MSME FILINGS
Micro, Small and Medium Enterprises (MSME) plays a vital role in economy by contributing in industrial development, employment generation and inclusive growth.
MSMEs are significantly contributing in GDP, Exports and Innovation.
An enterprise is classified as Micro, Small and Medium on the basis of investment in plant and machinery and annual turnover:
| Enterprise | Investment in plant and machinery | Annual turnover |
| Micro Enterprise | Upto₹2.5 crore | Upto₹10 crore |
| Small Enterprise | Upto₹25 crore | ≤ ₹100 crore |
| Medium Enterprise | Upto₹125 crore | Upto₹500 crore |
FORM MSME 1
This form was introduced by the Ministry of Corporate Affairs under Section 405 of the Companies Act, 2013, to protect Micro and Small Enterprises (not medium) from delayed payments.
It is a half-yearly compliance requirement to monitor and ensure timely payments to Micro and Small Enterprises.
As per the MCA notification issued in 2019, Companies having outstanding dues of more than 45 days against registered MSME suppliers are mandatorily required to file this form.
Its purpose is to report outstanding payments to MSME vendors that have remained unpaid for more than 45 days from the date of acceptance of goods or services.
APPLICABILITY TO FILE MSME FORM 1
Any company whether private or public irrespective of size, nature and business is required to file FORM MSME 1 if it satisfies the following conditions:
1.The company has received goods or services from suppliers/ vendor who are registered as Micro or Small Enterprises (MSEs) under the MSMED Act, 2006; and
2.The payment is outstanding for more than 45 days from the date of acceptance of goods or services.
3.The payment made after 45 days from the date of acceptance of goods or services during the half year.
NOT REQUIRED TO FILE MSME FORM 1
- Medium Enterprises are not covered under this reporting requirement, only Micro and Small enterprises.
| Scenario | MSME Form Required ? |
| Payment was made after 45 days, but before 31st March / 30th Sept | Yes |
| Payment is still outstanding as on 31st March / 30th Sept and delay > 45 days | Yes |
| Payment made within 45 days (irrespective of date) | No |
TIMELINES
Every company who is under obligation to file this form, shall file MSME-1 with ROC every half year.
| S.R. | MONTH | DUE DATE |
| 1. | April to September | 31st October |
| 2. | October to March | 30th April |
DETAILS REQUIRED
- CIN and PAN of the company
- Name, address and e-mail of the company
- Name and PAN of the suppliers
- Outstanding amount due against the supply of goods or services
- Date from which the amount is due
- Reason for delay in payment of the amount due.
Benefits of MSME Form 1
- Timely Payments
Specified companies have to report their outstanding dues to MSME suppliers. It encourage payment within 45 days. - Vendor Relationship Management
It helps avoid dispute between with MSME suppliers and build trust with them . - Creditworthiness
Investors prefer those companies which have clean compliance track record and have no dues to MSMEs - Protection from legal action
Filing MSME-1 reduces risk of litigation and ensure proper disclosures .
CONSEQUENCES OF NON FILING
In case company fails to file MSME Form 1, it may subject to the following penalties under section 405(4) of the companies Act,2013:
- Penalty of ₹20,000 for company and officer in default
- ₹1000 per day for continued failure
- Subject to maximum penalty of ₹3,00,000
Conclusion
MSME Form-1 is a crucial compliance requirement under the provisions of the Companies Act, 2013. Companies must identify its accurate outstanding dues and strictly follow the timelines.
Therefore, maintaining proper records, payment and timely filing of MSME Form-1 is essential for good corporate governance.
