The MSME Development Act, 2006 (‘MSMED Act’) strengthens the provisions relating to delayed payments to the Micro, Small and Medium Enterprises (‘MSME’) by specifying the maximum credit period and higher penal interest if delayed beyond that period. If there is a delay in payment, companies will have to mention the reason for such delay in the statement of accounts.

Please note that Section 15 of the MSMED Act states ‘LIABILITY OF BUYER TO MAKE THE PAYMENT’. It says that where the supplier supplies goods or renders any services to any buyer

  • then the buyer shall make payment on or before the date agreed upon between him and supplier in writing, and
  • if there is no agreement, then before the appointed date.

The proviso to this section states that the period of credit given by the seller shall not exceed 45 days from ‘the day of acceptance’ or from ‘the date of deemed acceptance’.

“APPOINTED DATE” means the day following immediately after the expiry of the period of fifteen days (15 days) from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier. 

Can we file MSME form pursuant to CFSS Scheme ?

Ans. No, there is no fee that is to be paid while filing the MSME form and the CFSS (Companies Fresh Start Scheme) grants immunity from any additional fees, penalty and prosecution.

Form MSME-1 is also not included in the list of forms available under CFSS Scheme.

FAQs on MCA E-Form MSME-1

Q.1 What are the Provisions applicable to MSME-1 Form?

Ans. Order 2 and 3 dated 22 January, 2019 issued under Section 405 of the Companies Act, 2013

Q.2 What is the Objective of MSME-1 Form ?

Ans. furnishing half yearly return with the registrar in respect of outstanding payments to Micro or Small Enterprises

Q.3 Nil Return (no outstanding amounts) is required to be filed?

Ans. No.

Q.4 What is Return Type?

Ans. Half Yearly Return (the form was introduced with two types of returns – Initial and Half Yearly Return.)

Q.5 What is the Due Date to file MSME-1 Form?

Ans. a) For Half year period April to September – 31st October   b) For half year period October to March – 30th April

Q.6 Who is required to file MSME- 1 Form?

Ans. 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

Q.7 Whose details are required to be reported ?

Ans. Whose payments exceed 45 days from the date of acceptance or the date of deemed acceptance of the goods or services as per provisions of Section 9 of the Micro Small and Medium enterprises Development Act, 2006 (MSMED Act)

Q.8 If agreement terms for payment is 28 days, and payment is made after 28 days?

Ans. it is termed as delayed payment and should be reported under MSME-1 Form.

Q.9 If agreement is made to make payment within 60 days between the parties but as on date of filing return the amount is outstanding for more than 45 days but less than 50 days. Whether reporting is required or not?

Ans. In this case, Reporting has to be made as per the rules made thereby and shall be given if the amount is outstanding for more than 45 days.

Q.10 In case, if there is no agreement?

Ans. 15 days criteria will be applicable when there is no agreement (Appointed date as per MSMED Act)

Q. 11 If any Supplier is not registered under MSMED Act, 2006 and at the time of Filing return he got status of Micro or Small ?

Ans. Reporting should be required to be made for that supplier.

Q.12 How many Entries we can made for vendors in a single form ?

Ans.  99 Entries

Q.13 If as on 31.03.2020 No outstanding payment to MSME vendor, But there was delay in payment of some MSME vendor more than 45 days which has been paid on or before 31.03.2020. Whether Company needs to give details of such invoices in the form?

Ans. Companies have to give details of outstanding payment to MSME vendor only on due date i.e. 31.03.2020 Payment has already been made to vendors before 31.03.2020, then company is not required to give details of such transaction in MSME-1. However it doesn’t justify the objective completely but as per the provision of the Act and language of the form MSME 1 it ask for outstanding payments.

Q. 14. If entries are more than 99 then what?

Ans. Multiple forms can be filed, if entries are more than 99.

Q.15 If Company is under IBC Process – Who is required to file?

Ans.  Duty of Resolution Professional is to file it (only Advisable)

Q.16 Exemption to file MSME-1 Form?

Ans. Medium Enterprises are not require to file.

Q. 17 Is their any additional fee (late fee) for delay filing of MSME Form?

Ans. No Fee

Q.18 Is their any statutory filing fee for the filing of MSME Form

Ans. No Additional Fee

Q.19 Processing Type of this E-form

Ans. The form will be processed in STP mode.

Q. 20 What is the Penalty for Non-Filing of Form MSME-1?

Ans. Non-compliance will lead to punishment and penalty under the provision of the Companies Act. As per Penalty Provision of Section 405 (4) of the Companies Act, 2013

In No Event The Author Shall Be Liable For Any Direct, Indirect, Special Or Incidental Damage Resulting From Or Arising Out Of Or In Connection With The Use Of This Information. This Has Been Shared For Knowledge Purposes Only.

{The author  i.e. Ashish Sharma is a Company Secretary in Practice at Sharma Ashish & Associates and can be contacted at (Email) info@csashishsharma.com}

Author Bio

Qualification: CS
Company: SHARMA ASHISH & ASSOCIATES
Location: DELHI, New Delhi, IN
Member Since: 28 May 2019 | Total Posts: 2
Sharma Ashish & Associates is registered as a practicing Company Secretaries firm with the Institute of Company Secretaries of India. It was established by Ashish Sharma (B.com, ACS, ACMA, MBA, LLB) founder & sole proprietor with a view to cater professional advisory services relating to Cor View Full Profile

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