MSME-1 and DPT-3 Explained: Who Must File, Due Dates and What to Report

Most companies know about their annual accounts and annual return. Fewer know about MSME-1 and DPT-3, two returns that apply to a large share of ordinary private companies but only in particular circumstances. That's exactly why they get missed. This guide explains who has to file each one, when, and what goes in them.

MSME-1: Dues to Micro and Small Suppliers

MSME-1 is a half-yearly return that tells the Registrar of Companies how much a company owes to micro and small enterprise suppliers, and why those payments are late. It exists to discourage large buyers from delaying payments to small businesses.

Who has to file

A company files MSME-1 for any half-year in which it received goods or services from a micro or small enterprise and its payment was outstanding for more than 45 days from the date the goods or services were accepted. The supplier has to be registered as a micro or small enterprise under the MSMED Act, which today means Udyam registration. Medium enterprises aren't covered.

Due dates

• For October to March: by 30 April.
• For April to September: by 31 October.

What it reports

• Each supplier's name and PAN.
• The amount outstanding and the date from which it became due.
• The reason the payment was delayed.

The wider picture

MSME-1 isn't the only consequence of paying small suppliers late. Under the MSMED Act, a buyer who pays after 45 days owes compound interest at three times the bank rate, and the supplier can take the claim to the state's Micro and Small Enterprises Facilitation Council. Income-tax rules can also deny the buyer a deduction for such amounts until they're actually paid. Tracking supplier payments against the 45-day limit protects the company on all three fronts.

DPT-3: Deposits and Loans

DPT-3 is an annual return of deposits, and of money a company has received that isn't treated as a deposit. The second part is what catches most private companies, because it covers some very ordinary transactions.

Who has to file

Every company, other than a government company, that has such money outstanding at 31 March. That includes companies that don't take deposits at all but have, for example, a loan from a director or another company.

Due date

By 30 June each year, for amounts outstanding as at 31 March.

What counts as "not a deposit" but still reportable

• Loans from directors, and for private companies, from directors' relatives, provided the director declares the money is their own and not borrowed.
• Loans from banks and financial institutions.
• Loans from other companies.
• Advances received against goods or services, within the limits the rules allow.
• Security deposits from employees, and share application money pending allotment within the allowed time.

Certification

A company that has accepted actual deposits files DPT-3 with an auditor's certificate. A company reporting only amounts that aren't deposits files it without one, though the figures should match its audited accounts.

What Happens If You Miss Them

• Both forms attract additional fees when filed late, rising in steps with the delay.
• Not filing at all can lead to penalties on the company and on the officers in default.
• During due diligence, investors and lenders check these filings against the accounts, and gaps raise questions.

A Simple Routine

1. Ask your suppliers for their Udyam registration status and record it in your accounting system.
2. At 31 March and 30 September, run an ageing report of dues to micro and small suppliers.
3. If anything is overdue beyond 45 days, file MSME-1 by 30 April or 31 October.
4. At 31 March, list every loan and advance the company has received, and file DPT-3 by 30 June.
5. Keep directors' declarations for any loans they've made to the company.

Getting Help

Think Filing reviews which of these returns apply to your company, prepares the supplier and loan data, and files MSME-1 and DPT-3 on time, including any missed returns from earlier periods.