Return with Registrar in respect of outstanding payments to MSME (MSME FORM I) CA Mohit Bhuteria A.C. Bhuteria & Co. Chartered Accountants 2 India Exchange Place Kolkata – 700001 Mobile :9331026475

What are MSMEs? Classification of enterprises in terms of Section 7 of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006: In the case of the enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the First Schedule to the Industries (Development and Regulation) Act, 1951: A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs. 25 lakh; A small enterprise is an enterprise where the investment in plant and machinery is more than Rs. 25 lakh but does not exceed Rs. 5 crore; A medium enterprise is an enterprise where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore.

What are MSMEs? Classification of enterprises in terms of Section 7 of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006: In the case of the enterprises engaged in providing or rendering of services, as— A micro enterprise is an enterprise where the investment in equipment does not exceed Rs. 10 lakh; A small enterprise is an enterprise where the investment in equipment is more than Rs.10 lakh but does not exceed Rs. 2 crore; A medium enterprise is an enterprise where the investment in equipment is more than Rs. 2 crore but does not exceed Rs. 5 crore. Note: In calculating the investment in plant and machinery, the cost of pollution control, research and development, industrial safety devices and such other items as may be specified, by notification, shall be excluded.

Who is a “supplier”? Definition of “supplier” in terms of Section 2(n) of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006: “supplier” means a micro or small enterprise, which has filed a memorandum with the authority referred to in sub-section (1) of section 8, and includes,— (i) the National Small Industries Corporation, being a company, registered under the Companies Act, 1956 (1 of 1956); (ii) the Small Industries Development Corporation of a State or a Union territory, by whatever name called, being a company registered under the Companies Act, 1956 (1 of 1956); (iii) any company, co-operative society, trust or a body, by whatever name called, registered or constituted under any law for the time being in force and engaged in selling goods produced by micro or small enterprises and rendering services which are provided by such enterprises;

Consequences of delayed payments to MSMEs under the MSMED Act, 2006 Section 15 - Liability of buyer to make payment Where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day: Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed forty-five days from the day of acceptance or the day of deemed acceptance. Section 16 - Date from which and rate at which interest is payable Where any buyer fails to make payment of the amount to the supplier, as required under section 15, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay compound interest with monthly rests to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at three times of the bank rate notified by the RBI.

Consequences of delayed payments to MSMEs under the MSMED Act, 2006 Section 23- Interest not to be allowed as deduction from income Notwithstanding anything contained in the Income-tax Act, 1961 (43 of 1961), the amount of interest payable or paid by any buyer, under or in accordance with the provisions of this Act, shall not, for the purposes of computation of income under the Income-tax Act, 1961, be allowed as deduction.

Notification of MSME Ministry Notification No. S. O. 5622(E) dated November 2, 2018 Vide this Notification: Companies who get supplies of goods or services from micro and small enterprises and Whose payments to such micro and small enterprise suppliers Exceed 45 days from the date of acceptance* or date of deemed acceptance** : Shall submit a half yearly return to MCA stating the following: amount of payments due and reasons of delay *“the day of acceptance” means,— (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; **“the day of deemed acceptance” means, 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;

Specified Companies (Furnishing Of Information About Payment To Micro And Small Enterprise Suppliers) Order, 2019 Notification: Notification SO No. 368(E) [F.No.17/6/2017-cl-v], dated 22-1-2019 Requirements: INITIAL REPORTING: Every specified company* shall file in MSME Form I details of all outstanding dues to Micro or small enterprises suppliers existing on the date of notification of this order within thirty days from the date of publication of this notification. REGULAR RETURN: Every specified company* shall file a return as per MSME Form I annexed to this Order, by 31st October for the period from April to September and by 30th April for the period from October to March. * Specified Company means: - all companies who get supplies of goods or services from micro and small enterprises and whose payments to such enterprises exceeds 45 days from date of acceptance or date of deemed acceptance of the goods or services.

Other relevant Circulars and Updates General Circular No. 01/2019 dated February 21, 2019 Vide this General Circular, MCA intimated that pending deployment of MSME Form I, the period of 30 days for acceptance of the e-form shall be reckoned from the date of deployment of the same on MCA’s portal. As on and from May 1, 2019, MSME Form I has been deployed on MCA’s portal.

THANK YOU