The Criterion for filing MSME I form (MCA) by those specified companies whose outstanding payment to MSMEs suppliers is exceeding 45 days, is being discussed below:
- Order Named: Specified Companies (Detailed information regarding payment to micro and small enterprise suppliers) Order, 2019
- Date of Notification: In context to Order dated January 22, 2019, issued under Section 405 of the Companies Act, 2013
- Effective Date: From the Date of Publication in the Official Gazette
Note: File MSME Form 1 As Per the Applicability of the Provisions by Complaw Software
What is MSME Form 1 (MCA)?
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.
Major changes have been made by the Ministry of Corporate Affairs in the context of protecting the interest of the small group of companies or business. He laid emphasis on following compliance by all Specified Companies Whether Public or a Private Company, Micro or Small.
Recommended: Due Dates of Filing ROC Annual Return by Companies
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.
The following points should be stated in it:
- the amount of payment due and
- the reasons for the delay
Following the provision of section 405 of the Companies Act, 2013, (18 of 2013) the Central Government made it necessary for all the “Specified Companies” to furnish the above-notified information about the payment to micro and small enterprise suppliers.
MSME Form 1 Due Date (Initial Return)
The government has declared the MSME form 1 due date till 30th May 2019 for all eligible companies. The department earlier said that the due date for companies to file the form will be 30 days from when it is uploaded on the official website. Read the notification here.
MSME Form 1 Due Date (Half Yearly Return)
Form MSME I (half yearly return) has to be filed within 30 days from the end of each half year in respect of outstanding payments to Micro or Small Enterprise i.e. 31st October 2019 (April 2019 to September 2019) 30th April 2020 (for October 2019 to March 2020). Read the notification here.
Important Definitions:
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
Micro and Small Enterprise: The Micro and Small Enterprise mentioned above mean any class or classes of enterprises (including proprietorship, Hindu undivided family, partnership firm, company, undertaking, an association of persons or co-operative society), in which conditions applied are as per below:
| Manufacturing Sector | Conditions applied |
|---|---|
| Enterprises | Investment in plant & machinery |
| Micro Enterprises | Does not exceed twenty-five lakh rupees |
| Small Enterprises | More than twenty-five lakh rupees but does not exceed five crore rupees |
| Service Sector | Conditions applied |
| Enterprises | Investment in equipment |
| Micro Enterprises | Does not exceed ten lakh rupees: |
| Small Enterprises | More than ten lakh rupees but does not exceed two crore rupees |
Note: The Criteria specified above are specified bases Micro, Small and Medium Enterprises Development Act, 2006 and the bill to change the criteria of classification and to withdraw the MSMED (Amendment), 2015 is pending in the Lok Sabha.
The MSME Act, 2006 defines the Micro Small and Medium Enterprises.
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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.
Micro & Small Enterprise Category
In the Micro and Small Enterprise category there are entities which include Proprietorship, Hindu Undivided Family, Partnership Firm, Company, Undertaking, an Association of Persons or Co-Operative Society.
Applicability on Companies:
As per a notification issued by the MCA it has been mandated to file disclosures through Form MSME I for every type of the Company – 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
Note: Date of deemed delivery refers to the acceptance of goods and services by the buyer in written with no objection with the product or services received within the 15 days time period.
Late Filing Penalty for MSME Form 1
The section 405(4) which includes non-furnishing/incomplete/incorrect information penalty states a fine up to Rs.25000 (Co.,), Rs.25000/- (Min) & Rs.3 lacs (max) and imprisonment of 6 months for directors or both. Therefore it is mandatory for directors to file the MSME form 1.
Procedure for Filing MSME Form 1 (MCA)
The Initial one-time Return: The companies should file, the MSME Form I detailing 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.
Last date for filing Initial Return (One time return) in form MSME 1: Within 30 days from the date when E-form MSME-1 shall be deployed on the MCA Portal. Note: (as per the extended notification of MCA dated 21.02.2019). Read Notification
- All the Companies falling under the above-mentioned category, would require to file MSME Form I as a half-yearly return by October 31st, for the period from April to September and later by 30th April for the period from October to March and must furnish the below details in it:
1) the amount of payment due and
2) reasons for the delay
- Thus Concludingly, 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.
Read Also: Free Download ROC Return Filing Software for Companies
Step by Step Procedure to File MCA MSME Form 1
Below are the details of the form:
Step 1: Company details such as Corporate identity number, global location number, and the PAN
Step 2: Basic details of the company such as name, address, email id
Step 3: Details like initial returns of outstanding dues to the MSE suppliers
Step 4: Details of regular returns of outstanding dues to the MSE suppliers
Step 5: Details based on the reason for the delay in the payment amount
Step 6: Any particular attachment for the validation
Then there is a declaration by the company director along with a digital signature
Due Date for Filing MSME Form 1 (MCA):
1. Initially (One time)
- Every company is required to file MSME Form I within 30 days from the date of deployment of said E-form on the MCA portal (as extended by the MCA) furnishing the details of all the outstanding dues, to Micro or Small enterprises suppliers, existing on the date of notification of this order.
2. Thereafter The Half-yearly return
- Every company is required to file the MSME Form I as half yearly return by 31st October, effective for the period from April to September and once again by 30th April for the period October to March every year, relating to the outstanding payments to MSMEs.
Who should not file the form? (Exemption to this rule)
- This Rule applicable not for all the Companies but only for those Specified Companies whose payment to MSMEs suppliers exceed 45 days from the date of acceptance or deemed acceptance of the goods or services as per the provisions under section 9 of the MSME Development Act, 2006.
- If the payment against supplier exceeds 45 days but the supplier/Creditors gives a declaration that they do not fell under the category of Micro or small Enterprises.