Definition of MSME and Who Need to File MSME Forms

“Discover the updated MSME definition as per MCA’s June 1, 2020 notification. Learn who needs to file MSME forms, the requirements, due dates, and penalties for non-compliance. Stay informed for smooth ROC compliance.”

As per latest notification issued by MCA on June 1, 2020, new definition of MSME as follows:

Micro Enterprises: An industry whose investment in Plant and Machinery or Equipment does not exceed one crore rupees and turnover does not exceed five crore rupees called Micro Enterprises.

Small Enterprises: An Industry whose investment in Plant and Machinery or Equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees called Small Enterprises.

Medium Enterprises: An Industry whose investment in Plant and Machinery or Equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees called Medium Industry.

REQUIREMENT TO FILE MSME E-FORM TO ROC:

The Ministry of Corporate Affairs (MCA) issued a notification on 22 January 2019 that Some specific companies need to file MSME-1 form to ROC (Registrar of Companies) if, company is having current outstanding dues to the MSME (Micro, Small and Medium) enterprises.

WHO NEED TO FILE FORM MSME-1?

Specified Companies should file Form MSME-1 when payments are outstanding 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 –

• who received goods or services from the MSME.
• Whose payments to the MSMEs exceed 45 days from the date of acceptance of the goods or services.

When to file MSME-1 form to ROC:

Specified Company need to file this form if company has any outstanding toward MSME, if they don’t have any outstanding payment then it is not required to file MSME form to ROC

DUE DATE FOR FILING FORM MSME-1

MSME-1 is a half-yearly return that the specified companies need to file to ROC. Due date to file MSME-1 as follows:

30 April of every year -for the period of October to March

31 October of every year- for the period of April-September

PURPOSE OF FILING FORM MSME-1

As per the MSME Development Act, 2006 (MSMED), the MSME govt. department added the provisions relating to delayed payments to the MSME by providing the maximum credit period and penal interest for delay in payment. For this purpose, it is required to get information of specified companies who make delayed payment of MSME industry. When there is a delay in payment by the specified companies, they must mention the reason for such delay in their statement of accounts.

Liability to buyer to make payment to vendor under section 15 of MSMED: If supplier supplies any goods or services to buyer, it is buyers’ responsibility to make payment on or before agreed period as per agreement. If there is no agreement signed between them, then buyer to make payment on or before appointed date.

Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed forty-five days from the day of acceptance or the day of deemed acceptance.

The MSME-1 e-form is a half-yearly return that which need to file by specified companies (definition mentioned above) in respect of their outstanding payments to the MSME.

With the receiving of MSME form, the ROC can keep track of the companies that have outstanding dues towards MSMEs and the MSME suppliers who need to receive payments.

PENALTY PROVISION TO NON- FILING OF MSME OR FAILED TO MSME-1 WITHIN DUE DATE:

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.

LATEST AMENDMENT ON MSME ACT:  the Finance Bill, 2023 brings new clause (h) to section 43B of the Act, according to this act, any expenditure on any purchase or services taken from MSME shall be allowed only if make payment within time limit as per section 15 of MSMED Act to MSME.

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