Companies to file Return for Delayed Payment to MSME

Delayed Payment to MSME


The Central Government under section 9 of Micro, Small and Medium Enterprises Development Act, 2006 (MSMEDA-2006) empowers to issue notification, programmers, guidelines, and instructions for the promotion and development of the competitiveness of micro, small and medium enterprises in cases of delayed payment to MSME and others.

Using the powers mentioned under section 9 of MSMEDA-2006 the ministry of micro, small and medium enterprise issued the notification S.O. 5622(E) dated 2nd November 2018, wherein all the companies dealing with such enterprises facing delayed payment to MSME were required to fill return to the Ministry of Corporate Affairs stating the following details:

  1. The Amount payments due; and
  2. The reason of the delay.

With reference to the notification issued by MEMEDA-2006, Ministry of Corporate Affairs on 22nd day of January 2019 issued notification no. S.O. 368(E) under which Ministry of Corporate Affairs using the power define under section 405 of Companies Act, 2013 Central Government make order called as “Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019. Under this order every specified company is required to file MSME Form I.

If you have been receiving goods and services from the micro, small and medium enterprises, you must read this article as it will throw light on the requirements and conditions of filing MSME form1 in case of delayed payment to MSME. When filing this form, make sure your information is correct. Incomplete or incorrect information may result in penalties.

Here’s all that you need to know:

1. What is MSME FORM I return?

MSME Form I is the half yearly return to be filled by every specified company with the Registrar of companies. This return contain detail of all the outstanding payments to the micro and small for the goods and services supplied by them. All the payments which is due from more than 45 days needs to be reported under this return.

2. Details to be covered under MSME form I

Apart from the basic details required of reporting entity regarding delayed payment to MSME, form MSME – I also required details related to:

(a) the total amount of payment due; and

(b) the reasons for the delay;

The above-mentioned detail is required to be provided in below tabular format.

Financial Year/ParticularsName of suppliersPAN of suppliersAmount DueSpecify the date from which amount is due

3. Due dates of MSME FORM I

As per the specified companies (Furnishing of information about payment to micro and small enterprises supplier) order, 2019 following are the due dates for MSME Form I

  1. Initial return – with 30 days of publication of notification (i.e. 21st Feb 2019)
  2. Half Yearly Return
    • Half yearly for the period April to September – 31st October
    • Half yearly for the period October to March – 30th April

4. Who is specified company for MSME FORM I

All the companies will have to file MSME – 1 if following conditions are satisfied.

  1. Who get supplies of goods or services from Micro and Small Enterprises and
  2. Whose payments to Micro and Small Enterprises Suppliers exceed 45 days from the date of acceptance or the date of deemed acceptance of the goods or services

Such companies will be called as specified companies.

5. Micro and small companies are covered and not medium enterprises

As per the notification, outstanding dues to only Micro and small enterprises will have to be reported. As per MSME Act following table will be help full to understand the difference between Small, Micro and Medium enterprises.

Type of enterprisesInvestment in Plant & MachineryMSME-1 applicability
Manufacturing activitiesServices activities
Small enterprisesUp to 25 lacsUp to 10 lacsMSME-1 applicable
Micro enterprisesMore than 25 lacs but up to 5 croreMore than 10 lacs but up to 2 croreMSME-1 applicable
Medium enterprisesMore than 5 crores but up to 10 croresMore than 2 crores but up to 5 croreMSME-1 not applicable

6. How to calculate 45 days for outstanding

As per Explanation given under Sec 2(b) of The Micro, Small and Medium Enterprises Development Act, 2006,the day of acceptance or the day of deemed acceptance has been explained as below.


(a) The day of the actual delivery of goods or the rendering of services; or

(b) where any objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day on which such objection is removed by the supplier;


where no objection is made in writing by the buyer regarding acceptance of goods or services within fifteen days from the day of the delivery of goods or the rendering of services, the day of the actual delivery of goods or the rendering of services;

7. Penalties for non filing of MSME-01 Form?

As per section 405(4) if the companies fail to comply with as order or knowing furnishes or statistics which is incorrect or incomplete in any material respect, the company will be punishable as given in below table.

In other words, non-filing of MSME – 01 form or giving incorrect or incomplete form in any material aspect, the following penalties may be levied for MSME-01 Form which is for delayed payment to MSME.

on defaulting companyExtended up to Rs. 25000
Every officer who is in default Minimum fine Rs. 25000 which may extend to Rs. 300000
Imprisonment which may extended to 6 months.

8. Conclusion

Hence it is recommended that you handle the financial dealings with the micro, small, and medium scale enterprises carefully and gain knowledge of the form regarding delayed payment to MSME beforehand in order to avoid any hassle while filing the form.

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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