MSME Form-1 of MCA: Applicability, Due Date, Fees and Penalty

Credit risk and delay in payments are a common struggle in business, especially for Micro Small and Medium Enterprises (MSMEs). Therefore, the Ministry of Corporate Affairs (MCA) has released MSME Form-1 where instances of delays in payment beyond a specified period shall be reported to the ROC. 

What is MSME Form-1 and when it should be filed? Let’s find out!

MSME Form-1 of MCA - Applicability

MSME Form-1 provides information regarding outstanding payments as well as delays in payment to any MSME enterprise for a period exceeding 45 days. This form deals with the default by companies for payments to the MSME vendors. It becomes applicable if a company has MSME registered vendors and the payment to such vendor is outstanding for more than 45 days. If the above conditions are satisfied, then the company shall file MSME Form-1 regardless of the type of company. 

Why Was MSME Form-1 Introduced?

Section 15 of the MSME Development Act, 2006 states that where the suppliers provide any goods or services to the buyer, the buyer shall make the payment to the supplier within the period agreed by them. In case, no period is agreed upon between them, then the payment shall be made within the appointed date. The appointed date shall be 15 days from the date of acceptance of goods and services. 

Further, the period of credit shall not exceed 45 days from the date of acceptance or deemed acceptance of the goods or services. In a bid to ensure compliance with this provision, the MCA released MSME Form-1 in order to ensure that the payments made after 45 days or still outstanding beyond 45 days are reported to the MCA. Further, as stated earlier, only the companies falling in the above category shall file MSME Form-1. There is no concept of Nil filing of this form.

Disclosures in MSME Form-1 of MCA

Following are the disclosures required in MSME Form-1:

• CIN and PAN of the company
• Name, email and address of the company
• Total Outstanding Amount: Companies need to mention the total outstanding amount that is due to the MSME vendor. It includes both payments made after 45 days and the amount still payable after the expiry of 45 days at the end of the half year.
• Financial year
• Name of the supplier
• PAN of the supplier
• Date from which the amount is due to be paid to the MSME vendor.
• Reason for delay in payment: Here, the companies shall mention the actual reason for the delay in payments to the MSME vendor. Such reasons can include the following:
• Invoice not received on time
• Issues with the goods or services received or any dispute therein
• Technical issues from the bank’s end etc.

What is the Time Limit for Filing MSME Form-1?

MSME Form-1 shall be filed on half yearly basis with the ROC. Therefore, following is the due date for MSME Form-1:

• April to September: On or before 31st October 
• October to March: On or before 30th March

If the company does not have any MSME vendor or if no payment was outstanding beyond 45 days, then the company is not required to file MSME Form-1.

Fees for Filing MSME Form-1 of MCA

There are no fees for filing MSME Form-1. Further, even if there is a delay in filing MSME Form-1, then no additional fees shall be leviable in such cases.

Non-Compliance with MSME Form-1 of MCA

In case the company fails to file MSME Form-1, then it shall be liable for a penalty under Section 405(4) of the Companies Act, 2013. As per Section 405(4), the company and every company that is in default shall be liable to a penalty of Rs. 20,000 and in case of continuing failure, a further penalty of Rs. 1000 per day after the first day during which such failure continues, subject to a maximum of Rs. 3,00,000.

How to Calculate the Period of 45 Days?

The company shall make payment to the MSME vendor within 45 days after the acceptance of goods and services. You can also analyse the acceptance of goods and services from the date of invoice.

Following were the explicit provisions for MSME Form-1 of MCA. In case of any assistance, feel free to contact the ASC Group.
 

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Shivan Mathur

From Last few days I want to know about Applicability of Msme form 1. After read your blog my all doubts are clear. Thanks for sharing this useful information with us..

ASC Group

Thanks, You can contact with our experts team

Shivam

Thanks for sharing this information on msme form 1. Your website is the best place for financial news.

ASC Group

Thank u so much..