Central Government in the exercise of powers conferred under section 405 of the Companies Act, 2013 has issued a notification dated January 22, 2019, directing all companies that get supplies of goods or services from micro and small enterprises and whose payments to micro and small enterprise suppliers exceed forty-five days from the date of acceptance, shall submit a half yearly return to the MCA in Form MSME-1.
The said order may be called Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019 and shall come into force from the date of its publication in the Official Gazette. Click here
What is MSME Form 1 (MCA)?
Companies whose outstanding payments towards micro and small companies exceed 45 days are required to submit a half-yearly Form MSME-1 to the MCA stating the amount of payment due and the reason for the delay.
The Ministry of Corporate Affairs implemented a bigger revision for saving the interest of small firms and trades. He put significance upon mentioned compliance through all particular firms whether public or private firms, micro or small.
The firms who receive the supply of goods or services through micro or small companies and the due amount of payment posing out the cause of this delay more than 45 days from the acceptance date of deemed acceptance of the goods or services are needed to furnish the half-yearly return.
The return shall be filed in the prescribed MCA e-form “MSME FORM 1”
The Return should be stated the following points:
● amount of payment due; and
● reasons for the delayed payment
The central government has made it compliance for all the “specified companies”to file the above-mentioned details towards payment to micro and small company suppliers practising the power beneath the provision of section 405 of the Companies Act, 2013.
Some Useful Terms and Their Interpretation
Specified companies: under the provision of section 9 of the MSME Development Act 2006, the specified companies are said to be those who obtained the supply of goods and services through MSMEs along with the payment with respect to these supplies to the suppliers of these MSMEs more than 45 days from the acceptance date of deemed acceptance of goods or services.
Micro and small companies: any type or types of companies which includes including proprietorship, Hindu undivided family (HUF), partnership firm, company, undertaking, co-operative society or an association of persons) which states as MSMEs under the Micro, Small and Medium Enterprise Development (MSME) Act 2006 and have an investment in plant and machinery as follows:
| Classification | Investment in Plant and Machinery (in INR) | Investment in Plant and Machinery (in INR) |
| Sector | Manufacturing Sector | Service Sector |
| Micro | Below INR 25 lakhs | Below INR 10 lakhs |
| Small | More than INR 25 lakh but does not exceed INR 5 crore | More than Rs.10 lakh but does not exceed Rs. 2 crore |
- Day of Acceptance means a day of actual delivery of goods or services; or the day when the buyer has removed the objection made by him in 15 days from the date of delivery of goods.
- Deemed Delivery Date states a day of actual delivery of goods or services and where no objection regarding acceptance of goods or services within 15 days of delivery of goods or rendering of services is made by the buyer in writing.
Note: the specified criteria mentioned above are on the grounds of the Micro, small,l and Medium Enterprises Development Act 2006, and the bill to amend the criteria of types and to withdraw the MSMED (Amendment) 2015 is due in Lok Sabha.
Applicability upon the firms
According to the proposed notification through MCA, it is important to file disclosure via e-form MSME-I for every class of the company whether private or public, micro or small the companies who follows the below-mentioned conditions:
1st: the company should have received goods and services from micro or small companies
2nd: the payment is left or not furnished to these micro and small companies for 46 days from the acceptance date.
Note: The deemed delivery date states when the buyer accepts goods and services in writing with no hesitation within the service or products obtained within 15 days of a period.
MSME Form 1 (MCA) Due Date
The initial one-time return: the firm must furnish MSME Form I detailing all the outstanding dues with respect to the micro or small companies suppliers which exist upon the notification date of the concerned order in 30 days from the deployment date of E-form MSME-1 on the MCA portal.
The last date for furnishing the initial return (first-time return) on Form MSME-1: In 30 days from the date when e-form MSME-1 will be stationed upon the MCA portal.
Note: according to the extended notification of MCA on 21/02/2019.
MSME Form 1 Due Date (Initial Return)
For all the eligible companies the government would have notified the MSME form 1 with the due date of 30th May 2020. The council quoted that the last date for the companies to file the form would be 30 days from when the same would get uploaded to the official website. Read below for the notification here.
MSME Form 1 Due Date (Half-Yearly Return)
In the duration of 45 days from the finish of each half-year, the Form MSME I (half-yearly return) is mandated to get filed for outstanding payments to Micro or Small Enterprise i.e. 30th April for the October to March period.
Due Date for FY 2024-2025
| Period | Filing | |
|---|---|---|
| April 2024 to September 2024 | 31st October 2024 | |
| October 2024 to March 2025 | 30th April 2025 |
Exemption to this Rule:
- The Rules’ applicability is not for all the Companies but just for those Specified Companies whose payment to MSME suppliers exceeds 45 days from the date of acceptance or deemed acceptance of the goods or services as per the provisions under section 9 of the MSME Development Act, 2006.
- An exemption is also applied in cases where payment against the supplier exceeds 45 days but the supplier/Creditors give a declaration that they do not lie in the category of Micro or small Enterprises.
Privilege to the rule who must not furnish the form?
Beneath the provisions under section 9 of the MSME Development Act, 2006 the rule is not subjected to all the firms but only those specified firms whose filing is left for MSME suppliers more than 45 days from the acceptance date or deemed acceptance of goods and services.
If the payment for the supplier is more than 45 days however the declaration has been furnished by the supplier that they do not come below the class of micro or small enterprises.
What is Form INC-22A (Active)?
According to Rule 25A: Active Company Tagging Identities and Verification (ACTIVE) companies incorporated on or before the 31st December 2017 shall file the particulars of the company and its registered office, in e-Form ACTIVE (Active Company Tagging Identities and Verification) on or before 25 th April, 2019.
Due Date of Form INC-22A (Active)
As per the Government Rules, filing of Form INC-22A (Active) has been mandated and is required to be filed on or before 25th April 2019. The forms would also be accepted with a late fine of INR 10,000 if filed after 25th April 2019.
NOTE: The government has extended the due date till 15th June 2019.
Restrictions from filing Form INC-22A (Active)
Companies are restricted from filing Form INC-22A in the following cases:
- Company has not filed its due financial statements under section 137 or due annual returns under section 92 or both with the Registrar unless such company is under management dispute and the Registrar has recorded the same on the register.
- Companies been struck off or are under the process of striking off or under liquidation or amalgamated or dissolved as recorded in the register, shall not be required to file e-Form ACTIVE.
Consequences of not filing Form INC-22A (Active)
Company shall be marked as “ACTIVE-non-compliant” on or after 26th April 2019 if not filed form INC-22A and shall be liable for action under sub-section (9) of section 12 of the Act. Provided if the company files “e-Form ACTIVE”, on or after 26th April 2019 on payment of a fee of ten thousand rupees, the company shall be marked as “ACTIVE Compliant”.
In a case where a company does not file the INC-22A (ACTIVE) form, the government would not be accepting certain forms from them including:
- SH-07 (Change in Authorized Capital)
- PAS-03 (Change in Paid-up Capital)
- DIR-12 (Changes in Director except for cessation)
- INC-22 (Change in Registered Office)
- INC-28 (Amalgamation, de-merger)
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