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Guide on ROC Form MSME -1 : Filling Objective, Timeline Date & Penalty
ROC Filing of Form MSME-1 is a statutory requirement under the Companies Act, 2013, & the Specified Companies (Furnishing of Information about payment to Micro and Small Enterprise Suppliers) Order, 2019. MSME Form 1, as mandated by the Ministry of Corporate Affairs (MCA) in India, serves the purpose of tracking and reporting outstanding payments to Micro or Small Enterprises (MSMEs).
ROC Form MSME- 1 : This requirement applies to all companies that receive supplies of goods or services from micro and small enterprises (MSMEs), and whose payments to MSME suppliers exceed forty-five days from the date of acceptance or deemed acceptance of the goods or services.
Purpose of Form MSME- 1 : The primary objective of MSME Form 1 is to provide information on outstanding payments to MSMEs by specified companies. Specified companies include both public and private companies, irrespective of their size, which receive goods or services from MSMEs and delay payment beyond 45 days from the date of acceptance of those goods or services.
Filing Requirement of Form MSME- 1 : As per Section 405(1) of the Companies Act, 2013, and the Specified Companies Order, 2019, every company is mandated to file a return using MSME Form I.
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Due Dates of Form MSME- 1: There are two key due dates associated with MSME Form 1:
Initial Return: The initial return was due by 30th May 2020 for all eligible companies.
Half-Yearly Return: For subsequent periods, companies must file the form by the last day of the month following the end of each half-year. According to para 3 of the section 405(1) of the Companies Act, 2013, Specified Companies (Furnishing of Information about payment to Micro and Small Enterprise Suppliers) Order, 2019and each company must file a return using MSME Form I, The filing deadlines are set as follows:
- For the period from April to September, the filing deadline is 31st October.
- For the period from October to March, the filing deadline is 30th April.
For instance, for the period from April 2024 to September 2024, the due date is 31st October 2024. For the period from October 2024 to March 2025, the due date is 30th April 2025.
Reporting Period of Form MSME- 1: The form needs to be submitted on a half-yearly basis. It captures information on outstanding payments to MSMEs for a period exceeding 45 days during each half-year.
Documents Required for ROC Form MSME- 1
The form should include details such as the amount of payment due to MSMEs & reasons for any delays in payment. Ensuring the accuracy and completeness of these documents is crucial for timely & accurate filing of MSME returns, thereby fulfilling regulatory requirements and supporting MSMEs in the business ecosystem. For filing MSME returns, different documents are required for the initial return and regular half-yearly return.
Documents Required for Initial Return:
- Supplier’s PAN: PAN (Permanent Account Number) of the MSME supplier from whom goods or services are procured.
- Sum of the Amount Due: Total outstanding amount due to the MSME supplier.
- Supplier’s Name: Name of the MSME supplier from whom goods or services are procured.
- Reasons for Payment Delay: Explanation for any delay in payment to the MSME supplier.
- Amount Due Date: Date by which the payment to the MSME supplier is due.
- Financial Year From/To: Mention the financial year for which the return is being filed.
- Date From Which Amount is Due: Start date from which the amount is due to the MSME supplier.
- Digital Signature Certificate (DSC): DSC for authentication purposes.
Documents Required for Regular Half-Yearly Return:
- Period to Which the File Belongs: Mention the specific period for which the return is being filed (e.g., April to September or October to March).
- Company’s PAN: PAN of the company filing the return.
- Company’s Email Address: Email address of the company for communication purposes.
- Sum of Due Outstanding for a Specific Period: Total outstanding amount due to MSME suppliers for the specified half-yearly period.
- Information Regarding Supplier’s Name and the Sum of the Amount Due: Details of MSME suppliers, including their names and the amounts due.
- Reasons for Delay in Payment: Explanation for any delays in payment to MSME suppliers during the specified period.
- Attachments (If Any): Include any relevant attachments or supporting documents as required.
Legal Basis of MSME returns,: The requirement to furnish information through MSME Form 1 stems from Section 405 of the Companies Act, 2013, which was introduced by the Central Government to protect the interests of MSMEs.
What is Consequence of Delayed Payments to MSME Vendors:
- Section 16 of the MSME Act covers the consequences of paying MSME suppliers after the due date. According to this section, the buyer will be liable to pay interest to the MSME at a rate equal to three times the bank rate announced by the RBI if the buyer does not pay the MSME within 45 days of the acceptance or deemed acceptance of goods or services (assuming a due date is agreed upon in writing between the buyer and the supplier).
- The Reserve Bank of India may modify the interest rate, and the MSME Samadhaan portal may adjust the interest rate in accordance with that notification. Every month, the interest should compound.
Penalties for Non-compliance: Failure to comply with Section 405(1) attracts penalties as per Section 405(4) of the Companies Act, 2013. The penalties are:
- A penalty of Rs. 20,000 for the company.
- A penalty of Rs. 20,000 for every officer in default.
- In case of continuing failure, an additional penalty of Rs. 1,000 per day may be imposed, up to a maximum of Rs. 300,000.
Recent case ROC Imposes Rs. 16.9 Lakhs Penalty on Company & MD for Non-filing of e-form MSME-1 and Non-reporting of MSME Dues
Reporting by Statutory Auditor: The statutory auditor of the company is required to include a report in the financial statements regarding the delay in payment to MSME vendors. This report should also cover provisions made for loans related to MSMEs.
Conclusion
Overall, Form MSME-1 serves as a regulatory tool to ensure timely payments to MSMEs, thereby supporting their financial health and fostering a conducive environment for their growth. Compliance with these requirements is essential to avoid penalties and ensure transparency in dealings with MSMEs, thereby supporting their financial stability and growth. Following basic information required fiorm MSME form 1
- Name, Email & Address of the Company
- PAN & CIN of the Company
- Date from Which the Amount is Due
- Name & PAN of the Suppliers
- Outstanding Amount Due
- Reason for Delay in Payment
It's crucial to ensure compliance with Roc MSME Form-1 filing requirements to avoid legal consequences and protect the interests of both companies and MSMEs. Providing accurate information is essential to prevent any potential fines or penalties.
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