Delayed payments have long been a hurdle for Micro, Small, and Medium Enterprises (MSMEs), impacting their working capital and market competitiveness. The government’s Samadhaan portal, launched in October 2017 to address delayed payments, has recorded a substantial 1.68 lakh complaints involving almost Rs 40,000 crore in delayed payments.
MSME-1 Form Introduction
To combat this issue and ensure timely payments, the government introduced the MSME return form, known as the MSME-1 form, in January 2019. This move aims to track outstanding dues and provide a mechanism for MSMEs to address late payment challenges.Companies categorised as ‘Specified Companies’ under Section 405 of the Companies Act, 2013, are required to file the MSME-1 return form. These are companies that have purchased goods or services from an MSME, and the payment is due beyond 45 days from the acceptance or deemed acceptance of the goods or services.
Filing Timeline and Penalties
The MSME-1 return form is a half-yearly requirement, with filing deadlines of October 31 for the April to September period and April 30 for the October to March period each year. Failure to submit the form incurs a penalty of Rs 20,000, with subsequent delays attracting a daily penalty of Rs 1,000, up to a maximum of Rs 3 lakh.To complete the MSME-1 form, companies must provide crucial details such as Corporate Identity Number (CIN), PAN, MSME seller details (name and PAN), date from which the payment is due, amount due details, and reasons for the payment delay.
Digital Authentication Process
The online form, accessible on the Corporate Affairs Ministry portal, requires digital signatures from the director, manager, secretary, CEO, or CFO of the company. Directors must provide their Director Identification Number (DIN), while secretaries need to supply either their membership number or PAN, especially for Section 8 companies.In the case of Section 8 companies, if the designation is company secretary, the form requires either the membership number or PAN for authentication. This stringent process ensures accountability and adherence to the MSME-1 filing obligations.
