Form MSME-1: Purpose, Filing, Reporting, and Due Date

 The Indian government has implemented various initiatives to support Micro, Small, and Medium Enterprises (MSMEs), one of which includes ensuring timely payments to these businesses. According to a 2023 report by the Ministry of Corporate Affairs (MCA), payments worth over Rs. 10,000 crore to MSMEs were delayed beyond the government-mandated 45-day credit period.

To address this issue, the MCA introduced Form MSME-1. This form mandates that companies report any outstanding payments to MSMEs that exceed the 45-day limit. Companies are required to file details of these outstanding payments with the Registrar of Companies (ROC), ensuring that the delays are tracked and appropriate measures are taken to expedite payments to MSME suppliers.

What is Form MSME-1?

Form MSME-1 is a mandatory filing required by certain companies to report any outstanding payments to MSME suppliers that have been due for more than 45 days. Companies must identify if their suppliers are registered under the MSME Development Act, 2006, and if there are outstanding dues to these registered suppliers, they must file Form MSME-1 with the Registrar of Companies (ROC).

Provisions under the MSME Development Act, 2006

The MSME Development Act, 2006 (MSMED) strengthens the provisions to ensure timely payments to MSMEs. According to Section 15 of the Act, if a supplier and buyer have an agreed-upon payment date, the buyer must make the payment on or before that date. If no specific date is agreed, the buyer must make the payment within 15 days from the date of acceptance of goods or services. Moreover, the period of credit granted should not exceed 45 days from the date of acceptance or deemed acceptance.

Click here to know more about New MSME 45 Days Payment Rule

Filing Requirements for Form MSME-1

Companies are required to file Form MSME-1 only if they have outstanding payments to MSME suppliers that are more than 45 days overdue. If no such payments are due, companies are not required to file a ‘Nil MSME-1 Return’.

Also Read:  MSME Payment Terms

Who Should File Form MSME-1?

Form MSME-1 must be filed by specified companies that meet the following criteria:

• Companies that have obtained goods or services from MSMEs: The company must have received goods or services from MSME suppliers.
• Companies with payments overdue for more than 45 days: If the company’s payments to the MSME supplier exceed 45 days from the date of acceptance or deemed acceptance of the goods or services, they must file Form MSME-1. 

Additionally, companies must provide the reason for the delay in payment when filing the form. This ensures transparency and accountability in addressing delayed payments to MSME suppliers.

Purpose of Filing Form MSME-1 

The purpose of filing Form MSME-1 is to ensure transparency and accountability in the payments made by companies to MSME suppliers. Every company that has received goods or services from an MSME supplier and has outstanding payments for more than 45 days is required to disclose this information to the Registrar of Companies (ROC). The key objectives of Form MSME-1 include:

• Tracking Outstanding Dues: To monitor and identify companies that have outstanding payments due to MSMEs, ensuring that overdue payments are reported.
• Monitoring MSME Suppliers: To track MSME suppliers who are awaiting payments, providing a clear record of pending dues.
• Ensuring Timely Payments: By disclosing delayed payments, the form helps promote timely payment practices and accountability among companies.
• Preventing Financial Loss to MSMEs: Filing the form helps prevent financial strain on small businesses caused by delayed payments, ensuring that MSMEs receive the funds they are owed without unnecessary delays.

Details to be Reported in Form MSME-1

When filing Form MSME-1, companies are required to provide the following details:

• CIN and PAN of the company: The Corporate Identification Number (CIN) and Permanent Account Number (PAN) of the company filing the form.
• Company Information: The name, address, and email of the company.
• Supplier Information: The name and PAN of the MSME supplier to whom the payment is owed.
• Outstanding Payment: The total amount due for the supply of goods or services that remains unpaid.
• Due Date: The date from which the payment has been overdue.
• Reason for Delay: An explanation of the reason for the delay in payment to the MSME supplier.

Due Date for Filing Form MSME-1

Form MSME-1 is a half-yearly return that must be filed by specified companies with the Ministry of Corporate Affairs (MCA). The due dates for filing Form MSME-1 are as follows:

Companies must ensure they file Form MSME-1 on time to remain compliant with regulatory requirements and avoid penalties.

How to File MSME Form-1?

To file Form MSME-1, follow this step-by-step process:

• Login to the MCA Portal: Access the Ministry of Corporate Affairs (MCA) portal using your credentials.
• Navigate to e-Forms: In the portal, go to the e-Forms section and select MSME Form-1 from the list of available forms.
• Enter CIN and PAN: Fill in the Corporate Identification Number (CIN) and Permanent Account Number (PAN) of the company filing the form.
• Enter Basic Company Details: Provide the basic information of the company, including the name, address, and email.
• Provide Outstanding Dues Information: Enter the details of initial returns of outstanding dues to MSME suppliers and any regular returns of outstanding dues. This includes the amount, due dates, and other relevant details. 
• Enter Reason for Payment Delay: Specify the reason for the delay in payment to the MSME supplier(s). This could include financial constraints, disputes, or any other valid reason.
• Attach Documents and Declaration: Attach any supporting documents and complete the declaration confirming the accuracy of the provided information.
• Digitally Sign and Submit: After reviewing the form, digitally sign it and submit the form through the MCA portal.

Once submitted, the form will be processed by the ROC, and the company will be compliant with the MSME reporting requirements.

Non-Compliance of Filing Form MSME-1

Failure to file Form MSME-1 by the specified companies will result in penalties under Section 405(4) of the Companies Act, 2013. According to this section:

If a company does not file Form MSME-1 on time, the company and every officer in default will be subject to a penalty of Rs. 20,000.

In the case of continuing non-compliance, an additional penalty of Rs. 1,000 per day will be levied for each day the failure continues, with a maximum penalty of Rs. 3 lakh.

It is crucial for companies to file Form MSME-1 on time to avoid these penalties and ensure compliance with the regulatory requirements.

Conclusion

Filing Form MSME-1 is essential for companies that have delayed payments to MSME suppliers. It helps track overdue payments and ensures that small businesses are paid on time. By submitting the form on time, companies can avoid penalties and stay compliant with the law. Timely filing of Form MSME-1 supports the financial health of MSMEs and promotes a fair and transparent business environment.

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