Ministry of Corporate Affairs (MCA) introduced Form MSME-1 on 22 January 2019 to track companies with outstanding payments to MSME suppliers. Companies must file this form if they owe payments to MSME suppliers that exceed 45 days from the date of acceptance or deemed acceptance of goods or services. MSME-1 form requires companies to disclose the amount due and the reason for the delay in payment. The due dates for filing are 31st October for the period April to September and 30th April for the period October to March. If there are no outstanding dues, no return is required. Non-compliance with filing Form MSME-1 or submitting incorrect details attracts penalties under section 405(4) of the Companies Act, 2013. Companies and their officers can face penalties up to ₹3 lakh for continued failure to comply.
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.
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Purpose of form MSME-1 :
All companies, who get supplies of goods or services from micro and small enterprises and whose payments to micro and small enterprise suppliers exceed forty five days from the date of acceptance or the date of deemed acceptance of the goods or services as per the provisions of section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 (hereafter referred to as “Specified Companies”), shall submit a half yearly return to the Ministry of Corporate Affairs in form MSME-1.
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.
The form stating the following:
(a) the amount of payment due; and
(b) the reasons of the delay;
Who Needs to File MSME-1 ?
All companies (except for micro and small enterprises themselves) that have:
- Outstanding dues to MSME suppliers.
- Payments overdue for more than 45 days.
Due Dates of filing MSME-1:
MSME-1 is a half-yearly return that the specified companies must file with the MCA. Below are the due dates for filing Form MSME-1:
- For April to September: Must be filed by 31st October of the same financial year.
- For October to March: Must be filed by 30th April of the following financial year.
Non-Compliance of filing form MSME-1:
If any company fails to file the form MSME-1 to MCA or furnishes any information or statistics which is incorrect or incomplete in any material respect, attract the penalty under section 405(4) of Companies Act, 2013 therefore, the company and every 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.
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