MSME (Micro Small and Medium Enterprise) is the pillar for the economic growth in many developed and developing countries across the world. These micro small and medium enterprises help in the accelerating the growth of our economy in the same as small things contribute towards the formation of the heap. Micro Small and Medium Enterprises is considered as the engine of betterment for all the developed and developing countries. The MSME sector in India contributes 45 % of the total Industrial employment, 50% of the Total Exports and 95% of the industrial units in our country. The government of our country has taken many initiatives and offered benefits to help the owners of these MSMEs to run and operate these enterprises efficiently. These tracks help in maintaining the record in a systematic manner which in future will accelerate the GDP growth of our country. Here in this article, we will see in detail the MSME Compliances.
The basic difference between Small and Micro Enterprises
Small Enterprises are those enterprises in which the manufacturing units have made a minimum investment of INR 50 lakhs or below. Whereas for another category that is Service Enterprises, service enterprises have to invest less than INR 20,00,000 in these kinds of enterprises
Micro Enterprises are those enterprises in which the manufacturing units have made a minimum investment of INR 2.5lakhs or below. Whereas for another category that is Service Enterprises, service enterprises have to invest less than INR 10,00,000 in these kinds of enterprises.
What are Specified companies?
Specified Companies are those companies who get supply from micro small and medium enterprises. In addition to this, Companies whose payments to Micro and small enterprise suppliers transcend 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 MSMED (Micro, Small and Medium Enterprises Development) Act, 2006.
Compliances for MSME
MSME Form 1 is a mandatory compliance for the specified companies which are defined in Section 9 of the MSMED (Micro, Small and Medium Enterprises Development) Act. These specified companies file the MSME Form 1 on a. half-yearly basis to the MCA (Ministry of Corporate Affairs).
What is the Return Periodicity of MSME Form 1?
Every specified company has to submit the yearly return on a half-yearly basis to the Registrar concerning the outstanding payments to the Micro, small and medium enterprises which contain the following information:
- The amount of payment due;
- The reasons for the delay.
What are the responsibilities of the Specified Companies after the MSME Registration?
The task does not end after you had the MSME Registration; there are certain compliances which needs to be followed by the Specified Companies.
- The Specified Companies need to check whether their suppliers are registered under the MSME Act or not.
- If they are registered under the MSME Act, the Specified Companies need to check if there is any due payment from their end for a period which has exceeded 45 days from the date of acceptance of the services or goods by such company. Also, the company has to either close or file a return of the particulars of the due payments stating the reason for the delay in the MSME Form1.
The specifications of the Liability include:
- The total amount of the Liability (Due Payment) on January 22nd, 2019.
- Supplier Enterprise
- PAN Card of the Supplier enterprise
- The date from which the Liability started.
What is the Due Date of MSME Form 1?
All the specified companies are required to file the yearly return on a half-yearly basis. These companies need to file in the MSME Form 1 stating the Outstanding dues to the Micro Small and medium enterprises suppliers within 30 days from the date of the publication of the notification specifying the order to perform the same.
Extension of the Due Date
The Ministry Of Corporate Affairs on February 21st 2019 state that the date of filing the MSME Form 1 will be calculated from the time the form is deployed on the MCA 21 Portal.
|Period of Return||Date of Filing|
|April to September||31st October|
|October to March||30th April|
What is the Penalty for not complying with these standards?
Following are the penalties for not complying with these standards:
- There will be a fine of INR 25000 with the Defaulter Company.
- The concerned officer of the company will be liable for imprisonment up to six months, or there will be a fine from INR 25000 to INR 3, 00,000.
The Ministry of Corporate affairs has altered the MSME compliance as per its requirements. Also, they have made it mandatory for micro small and medium enterprises to file returns stating their due payments to the Micro and small enterprises along with the reasons for the delay in MSME Form 1. The specified Companies under the MSME need to fire the return on a half-yearly basis.
Read our article:How to Register under Micro Small and Medium Enterprises in India?