What is MSME??
All the companies registered under the MSME Act, 2006 shall be considered as MSME companies. Companies must determine whether or not their suppliers are registered under the MSME Act of 2006. When a company has overdue dues to MSME suppliers and the suppliers are registered under the MSME Act, it must file Form MSME-1.
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What is MSME I Return?
Registrar of Companies (ROC) required the companies to file MSME I Form providing information on a half-yearly basis regarding outstanding payments to Micro or Small Enterprises for a period of more than 45 days from the date of acceptance of the goods or services, if any.
Thus, this form provides the details of the outstanding payments that are to be paid by the Company, filing the form, to MSME suppliers of the company.
When MSME I Return to be filed?
MSME return is to be filed on a half yearly basis. The form is to be filed for a For April-September period – Up to 31st October and For October-March period – Up to 30th April.
If any company fails to file the return within the specified time or intentionally furnishes incorrect or incomplete information or amount, it may attract fine up to twenty five thousand. Also, the officer in default shall attract may sentence to six months in prison or a fine of not less than twenty-five thousand rupees but not more than twenty-five thousand rupees.
ROC Notice of Adjudication for not filing of MSME I Form
If a corporation files MSME-1 after the deadline or fails to file MSME-1 form, a penalty is imposed under Section 450 of the Companies Act, 2013. In addition, Section 454 gives the ROC the right to send a notice of adjudication to the Company. The ROC is unable to reduce the penalty total below the minimum penalty amount in the event of an adjudication notice.
Conclusion
The micro, small, and medium-sized enterprise (MSME) sector has been critical to the country’s progress. It also gave banks greater options for lending to small and medium-sized businesses. Furthermore, timely submission of MSME paperwork is required to avoid penalties under Section 450 of the Companies Act.
Furthermore, the government should emphasise the relevance of MSME. Similarly, for the sector’s long-term viability, the government should provide more and more MSME benefits, such as improved standards for providing low-interest loans.
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Article highlights importance of filing or consequences of non filing. At the same time it should have discussed the contents or details required to be filled in the form .
How many penalties have been imposed for such violation of required furnishing of Form-1 ?
As per Section 405(4), the company and every company that is in default shall be liable to a penalty of Rs. 20,000 and in case of continuing failure, a further penalty of Rs. 1000 per day after the first day during which such failure continues, subject to a maximum of Rs. 3,00,000.