified companies to disclose details of all outstanding dues to Micro or
Small enterprises suppliers. Every specified company is mandated to file a
return as per MSME-1 form by 31st October for the period from April to
September and by 30th April for the period from October to March. The
form MSME-1 has been re-notified vide notification no. S.O. 2751 (E) dated
15.07.2024. Further, the Companies Act, 2013 does not contemplate
settlement of dues of the creditor’s including MSMEs.
(ii) If any company fails to comply with an order made under section 405
sub-section (1) or sub-section (3), or furnishes any information or statistics
which is incorrect or incomplete in any material respect, the company andevery officer of the company who is in default shall be liable to a penalty
of twenty thousand rupees and in case of continuing failure, with a further
penalty of one thousand rupees for each day after the first during which
such failure continues, subject to a maximum of three lakh rupees.
(iii) On the basis of the last half-yearly MSME-1 returns filed for period
October 2024 to March 2025 filed in the MCA21 portal, a total of 46,562
companies having reported dues of around Rs. 61,770 crores pending for
less than 45 days and around Rs. 22,730 crores pending for more than 45
days.
(iv) Ministry of MSME launched a portal viz. SAMADHAAN Portal
(https://samadhaan.msme.gov.in/MyMsme/MSEFC/MSEFC_Welcome.aspx)
for filing of grievances & for monitoring of the outstanding dues to the
Micro & Small Enterprises (MSEs) from the buyers of goods and services
on 30.10.2017. As per the information available on the SAMADHAAN Portal
since inception on 30.10.2017 till 17.07.2025, the amount involved in
pending applications is Rs. 22,363.40 crore.
(v) Under the provisions of the MSMED Act, 2006, Micro & Small
Enterprises Facilitation Councils (MSEFCs) have been set up in the
States/UTs to deal with cases of delayed payments of the Micro and Small
Enterprises (MSEs). So far, 161 MSEFCs have been set up in the country
with more than one MSEFC in Delhi, Jammu & Kashmir, Karnataka, Kerala,
Maharashtra, Punjab, Rajasthan, Tamil Nadu, Telangana, Uttar Pradesh
and West Bengal.
(vi) A special Sub-Portal has been created within SAMADHAAN Portal on
14.06.2020, after the Aatma Nirbhar Bharat announcements, for reporting
the dues and monthly payments by Central Ministries/Department/Public
Sector Enterprises to MSMEs.
(vii) Section 43B (h) of the Income-tax Act 1961 provides that any sum
payable by the assessee to an MSME beyond the time limit specified in
section 15 of the MSMED Act 2006, which cannot be more than 45 days,
shall be allowed as a deduction only on actual payment.
(viii) Government of India has also instructed CPSEs and all companies
with the turnover of Rs. 250 Crore or more to get themselves on-boarded
on the Trade Receivables Discounting System, an electronic platform for
facilitating the discounting of trade receivables of MSMEs through
multiple financiers.
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