All about MSME 1 form filling and its certification By CS Ankita Gupta


What is MSME 1 Filing
 
The MSME I Form is for the payment of half yearly return with the Registrar of Companies (ROC) in context of the outstanding payments to Micro or Small Enterprises.

A half-yearly return is required to be submitted to the Ministry of Corporate Affairs on a mandatory basis, by all those companies who receive supply of goods or services from Micro or small enterprises and the payment done to these micro and small enterprise suppliers exceeds forty-five days from the date of acceptance (or deemed acceptance) of the relevant good or services.
 
Important Definitions under MSME
 
Meaning of Micro & Small Enterprise

The MSME Act, 2006 defines the Micro Small and Medium Enterprises as:

In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro & Small Enterprises are depicted below:

Manufacturing Sector

Service Sector

Enterprises

Investment in plant
& machinery

Enterprises

Investment in equipment

Micro Enterprises

Does not exceed
Rs. 25 Lakh

Micro Enterprises

Does not exceed Rs. 10 Lakh

Small Enterprises

More than Rs. 25 Lakh but does not exceed Rs. 5 Crore

Small Enterprises

More than Rs. 10 Lakh but does not exceed Rs. 2 Crore


It covers companies, Partnership firm, Association of Person, Hindu Undivided family, Co-operative Society, Proprietorship Firm, other entities etc.

MSME Act, 2006, MSME Broadly Classified Into 2 Categories

1) In the First category comes to those Enterprises which are engaged in the manufacturing and production of goods for any industry.

  • Manufacturing Enterprises – As per the first schedule to the industries (Development and Regulation) Act, 1951, the Manufacturing enterprises defined in terms of investment in Plant & Machinery, are those enterprises that are engaged in the manufacture or production of goods for any specific industry
2) In the second category comes to those enterprises which are engaged in providing or rendering services.

  • Service Enterprises – Defined in terms of investment in equipment, service enterprises are those enterprises which are engaged in providing or rendering services
Under the MSMED Act 2006, the Micro Small & Medium Enterprises (MSMEs) in India are categorized and defined on the basis of capital investment done in plant and machinery but excluding the investments made in land and building
 
Definition of the Day of Acceptance:

Explanation (i) to Section 2(b) of the Act provides that day of acceptance means:

(a) The day of the actual delivery of goods or the rendering of services; or

(b) Where any objection is made in writing by the buyer regarding the acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day on which such objection is removed by the supplier
 
Definition of the Day of Deemed Acceptance:

Explanation (ii) to Section 2(b) of the Act provides that day of acceptance means the day of the actual delivery of goods or the rendering of services, where no objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services.
 
Specified Companies:

As per the provisions of section 9 of the MSME Development Act, 2006, Specified companies are those companies who receive the supply of goods or services from MSMEs and the payment against these supplies to the suppliers of these MSMEs exceed 45 days from the date of acceptance (deemed acceptance) of the goods or services
 
HOW TO OBTAIN MSME CERTIFICATE

The Government of India has specifically made an Act for Micro, Small & Medium Enterprises. The Micro, Small & Medium Enterprises Development Act, 2006 is only applicable to those enterprises which deal in Manufacturing and Service sector.

By the classification under this act, enterprises are categories under 3 classification.

In the case of entities engaged in the manufacturing or production of goods:

Micro enterprise: Any entity wherein the investment in plant and machinery does not exceed rupees twenty-five lakhs.

Small enterprise: Any entity wherein the investment in plant and machinery does not exceed rupees five crores but also more than rupees twenty-five lakhs.

Medium enterprise: Any entity wherein the investment in plant and machinery does not exceed rupees ten crores but also more than rupees five crores.

In the case of entities engaged in providing or rendering of services:

Micro enterprise: Any entity wherein the investment in equipment does not exceed rupees ten lakhs.

Small enterprise: Any entity wherein the investment in equipment does not exceed rupees two crores but also more than rupees ten lakhs.

Medium enterprise: Any entity wherein the investment in equipment does not exceed rupees five crores but also more than rupees two crores.

Details and Documents required:

  • Aadhar card of Applicant
  • Pan Card of the applicant in case of proprietor Or Company/firm Pan Card in Case of Company/firm
  • Bank Account Details
  • Office and Plant Locations address and proof.
  • AOA and MOA
  • Bills of the equipment and the machinery.
Steps:

Once all the documents are collected, you need to follow the following process to accomplish MSME registration:
  1. File the application for MSME registration on MCA portal (MSME Registration Portal) in the prescribed format.
  2. Self-certify all the given documents attached with MSME registration application.
  3. Upload the documents and file the application on the online portal
  4. Once the application is accepted, you will receive email from MSME Department on your registered mail id with Udyog Aadhar Number and Certificate
Applicability of MSME on Companies

Now back to the MSME 1 form filling, as per the notification issued by the MCA it has been mandated to file disclosures through Form MSME I for every type of the Company whether Public or Private Company, Micro or Small Companies; the Company that satisfies the following two conditions:

  • Condition 1: Company must have received Goods and/or Services from Micro or Small Enterprise
  • Condition 2: Payment must have been due/not paid, to such Micro and Small Enterprise for 46 days from the date of acceptance
Due Date for filing Form MSME-1

Initially, One-time return was required to be filed within 30 days of publication of this order i.e. 21st February, 2019.

But since the form was not available on the MCA portal, now the form must be submitted within 30 dates from the date of its deployment on MCA portal i.e. from 1st May (as per the extended notification of MCA dated 21.02.2019).

Due date of subsequent returns is mentioned below:

  • For Half year period ‘April to September’ – 31st October
  • For half year period ‘October to March’ – 30th April
Penalty for Non-Filing of Form MSME-1

Non-compliance will lead to punishment and penalty under the provision of the Companies Act. As per the Penalty Provision of Section 405 (4) of the Companies Act, 2013 Fine will be as follows:

> On Company – up to Rs.25,000/-

> On Directors, CFO, and CS – Imprisonment – up to 6 Months
Or

Fine – not less than Rs.25000/- but which may extend to Rs.300000/- per person
 
Procedure for Filing MSME Form 1 (MCA)
 
The Initial one-time Return: The companies should file the MSME Form 1by disclosing all the outstanding/ dues against the Micro or Small enterprises suppliers that are existing on the date of notification of the related order within 30 days from the date of deployment of E-form MSME-1 on the MCA Portal.

Exemption to this Rule:

1. Form MSME-1 is not applicable in the case of Medium Enterprises;

Particulars

 

 Manufacturing Sector (Investment in plant & machinery)

Service Sector (Investment in equipment)

Medium Enterprises

More than Rs. 5 Crore but does not exceed Rs. 10 Crore

More than Rs. 2 Crore but does not exceed Rs. 5 Crore

 
2. This Rule applies only for those Specified Companies whose payment to Micro & Small Enterprises exceed 45 days from the date of acceptance or the date of deemed acceptance of the goods or services as per the provisions of section 9 of the MSME Development Act, 2006;

3. If payment Exceed 45 days but supplier/Creditors given a declaration that they do not fall under Micro or Small Enterprises.
 
Note: Thus, it can be concluded that, each Specified Company, public or private, that obtains goods and services from the small and micro-enterprise and whose payment is due with such micro and small enterprise suppliers for 45 days from the date of acceptance, shall be required to file MSME Form as a half yearly return every year.

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