The Ministry of Corporate Affairs (MCA) on Tuesday unveiled an updated MSME-1 Form on the MCA V3 platform, mandating all companies to report detailed information on outstanding payments owed to Micro, Small, and Medium Enterprises (MSMEs).
According to the latest notification, the new MSME-1 Form on MCA V3 must be submitted by all companies with payments overdue for more than 45 days to any micro or small enterprises, starting from the date of acceptance or deemed acceptance.
“Provided that only those specified companies which have payments pending to any micro or small enterprises for more than 45 days from the date of acceptance or the date of deemed acceptance of the goods or services under section 9 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006) shall furnish the information in MSME Form-1,” said the MCA notification.
The new information required now includes the amount paid within 45 days, the amount paid after 45 days, the amount outstanding for 45 days or less, the amount outstanding for more than 45 days, and the reason for the delay in payment/amount outstanding.
Vinod Kumar, President of India SME Forum, said that he is extremely happy with the government’s action by adding a provision and replacing the existing MSME-1 form.
“This is a watershed moment for MSMEs who have been fighting for over 15 years to curb the malpractice of delayed payments and our heartfelt gratitude to the Government which has viewed this long-standing pain point of MSMEs very seriously,” he said.
In February 2023, Finance Minister Nirmala Sitharaman amended the Income Tax Act as part of the FY24 budget to ensure payments to the Micro and Small Enterprises (SME) sector for goods and services purchased within 45 days. The amendment, effective from April 2024, aims to address the working capital shortages faced by SMEs, which play a crucial role in job creation and exports.
However, the amendment has divided the industry. Certain sectors have opposed the 45-day payment cycle, demanding reconsideration in the final Budget for FY25 to be presented in the second half of July. While most SMEs support the amendment, some fear it may lead big businesses to shift their orders to unregistered SMEs.
An enterprise is classified as micro, small, or medium based on its investment in machinery and annual turnover. A micro-enterprise has an investment in plant and machinery not exceeding Rs 1 crore and turnover not exceeding Rs 5 crore; a small enterprise has an investment not exceeding Rs 10 crore and turnover not exceeding Rs 50 crore; and a medium enterprise has an investment not exceeding Rs 50 crore and turnover not exceeding Rs 250 crore.
First Published: Jul 16 2024 | 10:30 PM IST
