What is MSME I filing

The MSME I Form is for the payment of half yearly return with the Registrar of Companies (ROC) in context of the outstanding payments to Micro or Small Enterprises.

A half-yearly return is required to be submitted to the Ministry of Corporate Affairs on a mandatory basis, by all those companies who receive supply of goods or services from Micro or small enterprises and the payment done to these micro and small enterprise suppliers exceeds forty-five days from the date of acceptance (or deemed acceptance) of the relevant good or services.

Important Definitions under MSME 

Meaning of Micro & Small Enterprise

The MSME Act, 2006 defines the Micro Small and Medium Enterprises as:

In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro & Small Enterprises are depicted below:

Manufacturing Sector Service Sector
Enterprises Investment in plant & machinery Enterprises Investment in equipment
Micro Enterprises Does not exceed Rs. 25 Lakh Micro Enterprises Does not exceed Rs. 10 Lakh
Small Enterprises More than Rs. 25 Lakh but does not exceed Rs. 5 Crore Small Enterprises More than Rs. 10 Lakh but does not exceed Rs. 2 Crore

It covers companies, Partnership firm, Association of Person, Hindu Undivided family, Co-operative Society, Proprietorship Firm, other entities etc.

MSME Act, 2006, MSME Broadly Classified Into 2 Categories

1) In the First category comes to those Enterprises which are engaged in the manufacturing and production of goods for any industry.

  • Manufacturing Enterprises – As per the first schedule to the industries (Development and Regulation) Act, 1951, the Manufacturing enterprises defined in terms of investment in Plant & Machinery, are those enterprises that are engaged in the manufacture or production of goods for any specific industry

2) In the second category comes to those enterprises which are engaged in providing or rendering services

  • Service Enterprises – Defined in terms of investment in equipment, service enterprises are those enterprises which are engaged in providing or rendering services

Under the MSMED Act 2006, the Micro Small & Medium Enterprises (MSMEs) in India are categorized and defined on the basis of capital investment done in plant and machinery but excluding the investments made in land and building

Definition of the 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

Definition of the 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.

Specified Companies: 

As per the provisions of section 9 of the MSME Development Act, 2006, Specified companies are those companies who receive the supply of goods or services from MSMEs and the payment against these supplies to the suppliers of these MSMEs exceed 45 days from the date of acceptance (deemed acceptance) of the goods or services 

HOW TO OBTAIN MSME CERTIFICATE

The Government of India have specifically made an Act for Micro, Small & Medium Enterprises. The Micro, Small & Medium Enterprises Development Act, 2006 is only applicable on those enterprises which deals in Manufacturing and Service sector.

By the classification under this act, enterprises are categories under 3 classification.

In case of entities engaged in manufacturing or production of goods:

Micro enterprise: Any entity wherein the investment in plant and machinery does not exceed rupees twenty-five lakhs.

Small enterprise: Any entity wherein the investment in plant and machinery does not exceed rupees five crores but also more than rupees twenty-five lakhs.

Medium enterprise: Any entity wherein the investment in plant and machinery does not exceed rupees ten crores but also more than rupees five crores.

In case of entities engaged in providing or rendering of services:

Micro enterprise: Any entity wherein the investment in equipment does not exceed rupees ten lakhs.

Small enterprise: Any entity wherein the investment in equipment does not exceed rupees two crores but also more than rupees ten lakhs.

Medium enterprise: Any entity wherein the investment in equipment does not exceed rupees five crores but also more than rupees two crores.

Details and Documents required:

  • Aadhar card of Applicant
  • Pan Card of applicant in case of proprietor Or Company/firm Pan Card in Case of Company/firm
  • Bank Account Details
  • Office and Plant Locations address and proof.
  • AOA and MOA
  • Bills of the equipment and the machinery.

