1. Applicability of MSME Act:
As per Section 7 of THE MICRO, SMALL AND MEDIUM ENTERPRISES DEVELOPMENT ACT, 2006, following is the classification of Enterprise on the basis of Investment in Plant & Machinery / Equipment.
|INVESTMENT IN PLANT & MACHINERY/ EQUIPMENT||Manufacturers||Service Provider|
|MICRO||Doesn’t Exceeds Rs 25 Lakhs||Doesn’t Exceeds Rs 10 Lakhs|
|SMALL||Between 25 Lakhs to 5 Crores||Between 10 Lakhs to 2 Crores|
|MEDIUM||Between 5 Crores to 10 Crores||Between 2 Crores to 5 Crores|
2. Trigger Point:
As per Section 16 of the Act, the buyer who fails to pay to supplier [registered under MSME Act] beyond 45 days from the date of acceptance of goods or services, the buyer shall be liable to pay Compound interest with monthly rests to the supplier on that amount from the appointed date at three times of the bank rate notified by the Reserve Bank of India.
3. Presentation (in Buyer books):
As per Section 22 of the Act, Where any buyer is required to get his annual accounts audited under any law for the time being in force, such buyer shall furnish the details of principal amount and the interest due to any supplier in his annual statement of accounts.
4. Treatment as per Income Tax:
As per Section 23 of the Act, the amount of interest payable or paid by any buyer shall not be allowed as deduction under Income Tax Act 1961.
5. ONE TIME COMPLIANCE as per Companies Act 2013:
Every specified company shall file in MSME Form I details of all Outstanding dues to Micro or Small enterprises suppliers existing on the date of notification (22nd Jan 2019) of this order within thirty days from the date the form is deployed on website i.e. 21st Feb 2019.
6. REGULAR HALF YEARLY COMPLIANCE as per Companies Act:
Every specified company shall file a return as per MSME Form I annexed to this Order, by 31st October for the period from April to September and by 30th April for the period from October to March.
7. Information to be furnished in such return:
a. Financial Years/ Particulars
b. Name of Suppliers
c. PAN of Suppliers
d. Amount Due
e. the date from which amount is due
f. reasons for delay in amount of payments due
8. Specified companies means all companies:
a. who get supplies of goods or services from micro and small enterprises and
b. Whose payments to micro and small enterprise suppliers exceed 45 days from the date of acceptance or the date of deemed acceptance of the goods or services.
9. The Form is to be digitally signed by Director/ CS/ CFO.
10. Day of Acceptance:
Explanation (i) to Section 2(b) of the Act provides that day of acceptance means:
a. The day of the actual delivery of goods or the rendering of services; or
b. Where any objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day on which such objection is removed by the supplier
11. Day of Deemed Acceptance:
Explanation (ii) to Section 2(b) of the Act provides that day of acceptance means the day of the actual delivery of goods or the rendering of services, where no objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services.
12. Exemption to this Rule:
a. Form MSME-1 is not applicable in the case of Medium Enterprises
b. If payment Exceed 45 days but supplier/Creditors given a declaration that they do not fall under Micro or small Enterprises
c. As per language of Notification, if allthe vendors/ creditors of Company are NON- MSME registered. In such case there is no need to file e-form MSME-1
d. This Rule applicable only for those Specified Companies whose payment to Micro & Small Enterprises exceed 45 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 MSME Development Act, 2006
13. Applicable Limits:
As per MSME Act, 2006; Limit of amount doesn’t matter to check whether payment made in 45 days or not. Say, If due amount is Rs. 100/- only and doesn’t get paid in 45 days. Specified Companies needs to report the same to ROC in e-form MSME-1.
|On Company||Up to Rs. 25,000|
|On Director, CFO, CS||Imprisonment up to 6 Months
Fine not less than 25,000 up to Rs. 3,00,000 per person