Latest Update on MSME Companies; 2019

Explanation: The latest update on the MSME which are Manufacturing and Services sector including enterprise like investment in plant and machinery, investment in equipment, micro enterprises (which does not exceed Rs. 25Lakh or Rs. 10Lakh respectively), small enterprises (which is more than Rs. 25Lakh and is less than Rs. 5Crore and more than Rs. 10Lakh and less than Rs. 2Crore respectively). It encircles around companies, Partnership Firm, Association of Person, Hindu Undivided family, Co-operative Society, Propertiship Firm, other entities same as these. As per the Central Government vide notification S.O. 5622 (E), dates 2nd November, 2018  has dictated that all companies, who get supplies of goods or services from Micro & Small Enterprises & whose payments to Micro & Small Enterprise suppliers that goes beyond 45 days from the date of acceptance or the date of deemed acceptance of the goods or services as stated in provisions of section 9 of the Micro, Small & Medium Enterprises Development Act, 2006, (now on referred to as Specified Companies) must submit a Half-yearly Return to the Ministry of Corporate Affairs stating the following:

1. The amount of payment due; and

2. The reasons for delay in the payment

Regulation:  As per the new regulation the rule bestowed by Section 405 of the Companies Act, 2013, the Central Government now crafts the Order named as Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Order, 2019 states that every company that acquires goods or services from Micro and small enterprise whose payment is due or is not paid to those enterprises for 45 days from date of authorization should file in MSME Form 1 details of all outstanding dues to Micro and small enterprise suppliers exiting on the date of notification of this order.

Enrolled Dates:  As per the new notification the present due date for first return is 30.05.19

Time Limit: Every Specified Company should file in MSME Form I factors of all outstanding to Micro or Small Enterprises suppliers active on the date of notification of this Order (i.e. 22.01.19) within 30 days from the date of publication of this notification.

The Time Period for Registration: Every Specified Company shall file a Return as per MSME Form I as under:

1. One time return or transitional return is required to be filled till 30.05.09

2. For April to September for a half-yearly term by 31st October and

3.  For October to March for a half-yearly term by 30th April

Procedure to be followed:

1.  At first, be aware of your MSME registered suppliers and ask for their registration certificates

2.  If there are these kind suppliers who are registered under MSME Act and if the outstanding to them are due for more than 45days from the date of receiving of the goods and services, then particulars of these suppliers should be delivered in Form MSME-1

3. Information entailed in reverence of these suppliers should be produced with ROC in Form MSME-1

*Note: Total outstanding amount due on 22.01.19 (for one-time return, which has to be submitted by 30.05.19 with a) name of the supplier, b) PAN of the supplier and c) date from which such amount is due

4.    Reasons for payment hold-ups

Penalties as listed: Non-fulfilment will result in punishment and penalty under the provision of the Companies Act as per Penalty Provision of Section 405 (4) of the Companies Act, 2013. Fine will be as follows:

1.  On Company fine will be up to Rs. 25,000

2.  Directors, CFO and CS will face imprisonment for up to 6 months or

3.  On Directors, CFO and CS will be fined Rs. 25,000 to Rs. 30,000 per person

Extensions: As this regulation is for small and micro companies only this does not account medium or large enterprises. The particulars are noted below:

1.  Form MSME-1 is not applicable in the case of Medium Enterprises; such as Manufacturing Sector investment in plant and machinery, Service Sector, investment in Equipment and Medium Enterprises (entitled with more than Rs. 5Crore not exceeding Rs. 10Crore or less than Rs. 5Crore but more than Rs. 2Crore respectively)

2.  This Rule is only valid for those Specified Companies whose payment to Micro and Small Enterprises go beyond 45 days from the date of taking or the date of estimated acceptance of the goods or services according to the provisions of section 9 of the MSME Development Act, 2006 lastly,

3.  If payment surpasses 45 days but supplier or creditor who has agreed to a declaration that they do not fall under Micro or Small Enterprises.

By LNN (Liyaans News Network)