Introduction: MSME Return

MSME is the registration of Micro Small and Medium enterprises. This registration is also termed Udyog Aadhar or Laghu Udyog. Under this registration, the entities are divided into micro or small, or medium enterprise as per their investment in the manufacturing business or in the service sector.

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The main advantage of the business entity from MSME registration in India is it provides recognition to the business by providing a unique number to the entity. This MSME sector results in the  According to the MSME data, this MSME sector contributes near about 50% of total export, 45% of total Industrial Employment, and about 95% of industrial units in which more than 6000 products are manufactured. With the growth of these MSME industries, there will be the growth in the economy and reduced unemployment too by employing a good volume of unskilled and semi-skilled people. The industries registered under MSME are also known as SSI i.e. small-scale industries.

Benefits under MSME Registration

• Sanction of a loan with a lower rate of interest.
• Tax Benefits in regards to central excise and direct taxes in the initial years of company’s operation.
• Privileges on sales tax and other subsidies levied by the state government. 
• Reduces the cost of Trademark and Patent Registration
• Overdraft Interest Rate Exemption
• Industrial Promotion Subsidy Eligibility
• Subsidy on Electricity Bills 
• availed advantages from the schemes offered by the Central Government.

Compliances of MSME

MSME Form 1

This forms contains the information that required to furnish in context to the pending payment towards the Micro and Small enterprises registered under MSME by filing the half yearly return through MSME form 1 with the Registrar of Companies (ROC).

The need for this intimation came in order to protect the interest of the small group of companies or businesses.

According to section 405 of the Companies Act, 2013, (18 of 2013), it was mandate by Central Government for all the registered entity to furnish about the due payments towards the micro and small enterprise suppliers in forms -

• MSME Form 1 (Initial Return)
• MSME Form 1 (Half Yearly Return)

Initial Return in form MSME 1 was to filled only once when the notification was published in 2019 whereas the half-yearly return in form 1 is required to be submitted mandatory to the Ministry of Corporate Affairs (MCA)every financial year by all the companies who takes or receives thegoods supply or services from Micro or small enterprises. It is required to show the due payment done to these micro and small enterprise if it’s pending for more than 45 days from the date of acceptance or acceptance.The following points should be stated in it:

• The amount of payment due
• The reasons for the delay

Applicability to the Companies

It’s a mandatory to file disclosures through Form MSME I for all Public or Private Company, Micro or Small Companies; if in case -

• The company have received goods or services from Micro or Small Enterprise
• Payment is due to Micro and Small Enterprise for more than 45 days from the date of acceptance

Due Date for Filing MSME Form 1

Initial return (One time)

• All the companies are required to file MSME Form I within 30 days including the details of all the outstanding dues to the micro and small enterprises from the date of deployment of E-form on the MCA portal.

Half-yearly return (regular return)

• This forms relates to the outstanding payments to Micro, Small and Medium enterprise suppliers. Due date to file this form -

Exemption to MSME Return Filing Rule

• It’s not applicable on all the companies. Applicable to only those companies whose payments are due and exceed 45 days from the date of receipt of the accepting the order or bill generated by MSME registered companies.
• If the declaration is given for non-falling into Micro or small enterprises in case the payment against supplier exceeds 45 days.

Details to be included in MSME FORM I

Initial Return:

• Company’s PAN
• Total outstanding amount due as on 22.01.2019 (date of notification of order)
• Name of suppliers and amount of payments due
• Following details are required to be included for the supplier

1. Financial Year from
2. Financial Year to
3. Supplier Name
4. Supplier PAN
5. Due Amount
6. Date from which amount due
7. Reason for delay in payments

Half-yearly return:

• Time Period (Apr to Sep or Oct to March)
• Company’s PAN of the Company
• Total outstanding amount
• Supplier details with due amount
• For each supplier the following details to be furnished

1. Financial Year from
2. Financial Year to
3. Supplier Name
4. Supplier PAN
5. Due Amount with date

• Reasons for Delay
• The e-form MSME FORM I to be digitally signed by

1. Director orManager orCompany Secretary orCEO orCFO
2. For director provide DIN details
3. For Manager, Company Secretary, CEO or CFO provide PAN details

Late Filing Penalty for MSME Form 1

There is a specified section in the Company’s Act 2013 that includes a non-furnishing/incomplete/incorrect information penalty i.e. section 405(4). Section 405(4) states a fine up to -

Expert’s Call

It’s always better to avoid the penalties and it can be done only by filing and complying with compliances on time. You can call Corpseed anytime for help with registration.