MCA FORM MSME-I ELIGIBILITY AND CRITERIA

COMPANIES NEED TO FILE RETURN FOR DELAYED PAYMENT TO M.S.M.E.

INTRODUCTION:

Small and Medium Enterprises (SMEs) are the backbone of a nation's economy. Like any other major economy, India too enjoys its fair share of SMEs which constitute bulk of the industrial base, also contributing significantly to the exports and GDP. SME segment has been a key engine of growth, employment, wealth distribution and effective mobilization of resources (both capital and skills) in India.

The Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006 provided for facilitating the promotion and development and enhancing the competitiveness of MSMEs (commonly referred to as SMEs) and for the related matters. A big leap for SMEs was witnessed in 2010, with "The Prime Minister's Task Force" recommending setting up of dedicated stock exchange/ platform for SMEs. SEBI, through its circular dated May 18, 2010, laid down framework for setting up a stock exchange/ trading platform dedicated to SMEs.

CLASSIFICATION:

As per Section 7 of MSMED Act, 2006 Classification of enterprises:

S. No.	Enterprises	Rendering Services	Manufacturer
1.	Micro Enterprise	Investment in equipment does not exceed Rs. 10,00,000/- (Rupees Ten Lakh)	Investment in plant and machinery does not exceed Rs. 25,00,000/- (Rupees Twenty Five Lakh Rupees)
2.	Small Enterprise	Investment in equipment is more than Rs. 10,00,000/- (Rupees Ten Lakh) but does not exceed Rs. 2,00,00,000/- (Rupees Two Crore Rupees)	Investment in plant and machinery is more than Rs. 25,00,000/- (Rupees Twenty-Five Lakh) but does not exceed Rs. 5,00,00,000/- (Rupees Five Crore Rupees)
3.	Medium Enterprise	Investment in equipment is more than Rs. 2,00,00,000/- (Rupees Two Crore Rupees) but does not exceed Rs. 5,00,00,000/- (Rupees Five Crore Rupees)	Investment in plant and machinery is more than Rs. 5,00,00,000/- (Rupees Five Crore Rupees) but does not exceed Rs. 10,00,00,000/- (Rupees Ten crore)

MCA NOTIFICATION:

Companies (Furnishing of information about payment to microand small enterprise suppliers) Order, 2019

The Central Government under section 9 of Micro, Small and Medium Enterprises Development Act, 2006 (MSMEDA-2006) empowers to issue notification, programmers, guidelines and instructions for the promotion and development of the competitiveness of micro, small and medium enterprises.

Using the powers mentioned under section 9 of MSMEDA-2006 the ministry of micro, small and medium enterprise issued the notification S.O. 5622(E) dated 2nd November 2018, wherein all the companies dealing with such enterprises were required to fill return to Ministry of Corporate Affairs stating the following details:

1.       The Amount payments due; and

2.       The reason of the delay.

Here’s all that you need to know

Q.1 What is MSME FORM I return?

Ans. MSME Form I is the half yearly return to be filled by every specified company with the Registrar of companies. This return contains detail of all the outstanding payments to the micro and small for the goods and services supplied by them. All the payments which is due from more than 45 days needs to be reported under this return.

Q.2 Details to be covered under MSME form I?

Ans. Apart the basis details required of reporting entity, form MSME – I also required details related to:

(a) the total amount of payment due; and

(b) the reasons for the delay;

The above-mentioned detail is required to be provided in below tabular format.

Financial Year/Particulars	Name of suppliers	PAN of suppliers	Amount Due	Specify the date from  which amount is due

Q.3 Due dates of MSME FORM I?

Ans. As per the specified companies (Furnishing of information about payment to micro and small enterprises supplier) order, 2019 following are the due dates for MSME Form I

1.   Initial return – with 30 days of publication of notification (i.e. 21st Feb 2019)

2.   Half Yearly Return

•      Half yearly for the period April to September – 31st October
•      Half yearly for the period October to March – 30th April

Q.4 Who is specified company for MSME FORM I?
Ans. All the companies will have to file MSME – 1 if following conditions are satisfied.

1.   Who get supplies of goods or services from Micro and Small Enterprises and

2.   Whose payments to Micro and Small Enterprises Suppliers exceed 45 days from the date of acceptance or the date of deemed acceptance of the goods or services.

Such companies will be called as specified companies.

Q.5 How to calculate 45 days for outstanding?
Ans. As per Explanation given under Sec 2(b) of The Micro, Small and Medium Enterprises Development Act, 2006,the day of acceptance or the day of deemed acceptance has been explained as below.

THE DAY OF ACCEPTANCE means, –

(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 acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day on which such objection is removed by the supplier;

THE DAY OF DEEMED ACCEPTANCE means

where no objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day of the actual delivery of goods or the rendering of services;

Q.6 Penalties for non filing of MSME-I Form?
Ans. As per section 405(4) if the companies fail to comply with as order or knowing furnishes or statistics which is incorrect or incomplete in any material respect, the company will be punishable as given in below table.

In other words, non-filing of MSME –I form or giving incorrect or incomplete form in any material aspect, following penalties may be levied for MSME-I Form

Particulars	Penalty
on defaulting company	Extended up to Rs. 25000/-
Every officer who is in default	Minimum fine Rs. 25000/- which may extend to Rs. 300000/- or Imprisonment which may extended to 6 months. or both

DISCLAIMER: The information given in this document has been made on the basis of the provisions stated in the Notification. It is based on the analysis and interpretation of applicable laws as on date. Under no circumstances whatsoever, the blogger shall be responsible for any loss, claim, liability, damage(s) resulting from the use, omission or inability to use the information provided in the document. 

CS Diwakar Agrawal

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