Payments to Micro and Small Enterprises (MSE)

By Rupin Chopra and Apalka Bareja

The MSME Samadhaan is an online Delayed Payment Monitoring System, governed by the Ministry of MSME for filing online application by the supplier MSE (Micro and Small Enterprise) unit for the delayed payments against the buyer of goods/services before the concerned MSEFC.

Chapter V of the Micro, Small and Medium Enterprises (MSME) Act, 2006 deals with the provisions in regard to the “Delayed Payments to Micro and Small Enterprises”. [Section 15 and 16 of the MSME Act, 2006]

The State Governments have established Micro and Small Enterprise Facilitation Council (MSEFC) for settlement of disputes on getting references/filing on Delayed Payments. [Section 20 and 21 of the MSME Act, 2006]

Click on this link to visit the official website of the MSME Samadhaan portal:

https://samadhaan.msme.gov.in/MyMsme/MSEFC/MSEFC_Welcome.aspx.

Types of Micro and Small Enterprises:

The Government of India has classified an MSME Enterprise in three categories i.e., Micro, Small and Medium Enterprises. The criteria for the same is listed below:

amount chart
TYPE	INVESTMENT	TURNOVER
MICRO	< 1 crore	< 5 crores
SMALL	< 10 crores	<50 crores
MEDIUM	<50 crores	<250 crores

Applicability:

Any Micro or Small Enterprise having valid Udhyog Aadhar Memorandum (UAM) can apply.

Benefits:

Online: This portal confers upon the MSEs to file application against the buyer of goods or services, if the payment for the same has not been received within 45 days from the date of acceptance or the date of deemed acceptance. The applications for delayed payments are filed before the Micro and Small Enterprise Facilitation Council (MSEFC).This portal remarkably facilitate the monitoring of delayed payments in an efficient manner.
Status: This portal also grants facility to the MSEs to check the status of their applications being filed via online.
Public: The information provided on this portal shall be accessed in the public domain, with an intent to inflict moral obligation on the defaulting parties.
Dispute Resolution Mechanism: The State Governments have established Micro and Small Enterprise Facilitation Council (MSEFC) for settling disputes on getting references/filing on Delayed Payments. State Government/UTs are requested to ensure that the MSE Facilitation Council hold meetings regularly and delayed payment cases are decided by the Councils within a period of 90 days as stipulated in the MSMED Act, 2006.

Implications for Delayed Payments to MSMEs:

If a company makes payment to its MSME vendors after 45 days of acceptance of goods/services, company must file:

Form: E-form MSME 1 every half year with ROC mentioning all transaction.
Interest: The Company is liable to pay interest on delayed payment to MSME registered supplier.
Rate of Interest: Rate of Interest shall be three times of the bank rate notified by the Reserve Bank.

Due Date to file Form MSME-1:

MSME-1 is a half-yearly return which needs to be filed by the companies, who have failed to make payment to the suppliers within 45 days from the date of acceptance of such goods/services.

The following information must be stated in the form:

The particulars of the outstanding amount and
Reasons for delay in payment to the MSME enterprises

The due dates for filing Form MSME-1 has been listed below:

For the period “October-March”, the due date is 30^th April
For the period “April-September”, the due date is 31^st October

Penalty:

Every company that gets supplies of goods or services from micro and small enterprises and whose payments to micro and small enterprises exceed 45 days from the date of acceptance or the date of deemed acceptance of the goods or services, fails to file MSME-1 to the Ministry of Corporate Affairs within the due date as specified above, shall be liable to a penalty amounting to Rs.20,000/- as per the provision of Section 405(4) of the Companies Act, 2013.

Further, in case of continuing failure, the company and every officer in default will be liable for a further penalty of Rs.1000/- for each day the failure continues, subject to a maximum of Rs.3 lakh.

Isha Sharma, Junior Associate at SSRANA has assisted in the research of this article.

Benefits of MSME Registration in India

Delayed Payments to Micro and Small Enterprises (MSE) under the MSME Act, 2006

Types of Micro and Small Enterprises:

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