Section 8 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 8(1) says that a person who intends to establish an enterprise files a "memorandum" of the micro, small or medium enterprise. For most enterprises the filing is at the person's discretion; for one class of medium manufacturer it is compulsory. The memorandum also decides who counts as a "supplier" for the delayed payment chapter, which is why a filing that looks optional has real consequences.
Section 8(1) covers three groups. A person establishing a micro or small enterprise may file the memorandum at his discretion. A person establishing a medium enterprise engaged in providing or rendering services may also file at his discretion. A person establishing a medium enterprise engaged in the manufacture or production of goods pertaining to an industry in the First Schedule to the Industries (Development and Regulation) Act, 1951 shall file. A proviso gave certain pre-2006 enterprises a window of one hundred and eighty days from commencement to file.
The text of section 8(1)
The sub-section opens: "Any person who intends to establish" an enterprise of one of three kinds "shall file the memorandum of micro, small or, as the case may be, of medium enterprise with such authority as may be specified by the State Government under sub-section (4) or the Central Government under sub-section (3)". The words "at his discretion" sit inside clauses (a) and (b), and clause (c) has no such words.
| Clause | Who | Filing is |
|---|---|---|
| 8(1)(a) | A micro or small enterprise | At the person's discretion |
| 8(1)(b) | A medium enterprise engaged in providing or rendering of services | At the person's discretion |
| 8(1)(c) | A medium enterprise engaged in manufacture or production of goods pertaining to an industry in the First Schedule to the Industries (Development and Regulation) Act, 1951 | Compulsory ("shall file") |
A reader should notice what is missing. A medium enterprise that manufactures goods outside the First Schedule industries does not appear in any clause, so the section does not address it.
Why a discretionary filing still matters
Section 2(n) defines a "supplier" as a micro or small enterprise "which has filed a memorandum with the authority referred to in clause (a) of sub-section (1) of section 8". Our explainer on the section 2 definitions sets this out in full. The consequence is direct: the delayed payment provisions in section 15 and onward speak of a "supplier". An enterprise that never filed a memorandum under clause (a) does not fit the definition as worded, however small it is.
If you are deciding whether to register an enterprise that sells to larger buyers, this is the practical reason to do so. Our MSME Udyam registration service handles the filing and the certificate.
Note also that clauses (b) and (c) concern medium enterprises. The definition of "supplier" in section 2(n) is limited to micro and small enterprises, so a medium enterprise's memorandum under clause (b) or (c) does not make it a supplier under that definition.
The proviso: pre-commencement enterprises
The proviso to section 8(1) applies to a person who, before the commencement of the Act, established:
- (a) a small scale industry and obtained a registration certificate, who "may, at his discretion" file; and
- (b) an industry engaged in the manufacture or production of goods pertaining to a First Schedule industry, with investment in plant and machinery above one crore rupees but not exceeding ten crore rupees, which filed an Industrial Entrepreneurs' Memorandum in pursuance of notification S.O. 477(E) dated 25 July 1991 of the erstwhile Ministry of Industry (Department of Industrial Development).
Such persons "shall, within one hundred and eighty days from the commencement of this Act, file the memorandum". The wording of the printed text for limb (b) is slightly garbled in our scanned copy around the words "plant and machinery", so read the gazette text if you need the exact phrase. The proviso was a transition rule and, by its terms, a time-limited one. Section 1(2) let the Central Government bring provisions into force on different dates; see our note on commencement and repeal.
Who the memorandum is filed with
Section 8(1) does not name an office. It points to sub-sections (3) and (4): the Central Government specifies the authority for medium enterprises, and the State Government specifies the authority for micro and small enterprises. Those sub-sections, the form and the procedure get their own article: authority, form and procedure for the memorandum.
What happens if a person does not file
Section 27(1) punishes whoever "intentionally contravenes or attempts to contravene or abets the contravention" of section 8(1). The fine is up to one thousand rupees on a first conviction, and not less than one thousand but up to ten thousand rupees on a second or subsequent conviction. The provision bites in practice only where filing is compulsory, because where the Act says "at his discretion" there is nothing to contravene. Our article on penalties and jurisdiction of courts covers this.
How this sits with Udyam Registration
The Central Government's notification S.O. 2119(E) of 26 June 2020 states that it is issued under section 7(1) read with 7(9) and section 8(2) read with 8(3), and that it "specifies the form and procedure for filing the memorandum (hereafter in this notification to be known as 'Udyam Registration')". In other words, filing Udyam Registration is the way the memorandum is filed today. The classification figures under the notification have been revised by S.O. 1364(E) with effect from 1 April 2025; see the classification under section 7 for the layering of the 2006, 2020 and 2025 positions.
Practical examples
Example 1: a new trading-and-service business. A person sets up a small service enterprise and files nothing. Section 8(1)(a) left the filing to her discretion, so she has broken no rule. But when a buyer delays payment she will have trouble showing she is a "supplier" under section 2(n).
Example 2: a medium manufacturer. A person establishes a medium enterprise manufacturing goods of an industry listed in the First Schedule to the 1951 Act. Clause (c) says "shall file". Failure to file, if intentional, attracts section 27(1).
Example 3: a medium service provider. A medium services company may file at its discretion under clause (b). The filing will not turn it into a "supplier", since section 2(n) covers only micro and small enterprises.
Common mistakes
- Reading "at his discretion" as meaning filing has no legal effect. It determines supplier status.
- Assuming every medium enterprise must file. Only the clause (c) class must.
- Applying the 2006 figures to decide the size class. Current limits come from the notification in force, as shown in our note on section 7(9).
Need help with filing your memorandum?
If you are unsure whether your enterprise should register, or whether an existing registration shows the right activity and size class, our team can review it and file or correct it for you. You can start from our MSME Udyam registration page.
Key takeaways
- Section 8(1) provides for filing a memorandum by a person who intends to establish an enterprise.
- Micro, small and medium-services enterprises file at their discretion; medium First Schedule manufacturers must file.
- Only a micro or small enterprise that filed under clause (a) is a "supplier" under section 2(n).
- Intentional contravention of section 8(1) is punishable under section 27(1).
- Udyam Registration is the notified form and procedure for the memorandum.
Read next
- Section 8 of the MSMED Act, 2006: Authority, form and procedure for the memorandum
- Section 2 of the MSMED Act, 2006: Definitions of enterprise, supplier and buyer
- Section 15 of the MSMED Act, 2006: Liability of buyer to make payment
- MSME Payment Protection: the 45 Day Rule, Sections 15 to 24
Disclaimer: Based on the Micro, Small and Medium Enterprises Development Act, 2006 (official text, not amended by the Jan Vishwas Acts of 2023 or 2026) and the Udyam notifications S.O. 2119(E) of 26 June 2020 and S.O. 1364(E) of 21 March 2025, read with later developments noted in the article, as on 30 September 2026. Notifications, rules and the Udyam portal change; verify the current position before acting.