Introduction

On 15^thJuly 2024, The Ministry of Corporate Affairs implemented major changes to the reporting requirements for specified companies that delay payments to the Micro and Small Enterprises (MSEs). This is to enhance protection in regard to finance for Micro and Small Enterprises (MSEs)

This notification further expands on the foundation built by the initial order in 2019. This includes an updated MSME Form 1 that seeks more detailed information from customers who fail to pay their bills within the prescribed 45-day time limit.

 

Modification in the filing of Half Yearly Return

Old Provision	New Provision
All specified companies, who get supplies of goods or services from MSE and whose payments to MSE suppliers 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 Micro, Small, and Medium Enterprises Development Act, 2006, to submit a half yearly return to MCA stating the amount due along with proper reasoning.	Now, only specified companies having pending payments for any micro or small enterprises for more than 45 days from the date of acceptance or the date of deemed acceptance of the goods or services under section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 have to submit half yearly return (Biannually).

 

Modification in MSME Form 1

Old Provision	New Provision
Earlier only the Amount due and the date to which it relates were to be mentioned under the field ‘Particular of the name of suppliers and amount of payments due’ in MSME Form 1	Now, Additional details are to be provided in regard to the amount due in MSME Form 1 i.e.,  Amount paid within 45 days Amount paid after 45 days Amount outstanding for 45 days or less Amount outside for more than 45 days Reason for delay in payment/amount outstanding

 

 

Penalty for Non-compliance of MSME

Under section 450 of the Companies Act, 2013, if a company and every officer of the company who is in default must be liable to a penalty of 20000 Rupees and in case of continuing failure, with a further penalty of 1000 Rupees for each day after the first during which such failure continues, subject to a maximum of 3 lakh rupees.

 

Conclusion

Companies dealing with MSE Suppliers must be well-informed about the applicability, procedures, and implications of MSME Form I. Compliance with this regulatory requirement is not just a legal responsibility as MSME Form I represents a critical mechanism to monitor and regulate payments made by specified companies to MSE suppliers. This half-yearly return intend to guarantee prompt payments, uphold the provisions of the MSMED Act, 2006, and facilitate the Registrar of Companies in tracking outstanding dues.

For reference, Composite Criteria: Investment in Plant & Machinery/equipment and Annual Turnover

Classification	Micro	Small
Manufacturing Enterprises and Enterprises Rendering Services	Investment in Plant and Machinery or Equipment: Not more than Rs.1 crore and Annual Turnover; not more than Rs. 5 crore	Investment in Plant and Machinery or Equipment: Not more than Rs.10 crore and Annual Turnover; not more than Rs. 50 crore

 

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