ARTICLE ON MICRO, SMALL AND MEDIUM ENTERPRISE (MSME) 

Ministry of Corporate Affairs vide Notification dated January 22, 2019, requires that

♣ Applicability:

To all the companies, who

(a) receive supplies of any goods and services from Micro, Small and Medium Enterprise (“MSME”)  

and

(b) whose payment exceeds 45 days from the date of acceptance or from 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.

(referred to as “Specified Companies”)

♣  Every Specified Companies shall file “MSME Form I” with the Ministry of Corporate Affairs, within 30 (thirty) days from the date of the said Notification and every half yearly as well, stating (1) the amount of payment due and (2) the reason of the delay. 

MSME Form I should also be filed on a half-yearly basis i.e:

  • on /before 30th April for the period October to March and
  • on /before 31st October for the period April to September.

In case of non- compliance, the Company and every officer in default shall be punishable under Section 405 (4) of the Companies Act, 2013 with a fine and/ or imprisonment, which reads as follow : 

If any company fails to comply with an order made under sub-section (1) or subsection (3), or knowingly furnishes any information or statistics which is incorrect or incomplete in any material respect, the company shall be punishable with fine which may extend to twenty-five thousand rupees and every officer of the company who is in default, shall be punishable with imprisonment for a term which may extend to six months or with fine which shall not be less than twenty-five thousand rupees but which may extend to three lakh rupees, or with both. 

Entities to be identified as Micro or Small enterprises :- 

Definitions of Micro, Small & Medium Enterprises

In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) , any class or classes of enterprises, whether proprietorship, Hindu undivided family, association of persons, co-operative society, partnership firm, company or undertaking, by whatever name called are classified in two Classes namely Manufacturing Enterprises and Service Enterprises.

1. Manufacturing Enterprises- The enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the Industries (Development and Regulation) Act, 1951) or employing plant and machinery in the process of value addition to the final product having a distinct name or character or use. The Manufacturing Enterprise are defined in terms of investment in Plant & Machinery.

2. Service Enterprises:-The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment..

The limit for investment in plant and machinery / equipment for manufacturing / service enterprises, as notified, vide S.O. 1642(E) dtd.29-09-2006 are as under

Sector MICRO SMALL
Manufacturing Sector Investment in Plant and Machinery not exceeding               INR 25 Lakhs. Investment in Plant and Machinery exceeding INR 25 Lakhs but not exceeding INR 5 crores
Service Sector Investment in equipment not exceeding INR 10 Lakhs. Investment in equipment exceeding INR 10 Lakhs but not exceeding INR. 2 crores.

Disclaimer

*This legal update is not intended to be a form of solicitation or advertising. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate thereafter. No person should act on such information without appropriate professional advice based on the circumstances of a particular situation. 

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Company: Amita Desai & Co
Location: Mumbai, Maharashtra, IN
Member Since: 04 May 2017 | Total Posts: 8
Amita Desai is a Fellow Company Secretary and Insolvency professional in practice since 1995 Her expertise lies in following .She can be reached at amita@amitadesai.com 1. Business and Legal Advisory on Corporate Law 2. Foreign Exchange Management Act 3. Drafting and Appearance before Tribunal View Full Profile

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