MSME stands for Micro, Small, and Medium Enterprises. The Ministry of Corporate Affairs (MCA) on the 22nd of January 2019, notified that all the companies which are having payments outstanding to MSME Enterprises should file all the particulars of the current exceptional dues using Form MSME-1. And this filing shall be comprised of two parts, namely initial returns, which are made using form MSME-1, and the half-yearly returns, which are made using the Form MSME-2.
Aadhaar Card and PAN Card are the only documents required for MSME registration. MSME registration is entirely online, and no proof of documents is required. PAN and GST-linked details on investment and turnover of enterprises will be taken automatically by the Udyam Registration Portal from the Government databases. It applies only to Micro or small enterprises, not Medium-Sized Enterprises. If all payments due to micro or small enterprises are made before the 45th day, then the Form is not required to be filed.
MSME
Micro, Small, and Medium Enterprises refer to any class or classes of enterprises, whether proprietorship, Hindu Undivided Family (HUF), Association of Persons (AOP), co-operative society, partnership firm, company, or undertaking, or any other name assigned to it.
And if such enterprises are in the manufacturing or production of goods, then they shall satisfy the following conditions:
Micro Enterprises
Manufacturing enterprises, to be classified as micro, must have invested an amount of INR 25 Lakhs or less. On the other hand, enterprises of the service sector must have invested a sum of INR 10 Lakhs or lower in equipment to be eligible to receive such classification.
Small Enterprises
Manufacturing enterprises would be classified as small for this purpose if their investment in Plant and Machinery exceeds INR 25 Lakhs but is limited to INR 5 Crores. On the other hand, enterprises in the service sector would be classified as small if their investment in equipment exceeds INR 10 Lakhs but is limited to INR 2 Crores.
Companies are required to file Form MSME.
All specified enterprises are required to file with MSME, and this shall include all companies that receive goods or services from micro and small enterprises. This is explicitly for those companies that have not made the payment to the MSME for more than 45 days from the date of acceptance of goods or services. These companies shall be required to file half-yearly returns with the MCA, stating the particulars regarding the outstanding amounts to be paid for MSME registration, along with the proper reasons for such delays in making payments to the MSME.
Responsibilities held by the Specified Companies
Firstly, the company should verify whether any enterprises from which they have sourced goods or services are registered under the MSME Act. And if any of the enterprises are registered, and the payments to such enterprises have been delayed for a period of more than 45 days, the company should either pay off such dues or file a return with MCA in Form MSME stating the amount which is due, along with the proper reason for such delay. The particulars of liability shall specifically include the following:
– The total outstanding amount due to the supplier of goods and services
– Name of the supplier
– PAN of the supplier
– Date from which the liability is due
– Reason for the delay in payment of the amount due.
Procedure for Filing
- Firstly, the company should identify the MSME-registered suppliers and request their registration certificates.
- And if any such suppliers are registered under the MSME Act and if the payments to them are due for more than 45 days from the date of acceptance of the goods and services, then details of such suppliers shall be furnished in Form MSME-1.
Meaning of ‘Day of Acceptance’
(a) The day of the actual delivery of goods or the rendering of services; or
(b) Where any objection is made in writing by the buyer regarding the acceptance of goods or services within 15 days from the day of the delivery of goods or the rendering of services, then the day on which the supplier removes such objection.
Day of Deemed Acceptance
This means the day of the actual delivery of goods or the rendering of services, where no objection is made in writing by the buyer regarding the acceptance of goods or services within 15 days from the day of the delivery of goods or the rendering of services.
Due Date for Filing of MSME Forms
– In the case of a half-year period of non-remittance for the period of April to September, the due date for filing of returns shall be 31st of October.
– In the case of a half-year period of non-remittance for the period of October to March, the due date for filing of returns shall be the 30th of April.
Penalty for Non-Compliance
Any company that commits a default pertaining to the filing of form MSME shall be levied with a fine of up to INR 25,000. Whereas the default committed by a Director, CFO, or CS would qualify for an imprisonment term of up to 6 months or a fine ranging between INR 25,000 and INR 3 Lakhs.
| Classification | Ceiling on Investment in Plant and Machinery (in INR) for enterprises engaged in the production, processing, or preservation of goods | Ceiling on Investment in equipment (in INR) for enterprises engaged in the service sector |
| Micro | Below 25 Lakhs | Below 10 Lakhs |
| Small | More than 25 Lakh but does not exceed 5 Crore | More than 10 Lakh but does not exceed 2 Crore |
