Return for payment to MSMEs

MSME Form 1 Filing: Ensuring Timely Payments & Compliance with Account Assure

In a significant move to protect Micro and Small Enterprises (MSMEs) from delayed payments, the Ministry of Corporate Affairs (MCA) mandates certain companies to file a half-yearly return known as MSME Form 1. This crucial compliance ensures transparency in payment cycles and strengthens the financial health of MSMEs, which are the backbone of our economy. At Account Assure, a leading Financial Audit Firm, we provide meticulous assistance to ensure your company accurately identifies MSME suppliers and files Form MSME-1 on time, safeguarding your compliance and reputation.

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What is MSME Form 1?

MSME Form 1 is a half-yearly return that “specified companies” must file with the Registrar of Companies (ROC). It requires companies to disclose details of outstanding payments to their Micro and Small Enterprise (MSME) suppliers that have exceeded the statutory payment period of 45 days.

This regulation stems from the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, which aims to promote timely payments to MSMEs. The MCA introduced Form MSME-1 to enforce these provisions and bring greater accountability.

Who Should File Form MSME-1?

Specified companies should file Form MSME-1 when payments are due to MSME for more than 45 days from the date of acceptance of the services or goods, along with the reason for its delay. Specified companies are companies-

That have obtained goods or services from the MSME.
Whose payments to the MSMEs exceed 45 days from the date of acceptance or deemed acceptance of the goods or services.

Details to be Reported in Form MSME-1

CIN and PAN of the company
Name, address and e-mail of the company
Name and PAN of the suppliers
Outstanding amount due against the supply of goods or services
Date from which the amount is due
Reason for delay in payment of the amount due

Due Date for Filing Form MSME-1

MSME-1 is a half-yearly return that the specified companies must file with the MCA. Below are the due dates for filing Form MSME-1:

Due Date	Period for which MSME-1 is filed
30 April	For October-March period
31 October	For April-September period

How to File MSME Form-1?

Here is the step-by-step process to file Form MSME-1:

Navigate to e-Forms and select the ‘MSME Form-1’.

Fill the CIN and PAN of the company.

Enter the basic details of the company.

Enter the details related to initial returns of outstanding dues to the MSE suppliers and regular returns of outstanding dues to the MSE suppliers.

Enter the reason for the delay in payment.

Attach documents and fill out the declaration.

Digitally sign the form and submit.

Non-Compliance of Filing Form MSME-1

Non-compliance with filing MSME-1 by the specified companies will attract a penalty under Section 405(4) of the Companies Act, 2013. As per Section 405(4), if any company fails to file MSME-1, the company and every officer in default will be liable to a penalty of Rs.20,000. In case of continuing failure, the company and every officer in default will be liable for a further penalty of Rs.1,000 for each day the failure continues, subject to a maximum of Rs.3 lakh.

How Account Assure Ensures Seamless MSME Form 1 Compliance:

As your trusted Financial Audit Firm, Account Assure provides meticulous and proactive support to ensure your company meets its MSME payment return obligations:

MSME Supplier Identification

We assist in identifying which of your suppliers are registered as Micro or Small Enterprises, which is the foundational step for this compliance.

Payment Status Analysis

Thorough review of your payment records to identify all outstanding dues and payments made beyond 45 days to MSME suppliers.

Data Compilation & Reconciliation

Meticulous compilation of all required information, including supplier details, outstanding amounts, and reasons for delay.
Reconciliation of data with your accounting records.

Form Preparation & Submission

Expert preparation of MSME Form 1 (including the latest V3 portal requirements) with accurate details.
Timely online submission of the form to the MCA portal within the prescribed due dates.

Advisory on MSMED Act & Income Tax Implications:

Providing clarity on the provisions of the MSMED Act, 2006, and the implications of delayed payments, including the impact of Section 43B(h) of the Income Tax Act.