Half Yearly MSME Return

Half Yearly MSME Return is filed in E-Form MSME 1 under the relevant section of the Companies Act, 2013. It is an intimation to the registrar for default in payment by companies to micro, small and medium enterprises.

The Form MSME-1 is filed when the payments are due for more than 45 days starting from the date of receiving the products or services with the specific reason for such delay.

The companies required to file the return are either the company receiving the products or services from MSME or the payment to the MSME is more than 45 days from accepting or deemed acceptance of the products or services.

Process to File Half Yearly MSME Return

According to the provision of the Ministry of Micro, small and medium enterprises (MSME) Development Act, 2006 must submit a half yearly return to the Ministry of Corporate Affairs. The procedure of filing is discussed in the following steps:

Step 1: Corporate Identity Number (CIN) of the Company

The first step is to download the MSME Form 1 pdf through the MCA portal. Enter the CIN number of the company and click on the pre-fill button. The details of the registered office, PAN number, Email ID and contact details of the company will be filled.

Step 2: Period of Filing i.e., Start Date and End Date

Filing half yearly MSME return; Enter the Start date as 1st April or 1st October either of these and should not be less than 1st October 2018. The End date will be pre-filled based on the start date entered.

For Filing an ‘Initial return’ the details given below are:

• The amount outstanding as of the date of notification
• Financial year
• Name of supplier
• PAN details of the supplier
• Date of the outstanding amount

For Half-Yearly returns the details given below are:

It is to be filled in every six months for the amount outstanding from six months starting from April to September and the next six months starting from October to March

• For half yearly MSME return; Enter the date of filing the return i.e., From and To
• Name of the suppliers
• PAN card details of the suppliers
• Amount Outstanding
• Date from which the amount is outstanding.

Step 3: Name of the Suppliers and Amount of Payment Due

Now, enter the particulars of name with PAN of suppliers and amount of payment due with the date of acceptance or deemed acceptance of products or services and status of outstanding amount like ‘Paid’ or ‘Unpaid’ as on the date of MSME return filing.

Step 4: Outstanding at Beginning of the Period and at the End of the Period

This is pre-filled based on the last return filed and Outstanding at the end of the period for more than 45 days

Step 5: Attachments to the Half Yearly MSME Return

The attachments should be in PDF or .jpg format and not exceed 2 MB for a single attachment. An optional attachment can be filled in if any

Step 6: Affixing of Digital Signature and Upload MSME Form MCA Portal

Select any one option from the list of directors/managers/company secretary/CEO/CFO for affixing the DSC to the form and then submit and upload the form on MCA.

Details to be Furnished in Form MSME-1

As per the relevant section of the MSME Development Act, 2006, when the suppliers provide goods to the buyer then the buyer is liable to make a payment on or before the agreed date. The fixed date for half yearly MSME return means fifteen days from the date of acceptance.

The provisions of the sections provide that the time granted for credit by the supplier should not exceed 45 days from the date of acceptance.

Hence, the Ministry of Corporate Affairs (MCA) has issued a notification in MSME Form for the company receiving the supplies from Micro and small enterprises and the outstanding payment is more than 45 days.

The specified companies must mention the following details in the MSME form 1 Format:

• Name of the supplier and PAN number with the outstanding balance
• Amount of outstanding payment against products and services
• Reasons for the delay to be mentioned for half yearly MSME return
• Date from when the amount is due to be paid

MSME Return Applicability

According to the Ministry of Corporate affairs, it has made it compulsory to file Form MSME-1 for all types of companies, namely, public companies, private companies, and micro or small companies. The companies must fulfill the two conditions given:

• The company must receive the products or services from a Micro or small enterprise
• The payment shall have been due and outstanding to MSME for more than 45 days from the date of acceptance.

The MSMED Act, 2006 has divided the MSMEs into two categories as given below:

• Manufacturing Enterprises

  These are classified as per investment in plant and machinery and are engaged in the manufacture of goods for a specific industry

• Service Enterprises for Half Yearly MSME Return

  These are classified as investments in equipment and engaged in providing services

As per the new definition, MSMEs are classified on the basis of capital investment in plant and machinery. The MSME includes proprietorship, Hindu undivided family (HUF), Company, Partnership firm, and Co-operative society.

The date of deemed delivery is the acceptance of goods by the prospective buyer in a written form specifying no objection to the goods received thereon within 15 days.

MSME Return Due Date

The specified companies shall file the return with the MCA portal. The due date for filing an initial return for all outstanding due to MSME is within 30 days of the date of issuing the notification. The due date extended for filing the initial return is 30th May 2020.

The due date for half yearly MSME return filed in Form MSME-1 is given below:

• For the Period of October to March - 30th April is the due date
• For the Period of April to September – 31st October is the due date

Consequences Of Non-Filing of Form MSME-1

As per the section of the Companies Act, 2013, In case of non-filing the form leads to penalty and punishment as given below:

• A fine of up to Rs. 25000 on the company in default
• A fine of a Minimum of Rs. 25000 and a maximum of Rs. 3 lakhs for not-filing the half yearly MSME return and imprisonment of six months for an officer in default.

Benefits of MSME Registration

The benefits of registration under the MSMED Act, 2006 are as follows:

• A loan can be sanctioned at a lower rate of interest
• The cost of trademark and patent registration is comparatively lesser.
• There is an exemption to an overdraft interest rate
• There is an industrial promotion subsidy provided by the government
• There is an electricity bills subsidy provided by the government
• There are various schemes offered by the Central government.