MSME-1 Form: Tackling Delayed Payments in India

In January 2019, the Indian government introduced the MSME-1 form to address the issue of delayed payments faced by Micro, Small, and Medium Enterprises (MSMEs). The form aims to track outstanding dues by companies, particularly those categorized as 'Specified Companies' under Section 405 of the Companies Act, 2013. These companies are required to file the half-yearly MSME-1 return form if payments to MSMEs are overdue beyond 45 days from the date of acceptance or deemed acceptance of goods or services.

As of October 2017, the government's Samadhaan portal recorded 1.68 lakh complaints from enterprises regarding delayed payments, totaling nearly Rs 40,000 crore. Of these, 33,262 cases involving Rs 5,812 crore have been resolved. The delayed payment issue significantly impacts the working capital flow and competitiveness of MSMEs in the market.

Specified Companies must file the MSME-1 return form by October 31 for the April to September period and by April 30 for the October to March period annually. Failure to comply results in a penalty of Rs 20,000, with subsequent failures incurring a daily penalty of Rs 1,000, up to a maximum of Rs 3 lakh.

The form requires details such as Corporate Identity Number (CIN), PAN, MSME seller details (name and PAN), due amount details, and the reason for the payment delay. The online form, accessible on the Corporate Affairs Ministry portal, must be digitally signed by the director, manager, secretary, CEO, or CFO of the company. Designation-specific details such as Director Identification Number (DIN) or membership number are also necessary for compliance, with specific requirements for Section 8 companies.