Form MSME-1 filing is a crucial requirement under the Micro, Small and Medium Enterprises Development Act, 2006. This form mandates companies to report their dues to Micro and Small enterprises. Non-compliance can lead to significant penalties. This article explores the filing process, deadlines, mandatory information, and penalties for non-compliance under Section 405 of the Companies Act, 2013.
Section 7(1) of Micro, Small and Medium Enterprises Development Act, 2006, provides the classification of Micro, Small and Medium Enterprises namely:
(i) a micro enterprise, where the investment in Plant and Machinery or Equipment does not exceed one crore rupees and turnover does not exceed five crore rupees;
(ii) a small enterprise, where the investment in Plant and Machinery or Equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees;
(iii) a medium enterprise, where the investment in Plant and Machinery or Equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees.
Further, Section 9 of the Act, empowers the Central Government to issue notifications, guidance or instructions as it may deem necessary to develop, promote and enhance competition of Micro, Small and Medium Enterprises.
In exercise of the above powers, the Central Government has issued the [i]notification dated 2 November, 2018 directing the Companies, who get supply of goods or services from micro and small enterprises to submit a half yearly return to the Ministry of Corporate Affairs (MCA), if the Company accepting supply from Micro or Small enterprise makes a due in payment for a period exceeding 45 (forty five) days from the date of acceptance or deemed acceptance of the supply of goods or services..
In addition to this, the Central Government has also exercised the power conferred under Section 405 of the Companies Act, 2013 and issued the order called Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019, via[ii]notification dated 22 January, 2019, directing the Companies to furnish the information about the outstanding dues to Micro Small enterprise for a period exceeding 45 days by way of filing half yearly return in Form MSME-1. to the Registrar of Companies issued by the
Due date for filing Form MSME-1:
Form MSME-1 is to be filed twice in a year, within the period of 30(thirty) days from the end of the half year i.e., 30 April and 30 October.
For the period of April to September- On or by 30 October
For the period of October to March – On or by 30 April
Information included in the Form MSME-1:
(a) the amount of payment due;
(b) the reasons of the delay;
(c) name of the Supplier;
(d) PAN of the Supplier;
(e) date from which the amount is due
Penal provisions for non-compliances:
Pursuant to Section 405 of the Companies Act, 2013, if the Company fails to comply with the order or furnish any information, then the Company and every officer of the company who is in default shall be liable to a penalty of Rs. 25,000/- (twenty thousand rupees) and in case of continuing failure, with a further penalty of Rs.1000/- (one thousand rupees) for each day after the first during which such failure continues, subject to a maximum of Rs. 3,00,000/- (three lakh rupees.)
Conclusion: Filing Form MSME-1 is essential for companies to comply with regulatory requirements under the MSMED Act. It ensures transparency and timely payment to Micro and Small enterprises. Non-compliance can result in substantial penalties, emphasizing the importance of adherence to filing deadlines and accuracy in reporting. Companies must stay informed and proactive to meet their obligations and avoid financial liabilities under the law.
[i] https://taxguru.in/corporate-law/yearly-reporting-payment-msmes-45-days.html
[ii] Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019
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