Purpose of Filing Form MSME-1

The MSME Development Act, 2006 (MSMED) strengthens the provisions relating to delayed payments to the MSMEs by providing the maximum credit period and penal interest for delay in payment. When there is a delay in payment by the companies, they must mention the reason for such delay in their statement of accounts.
Section 15 of the MSMED Act states that where the suppliers render services or supply goods to any buyer, the buyers should make payment on or before the agreed date between them and the suppliers. When there is no agreed date for payment between the MSME supplier and buyer, the buyer must make payment before the appointed date. The appointed date means fifteen days from the date of acceptance.
Section 15 also states that the period of credit granted by the seller should not exceed 45 days from the acceptance date or date of deemed acceptance. To strengthen this provision further, the MCA introduced Form MSME-1. Every company that has obtained services or goods from an MSME supplier and has outstanding payment for more than 45 days must disclose it to the ROC by filing the MSME-1 return.  
The MSME-1 is a half-yearly return that the specified companies need to file regarding their outstanding payments to the MSME.
In this manner, the ROC can keep track of the companies that have outstanding dues towards MSMEs and the MSME suppliers who need to receive payments.
However, companies have to file this return only when they have payments outstanding for more than 45 days to the MSME supplier. The companies need not file a ‘Nil MSME-1 Return’ when there are no outstanding amounts with the MSME suppliers.