The MSME I Form is to provide information on a half-yearly basis in the context of the outstanding payments to Micro or Small Enterprises for a period exceeding 45 days with the Registrar of Companies (ROC).
Major changes have been made by the Ministry of Corporate Affairs in the context of protecting the interest of the small group of companies or businesses. He laid emphasis on following compliance by all Specified Companies Whether Public or Private Company, Micro or Small.
Form MSME-1
The Ministry of Corporate Affairs (MCA) issued a notification on 22 January 2019 that specific companies having outstanding dues to the MSME (Micro, Small and Medium) enterprises have to file the particulars of all current outstanding dues in Form MSME-1 with the ROC (Registrar of Companies).
Companies need to identify if their suppliers are registered or not under the MSME Act, 2006. When the suppliers are registered under the MSME Act, and there are outstanding dues by a company to the MSME suppliers, it must file Form MSME-1.
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.
Who Should File Form MSME-1?
Specified companies should file Form MSME-1 when payments are due to MSME for more than 45 days from the date of acceptance of the services or goods, along with the reason for its delay. Specified companies are companies-
- That have obtained goods or services from the MSME.
- Whose payments to the MSMEs exceed 45 days from the date of acceptance or deemed acceptance of the goods or services.
Importance of Form MSME 1
Details to be Reported in Form MSME-1
- CIN and PAN of the company
- Name, address and e-mail of the company
- Name and PAN of the suppliers
- Outstanding amount due against the supply of goods or services
- Date from which the amount is due
- Reason for delay in payment of the amount due
MSME Form 1 Due date
MSME Form-1 is required to be submitted semi-annually to the Registrar of Companies (ROC). The MSME Form 1 last date is as follows:
Due Date | Period for which MSME-1 is filed |
30 April | For October-March period |
31 October | For April-September period |
Non-Compliance of Filing Form MSME-1
Non-compliance with filing MSME-1 by the specified companies will attract a penalty under Section 405(4) of the Companies Act, 2013. As per Section 405(4), if any company fails to file MSME-1, the company and every officer in default will be liable to a penalty of Rs.20,000. In case of continuing failure, the company and every officer in default will be liable for a further penalty of Rs.1,000 for each day the failure continues, subject to a maximum of Rs.3 lakh.
FAQs
Who are Micro, Small & Medium Enterprises?
| Manufacturing Sector | Service Sector | ||
|---|---|---|---|
| Enterprises | Investment in plant & machinery | Enterprises | Investment in equipment |
| Micro Enterprises | Below INR 25 Lakh | Micro Enterprises | Below INR 10 lakh |
| Small Enterprises | Above INR 25 Lakh but less than INR 5 Crore | Small Enterprises | Above INR10 lakh, but less than INR 2 crore |
| Medium Enterprises | Above INR 5 Crore but does not exceed INR 10 Crore | Medium Enterprises | INR 2 crore above, but less than INR 5 crore |
Why was the MSME-1 Form introduced by the MCA?
MSME-1 Form has been introduced for companies, who received supplies of goods or services from micro and small enterprises and whose payments for such supplies are outstanding for more than 45 days by the MCA.
Form MSME 1 introduction by MCA will help specified companies submit a half-yearly return to the MCA disclosing details like the amount of payment due, the reasons for the delay, etc.