Steps:

Once all the documents are collected, you need to follow the following process to accomplish MSME registration:

1. File the application for MSME registration on MCA portal (MSME Registration Portal) in the prescribed format.

2. Self-certify all the given documents attached with MSME registration application.

3. Upload the documents and file the application on the online portal

4. Once the application is accepted, you will receive email from MSME Department on your registered mail id with Udyog Aadhar Number and Certificate

Applicability of MSME on Companies

Now back to the MSME 1 form filling, as per the notification issued by the MCA it has been mandated to file disclosures through Form MSME I for every type of the Company whether Public or Private Company, Micro or Small Companies; the Company that satisfies the following two conditions:

  • Condition 1: Company must have received Goods and/or Services from Micro or Small Enterprise
  • Condition 2: Payment must have been due/not paid, to such Micro and Small Enterprise for 46 days from the date of acceptance

Due Date for filing Form MSME-1

Initially, One-time return was required to be filed within 30 days of publication of this order i.e. 21stFebruary, 2019.

But since the form was not available on the MCA portal, now the form must be submitted within 30 dates from the date of its deployment on MCA portal i.e. from 1st May (as per the extended circular of MCA dated 21.02.2019).

Due date of subsequent returns is mentioned below:

  • For Half year period ‘April to September’ – 31st October
  • For half year period ‘October to March’ – 30th April

 Penalty for Non-Filing of Form MSME-1

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 Fine will be as follows:

> On Company – upto Rs.25,000/-

> On Directors, CFO and CS – Imprisonment – up to 6 Months

Or

Fine – not less than Rs.25000/- but which may extend to Rs.300000/- per person

Procedure for Filing MSME Form 1 (MCA)

The Initial one-time Return: The companies should file the MSME Form I by disclosing all the outstanding/ dues against the Micro or Small enterprises suppliers that are existing on the date of notification of the related order within 30 days from the date of deployment of E-form MSME-1 on the MCA Portal.

Exemption to this Rule:

1. Form MSME-1 is not applicable in the case of Medium Enterprises;

Particulars  Manufacturing Sector (Investment in plant & machinery) Service Sector (Investment in equipment)
Medium Enterprises More than Rs. 5 Crore but does not exceed Rs. 10 Crore More than Rs. 2 Crore but does not exceed Rs. 5 Crore

2. 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;

Relevant Notification- Half Yearly Reporting of payment to MSMEs after 45 day

3. If payment Exceed 45 days but supplier/Creditors given a declaration that they do not fall under Micro or Small Enterprises.

Note: Thus, it can be concluded that, each Specified Company, public or private, that obtains goods and services from the small and micro-enterprise and whose payment is due with such micro and small enterprise suppliers for 45 days from the date of acceptance, shall be required to file MSME Form as a half yearly return every year

Author Bio

Qualification: CS
Company: Scarlet Wireless India Pvt Ltd.
Location: Bangalore, Karnataka, IN
Member Since: 13 May 2019 | Total Posts: 10
A Associate Company Secretary and a CA Aspirant, I Ankita Gupta have just started my career into the legal field and I would learn & grow at every given opportunity & there by prove to be an asset to which ever organization I am associated with and enhance my legal and secretarial skills. View Full Profile

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9 Comments

  1. Atul gupta says:

    If a company is 80% trading and 20% manufacturing. Having total turnover around 80 cr with investment in plant n machinery is less than 10 crore ,then would it be considered as msme or not?

  2. CA DEEPAK SONI says:

    THE CORRUPT ARROGANT AND IGNORANT BUREAUCRATS JOYING IN THEIR AIR CONDITIONED CHAMBERS KEEP THE ENTREPRENEURS HIGHLY PRE OCCUPIED IN FILLING IN HUNDREDS OF FORMS AND RETURNS WHICH ARE TOTALLY USELESS.THEY ARE PRODUCING MORE AND MORE CLERKS AND LESS AND LESS TECHNOCRATS.THE USELESS EXERCISE IS PRESCRIBED AT THE REGULAR INTERVALS TO ESTABLISH THEIR UNWARRANTED IMPORTANCE AND DERIVE SADISTIC PLEASURE FROM THE HARASSMENT CAUSED TO THE BUSINESSPERSONS.

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