In January 2019, the Ministry of Corporate Affairs (MCA) introduced a notification mandating certain companies to disclose their outstanding dues to Micro, Small, and Medium Enterprises (MSMEs) by filing the MSME-1 Form with the Registrar of Companies (ROC).
Why should we file the Form MSME-1?
Companies must check if their suppliers are registered under the MSME Act, 2006. If so, and if there are outstanding dues beyond 45 days, the company is obligated to file Form MSME-1.
Purpose of Filing Form MSME-1
The MSME Development Act, 2006 emphasizes timely payments to MSMEs and imposes penalties for delayed payments. Companies must state reasons for payment delays in their accounts.
Details to be Reported
Companies must provide their CIN, PAN, name, address, and email. Additionally, they need to furnish details of the supplier’s name, PAN, outstanding amount, due date, and reasons for payment delay.
Due Dates for Filing Form MSME-1
The form is submitted semi-annually, with deadlines as follows:
- April 30: For October-March period
- October 31: For April-September period
Consequences of Non-Compliance
Failure to file the MSME-1 within the deadline incurs penalties under Section 405(4) of the Companies Act, 2013. Companies and defaulting officers face a fine of Rs. 20,000 initially, with additional daily penalties up to Rs.3 lakhs for prolonged non-compliance.
Navigating Compliance
The form serves as a vital tool in ensuring prompt payments to MSMEs, fostering a conducive environment for business growth. Adhering to filing deadlines and accurately reporting outstanding dues is imperative for companies to avoid penalties and uphold regulatory integrity.
Conclusion
This Form stands as a testament to regulatory efforts aimed at promoting fair and timely payments within the business ecosystem. By fulfilling their obligations and promptly disclosing outstanding dues, companies contribute to the sustenance and growth of MSMEs, fostering a mutually beneficial environment for all stakeholders involved.
Pitchers Global aims to provide expert financial services that will help your business navigate the MSME-1 Compliance and