Compliances

MSME Form 1: Mandatory Compliance for Specified Companies

MSME Form 1 is a mandatory compliance for specified companies. Specified Companies are types of companies as defined in Section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 {MSMED Act}. These Specified Companies need to fill the MSME Form 1 on a half-yearly basis to the Ministry of Corporate Affairs {MCA}.

What are Specified Companies?

Specified companies are companies that get their supplies in the form of goods or services from the Micro and Small Enterprises. Also, companies whose payments to the Micro and Small Enterprise suppliers ages more than 45 days from the date of acceptance/date of deemed acceptance of the services or goods as per the regulations of Section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 {MSMED Act^[1]}.

About MSME Form 1

MSME Form 1 is the form for furnishing half yearly return with the registrar concerning the outstanding payments to the Micro and Small Enterprises. Every specified company are required to submit a half-yearly return to the Ministry of Corporate Affairs {MCA} containing the following information;

• The amounts of the due payments and,
• The reason for the delay in payment

This form was issued under Section 405 of the Companies Act, 2013.

MSME Form 1 with Instruction Manual

MSME Form 1 issued as per Section 405 of the Companies Act, 2013 is given below;

What are the Responsibilities of the Specified Companies?

First, the Specified companies need to identify whether their suppliers are registered under the MSME Act or not. If they are, then they need to check if there are any payments due from their end for a period which exceeds 45 days from the date of the acceptance of the services or goods by such company. In that case, the company would need to either close the due payments or file a return of the particulars of the liability stating the reason for the delay in the MSME Form 1. The specifics of the liability should include the following;

• The total amount of the due payment on 22^nd January 2019
• The name of the supplier enterprise
• PAN Card of the supplier enterprise
• The date on which the liability started

Small and Micro Enterprises

Micro and Small Enterprises are classes or types of enterprises. The names Hindu Undivided family {HUF}, Association of persons {AOP}, Co-operative society, partnership firm, etc. is associated with such companies or undertakings.  

• Small Enterprises: Manufacturing units that have made a minimum investment of Rs. 25 lakhs or below is classified as a Small Enterprise. Also, such units need to invest the amount of 10 lakhs or below in equipment to receive this classification.
• Micro Enterprises: Manufacturing units that have made an investment in Plant and Machinery exceeding Rs. 25 lakhs but less than five crores will be considered a Micro Enterprise. Also, if such units invest more than Rs. 10 lakh but less than Rs. 2 crores in equipment, then it will receive this classification.

MSME Form 1 due date

Every specified company needs to file in the MSME Form 1 stating the outstanding dues to the Micro or Small enterprise suppliers within thirty days from the date of publication of the notification specifying the order to perform the same action by the specified companies.

Every specified company will need to file the half-yearly return on 31^st October for the period of the half-year April to September and on 30^th April next year for the period of the next half year from October to March.

Extension of Due Date

In a circular dated 21^st February 2019 the Ministry of Corporate Affairs said that the date for filing the MSME Form 1 will be reckoned from the time now the form is deployed on the MCA 21 Portal.

Typically, the due dates for the filing of the MSME Form 1 were as follows;

Sr. No.	Half-Year Period Of Non-Remittance Of Form	Due Date Of Filing The Return
1	April to September	31st October
2	October to March	30th April

InitialReturnInMSMEForm_21022019

Penalty for not Complying with these Standards

The penalty for the non-compliance of these rules is as follows;

• The defaulter company will be levied with a fine of Rs. 25000
• The officer in default of the company would be liable for imprisonment term of up to six months or with a fine from Rs. 25,000 to Rs. 3, 00,000

To Conclude

The Ministry of Corporate Affairs {MCA} has made is mandatory for micro and small enterprises to file returns stating their due payments to the MSEs along with the reason for the delay in the MSME Form 1. Such specified companies need to file this return at a half-yearly basis.

Previously the due date for filing this return was 31^st October for the period from April to September and 30^th April for the period from October to March. This is now reckoned by the government.