The MSME Return form, known as the MSME-1 form, was introduced by the government in January 2019 to monitor payments that have been outstanding for over 45 days for goods purchased from MSMEs. This initiative aims to address the critical issue of delayed payments. The form must be submitted biannually, with deadlines set for October 31 for the April to September period and April 30 for the October to March period each year.
In July of this year, the government revised the MSME-1 form to collect more comprehensive information from buyers who delay payments. Previously, the form required specified companies to disclose the amount due, the due date, and the reason for the delay in accordance with the Specified Companies (Furnishing of Information about Payment to Micro and Small Enterprise Suppliers) Order, 2019.
The updated form now asks for additional information, including the amount paid within 45 days through invoice discounting via TReDS or other payment methods, the amount paid after 45 days, the amounts outstanding for 45 days or less, as well as those outstanding for over 45 days. It also requires the name and PAN of the MSE supplier, along with the reason for the payment delay.
To be valid, the MSME-1 form must be digitally signed by individuals such as the director, managing director, manager, company secretary, CFO, CEO, or any other authorized company representative. Essential details like the director identification number (DIN) of the director or managing director, or the PAN of the manager, CFO, CEO, or other authorized personnel are also required.
Non-compliance with the submission deadlines results in a penalty of Rs 20,000 imposed on the company and any officers responsible for the failure. This penalty escalates to Rs 1,000 per day and can accumulate to a maximum of Rs 3 lakh for repeated failures.
According to data from the MSME Samadhaan portal as of October 11, 2024, there were 2.09 lakh delayed payment applications filed, amounting to Rs 46,595 crore, by micro and small enterprises. Out of these, only 19,388 applications involving Rs 2,459 crore were settled mutually, while 41,909 applications concerning Rs 6,970 crore were resolved.