MSME Form 1 – All that you need to know

What is the fuss around MSME Form 1?

MCA came with an order dated 22^nd Jan 2019 that:

Every Company which has received goods or services from Micro & Small Enterprise

AND

Payment is due/ not paid to such enterprise for 46 days from date of acceptance

Shall file in MSME Form 1

Note:

Only Micro and Small Enterprise Suppliers are considered. Medium Enterprise suppliers are not considered as per the notification.
The 45 days calculation starts from the date of acceptance/deemed acceptance and not from the date the balance becomes due

Who is MSME?

MSME is classified into two categories:

Manufacturing enterprise; and
Service enterprise.

They are defined in term of investment in Plant and Machinery/ Equipment as below

	MICRO	SMALL	MEDIUM
Manufacturing Enterprises	< Rs 25 Lacs	< Rs 5 Crs	< Rs 10 Crs
Service Enterprises	< Rs. 10 Lacs	< Rs 2 Crs	< Rs 5 Crs

Note: Only registered enterprises having valid MSME certificate shall be considered. Udyog Aadhar is also considered as MSME registration.

What is MSME Form 1?

A Half yearly return to the Ministry of Corporate Affairs stating the following:

Name of Supplier,
PAN of Supplier
Amount Due*
Date from which such amount is due
Reasons for Delay (Generic) (eg – Credit period>45 days, Goods in Transit, Material rejected/returned, etc)

Note:

Here the details like amount and date are with respect to the due date and not the date of acceptance.
For example, an MSME vendor delivered you goods on 1/12/18. The credit period is 60 days. Hence you have to report this vendor in MSME form 1 since it is more than 45 days as on 22/1/19. However, the amount due would be Nil and date from which such amount is due – 30/01/2019.

What is the due date?

Filing Period	Due date of Filing
Initial Return (Payable for more than 45 days as on 22^nd Jan 2019)	30^th May 2019
From April to September	31st October
From October to March	30th April

Note: Only the first return is an “as on 22^nd Jan 2019” return. For regular returns post that, you have to report all the MSME vendors to whom the payment was not made within 45 days from the date of acceptance in the said period.

How do we do it?

Step 1: Go through your list of vendors to whom Payment is due/ not paid for 46 days from date of acceptance

Step 2: Identify the list of vendors you think can be MSME

Step 3: Send them MSME confirmation asking whether they are MSME as on the said date. And if yes, ask them to attach their registration certificate as on the said date

Step 4: Once you receive the certificate, furnish their details in Form MSME -1

Is it Mandatory to file MSME Form 1?

Yes.

Is there any Penalty?

Yes

On Nonfilling or
On Knowingly furnishes incorrect/ Incomplete Information.

Particulars

Penalty

On defaulting company

Extended Up to Rs. 25,000/-

Every Officer who is in default

(Directors, CFO and CS)

Minimum Fine Rs. 25,000/- which may extend to Rs. 3,00,000/-

Imprisonment which may extend to 6 Months

Both

What if I missed the due date?

Don’t Worry! MCA is currently allowing (as on 6/6/2019) filling of MSME Form 1 – Without Penalty.

What if I missed filling some vendors in the return?

Don’t worry! You can file another return for the same period with the vendors you missed in your earlier return

Is there any software which can easily get MSME confirmation from all Vendors?
The Firmway tool can allow the companies to manage their entire MSME confirmations for one time and recurring return. Just upload a simple excel file with Vendor Name, Email Id and mobile number. The software will automatically trigger email and SMS to every vendor, do a rigorous follow-up and provide a real-time dashboard.

Know more about it – firmway.in

Links:
MCA Notification – http://www.mca.gov.in/Ministry/pdf/MSMESpecifiedCompanies_22012019.pdf

MCA Form Download – http://www.mca.gov.in/MCA21/dca/downloadeforms/eformTemplates/NCA/Form_MSME_help.zip

Disclaimer:

All Readers are advised to refer relevant provision of law before applying or accepting any of the point mentioned above or not. The author accepts no responsibility whatsoever and will not be liable for any losses, claims or damages which may arise because of the contents of this write-up.

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