Form MSME-1- All you need to know about Form MSME-1.

Form MSME-1- All you need to know about form MSME-1.

Which companies are obliged to file form MSME-1?

All companies, who get supplies of goods or services from MSME (Micro, small and medium enterprises) and whose payments to MSME suppliers exceed 45 five 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 Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006).

Under which provision form MSME-1 is required to be filed.

Form MSME 1 is required to be filed pursuant to the Order dated 22 January 2019 issued under Section 405 of the Companies Act, 2013.

What is the purpose of introducing form MSME-1 by the MCA?

  • MSME Form 1 is intended to help Micro, Small, and Enterprises as well as Small Scale Industries.
  • The form was formed as a result of numerous companies buying goods or taking services but failing to pay for them or paying late, causing them to lose money.
  • The MSME Form 1 on the other hand, required such companies to disclose the amount due to them and the reason for making the payment after 45 days of receiving any goods or services.

What is the frequency of filing form MSME-1?

The form MSME-1 is required to be filed by the companies half-yearly to the MCA (Ministry of Corporate Affairs).

What are the due dates of filing form MSME?

For April- September period – 31st October

For October – March period – 30th April

What are the details to be filed in Form MSME-1?

In the case of Regular half yearly return:

  • Period for which it is being filed for
  • PAN of the Company
  • E-mail Id of the Company
  • Total outstanding amount due for the particular period
  • Details of the name of suppliers and amount of payments due (number of entries to be specified subject to maximum 99 rows)
  • Reasons for delay in the number of payments due (para)

For each supplier, the following details are to be furnished

  • FY from to FY
  • Name of the Supplier
  • PAN of the Supplier
  • Amount due
  • Specify the date from which the amount is due.

Who is authorized to digitally sign the form MSME-1?

The e-form MSME FORM 1 has to be digitally signed by the following authorized persons of the company:-

  • Director or
  • Manager or
  • Company Secretary or
  • CEO or
  • CFO

Do need to file MSME-1 if there is no payment after 45 days to MSME?

No, the company is required to file form MSME-1 only when payment in respect of goods/services has been made to MSME’s after 45 days of acceptance of goods/service.

Some MSME Development Act 2013 Provisions

Section 15:  Where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day:

Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed 45 days from the day of acceptance or the day of deemed acceptance.

Section 16: Where any buyer fails to make payment of the amount to the supplier, as required under section 15, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay compound interest with monthly rests to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at three times of the bank rate notified by the Reserve Bank.

Penalty for non-filing of form MSME-1:

Companies who fail to comply with Section 405 (1) and (3) of the Companies Act, 2013 are liable for a penalty as mentioned under Section 405 (4) of this Act as follows: –

  • The company and every officer of the company who is in default: Penalty of Rs 20000
  • And in case of continuing failure, with a further penalty of Rs. 1000 for each day after the first during which such failure continues, subject to a maximum of three lakh rupees.

Other important points:

(i) Company is required to give the following additional information in its financial statement:

  • the principal amount and the interest due thereon
  • the amount of interest paid by the buyer in terms of section 16
  • the amount of interest due and payable for the period of delay in making payment
  • the amount of interest accrued and remaining unpaid at the end of each accounting year
  • the amount of further interest remaining due and payable even in the succeeding years

(ii) Section 23 of MSME Development Act 2006 –Interest not to be allowed as a deduction from income:Notwithstanding anything contained in the Income-tax Act, the amount of interest payable or paid by any buyer, under or in accordance with the provisions of MSME Development Act 2006, shall not be allowed as a deduction for the purposes of computation of income under the Income-tax Act, 1961.


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