The Government of India had enacted the Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006 in which it had defined the micro, medium, and small enterprises.

As per section 7 of the MSMED Act, 2006, the micro, small and medium and enterprises are defined as:

Manufacturing Sector Service Sector
Enterprises Investment in Plant and Machinery Enterprises Investment in Equipment
Micro Doesn’t exceed Rs. 25 Lakhs. Micro Doesn’t exceed Rs. 10 Lakhs.
Small Above Rs. 25 Lakhs but doesn’t exceed Rs. 5 Crores. Small Above Rs. 10 Lakhs but doesn’t exceed Rs. 2 Crores.
Medium Above Rs. 5 Crores but doesn’t exceed Rs. 10 Crores. Medium Above Rs. 2 Crores but doesn’t exceed Rs. 5 Crores.

When and why MSME 1 Form introduced by MCA?

On 1st May 2019, the Ministry of Corporate Affairs (“MCA“) had released e-form MSME 1 (“MSME 1“), where all companies who are obtaining supplies of goods/ services from micro and small enterprises and whose respective payments towards such enterprises exceeding 45 days from the date of acceptance or the date of estimated acceptance of such products or services are required to file MSME 1, by 30th May 2019.

What is Form MSME 1?

The MSME 1 Form 1 is introduced by MCA in order to provide information on the payment made on a half-yearly basis regarding the outstanding payments to Micro or Small Enterprises for a period beyond 45 days with the Registrar of Companies (ROC). However, MSME 1 Form this is applicable to only micro and small enterprises and not to medium enterprises

half-yearly return is needed to be submitted to the Ministry of Corporate Affairs on a compulsory basis, by all those specified corporations who receive the supply of goods/ services from Micro or small businesses and the payment made to these micro as well as small enterprise suppliers had exceeded 45 days from the date of acceptance (or deemed acceptance) of the related goods or services.

In the MSME Form 1, some of the important details must be stated which includes:

  • The amount of payment due
  • The reasons for the delay

According to Section 405 of the Companies Act, 2013, the Central Government had made it essential for all the “Specified Companies” towards furnishing the above-notified information relating to the payment to micro and small enterprise suppliers.

Due Date for filling MSME 1 Form:

MSME Form 1 Due Date (Initial Return):

The government had declared the MSME form 1 due date will be till 30th May 2019 for each and every eligible enterprise. The department had earlier stated that the due date for businesses towards filing the form would be 30 days from when it is uploaded on the official website.

MSME Form 1 Due Date (Half Yearly Return):

MSME I Form (half-yearly return) had to be filed within 30 days from the end of each half-year regarding outstanding payments towards Micro or Small Enterprise, that is, 30th April 2020 (for October 2019 to March 2020) and 31st October 2020 (for April 2020 to September 2020).

MSME Form 1 applicability on Companies:

According to a notification issued by the MCA it has been directed to file disclosures through MSME 1 Form for each type of the Company – Public or Private Company, Micro or Small Companies. The Corporation must satisfy the following two conditions:

Condition 1: the corporation must have received Goods and/or Services from Micro or Small Enterprise

Condition 2: Payment should have been due/not paid, towards such Micro and Small Enterprise for 45 days from the date of acceptance

Note: The date of estimated delivery refers to the acceptance of goods and services by the buyer in writing with no objection to the goods or services received within the 15 days’ time period.

Documents Required for MSME FORM 1:

1. Aadhaar card of the individual

2. Pan Card of the individual in case of proprietor Or Corporation/firm Pan Card in Case of Corporation/firm

3. Bank Account Details

4. Office Address as well as Plant Locations

5. AOA and MOA

6. Bills of the equipment as well as the machinery.

How to File MSME 1 Form :

1. Once the applicant has downloaded the form from the MCA portal, the applicant must open the form and select whether the filing is being completed for initial return or for regular half-yearly return.

2. Once the applicant selects the purpose of the form, you are required to enter the CIN of the Company and click on the prefill button.

3. Once the applicant clicked on the pre-fill button, the system would automatically display the name, address of the registered office, as well as email ID of the Corporation. However, the applicant could edit the e-mail ID of the Corporation and enter a revised one.

4. The applicant then must enter the total outstanding sums due as on the date of notification of the said order i.e. 22nd January 2019.

5. After entering the outstanding sum, the applicant must enter the number of entries, that is a number of suppliers whose sum is due which includes additional details for example name, PAN, sum due towards the supplier, a fiscal year from and to which such amount relates.

6. It is compulsory to mention the reason for the delay in making the payments which are due to the supplier.

7. There are no compulsory attachments required for filing the MSME 1 Form. However, the applicant can attach any proof of sum due to such supplier for example invoice or cash memo supporting the information that is filed in the form in order to avoid any kind of discrepancy.

8. The applicant must enter the designation (Director, Manager, Company Secretary, CEO, and CFO) of the individual digitally signing the form and enter DIN/PAN.

9. Then you are required to click on Check Form. Affix digital signature and then click on pre-scrutiny.

10. When the MSME 1 Form is pre-scrutinized, the applicant must file the same on the MCA portal.

Penalty for Non-Compliance of MSME 1 Form:

Any enterprise defaulting under these provisions shall be forced to pay a fine of up to Rs. 25,000; while the defaults of a Director, CFO, or CS of a company shall qualify for an imprisonment term of up to 6 months or a penalty ranging from Rs. 25,000 to Rs. 3,00,000.

FAQ’s

1. What details are required to be furnished by companies in the MSME-1 Form?

– Companies are required to furnish the following details through the MSME-1 Form:

  • The amount of payment due
  • The reasons for the delay
  • Name of the Supplier
  • PAN details of the supplier
  • Date from which amount is due

2. What do you mean by a Specified Company under MSME Form-1?

– A specified Company under MSME Form-1 includes a Public or Private company who:

  • Receives goods or services from Micro or Small Enterprises (MSME)
  • The payment for such services is due to the enterprise exceeding 45 days

3. Can MSME Form I be filed with ‘Zero’ outstanding amount?

– No, you cannot file MSME Form I with zero or NIL outstanding amount.

4. What is the statutory fee for the filing of MSME Form I?

– No Fee is required

5. Any additional fee (late fee) is required to be paid for delay in filing of MSME Form?

–    No Fee is required

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