MSME Form 1: who files it, the two due dates and the penalty

The return comes from an MCA order of 22 January 2019 under section 405 of the Companies Act, 2013. It applies to a company when both of these are true:

• it received goods or services from a micro or small enterprise; and
• payment to that supplier is outstanding for more than 45 days from the date of acceptance, or deemed acceptance, of the goods or services.

Medium enterprises are not covered. A company with no payment to a micro or small supplier pending beyond 45 days in the half-year is outside the wording of the order.

• The name of each micro or small supplier with an overdue payment.
• The supplier’s PAN.
• The amount due and the date from which it has been due.
• The reason for the delay.

To fill it you need to know which of your suppliers are registered as micro or small. Ask each supplier for its Udyam registration certificate when you onboard it, and tag it in your accounts.

A buyer must pay a registered micro or small supplier within the period agreed, and in no case later than 45 days. After that, compound interest at three times the bank rate runs on the amount, and the supplier can pursue it through the MSME Samadhaan portal.

So MSME Form 1 is a report of a problem, not the problem itself. The lasting fix is to pay these suppliers inside 45 days.

Under section 405(4), a company that does not furnish the information, or furnishes information that is incorrect or incomplete in a material respect, is liable to a penalty, and so is every officer in default:

1. Collect the Udyam certificate from every supplier.
2. Run a creditor ageing report at 30 September and 31 March for micro and small suppliers.
3. Clear anything older than 45 days before the half-year ends where you can.
4. File the form for what remains.

We file MSME Form 1 as part of our annual compliance plan and as a single filing through ROC filing.