Zeal Consultancy - Blog , ROCZeal Consultancy - Blog , ROChttps://www.zealconsultancy.co.in/blogs/rocWed, 22 Apr 2026 18:25:38 +0530http://zoho.com/sites/<![CDATA[Compliance related to Goods and Services obtained from Micro and Small Enterprises]]>https://www.zealconsultancy.co.in/blogs/post/Compliance-related-to-Goods-and-Services-obtained-from-Micro-and-Small-EnterprisesIn this article, we are going to discuss in detail about Form MSME 1]]>

MSME Form 1

For a business to operate successfully, it requires financial resources. Money holds paramount importance, especially for the survival of small businesses. To secure more orders, smaller entities often strive to meet the criteria set by larger organizations, which may include extended credit periods. However, a prolonged credit period can pose liquidity challenges, potentially leading to defaults.

To support smaller organizations, the government has implemented changes in the MSMED Act, 2006. According to these amendments, if organizations delay payments to smaller entities (micro and small enterprises), they will face consequences such as interest charges, additional financial disclosure requirements, disallowance of interest, and liabilities under the Income Tax Act.

Furthermore, there are additional compliance requirements outlined in Form MSME-1 under the Companies Act, 2013. This article will delve into a detailed discussion of Form MSME-1.

Introduction to MSME (viz. Micro, Small and Medium Enterprises):

1. Micro Enterprises
Micro Enterprises are defined as enterprises where the investment in plant and machinery or equipment does not surpass Rs. 1 crore, and the annual turnover remains up to Rs. 5 crores. These small-scale units form the foundation of local economies and play a vital role in employment generation.

2. Small Enterprises
Small Enterprises are enterprises in which the investment in plant and machinery or equipment ranges from over Rs. 1 crore to Rs. 10 crores. Simultaneously, the annual turnover falls between Rs. 5 crores and Rs. 50 crores. This category represents a step beyond micro enterprises and often marks a phase of growth and expansion for businesses.

3. Medium Enterprises
Medium Enterprises are enterprises with an investment in plant and machinery or equipment ranging from over Rs. 10 crores to Rs. 50 crores. The annual turnover for medium enterprises falls within the range of Rs. 50 crores to Rs. 250 crores. These enterprises typically exhibit higher levels of operational scale and complexity.


Conditions under which companies are required to file Form MSME 1:
1. That have obtained goods or services from the Micro and Small enterprise &;
2. Whose payments to the Micro and Small enterprise exceed 45 days from the date of acceptance or deemed acceptance of the goods or services. 

Both conditions need to be fulfilled

Note: 
1. Buyers and seller need to make sure that date of agreement to pay should not exceed 45 days from the date of acceptance or deemed acceptance of good and services.
2. In case there is no agreement, payment should be made within the appointed date which is 15 days from the date of acceptance or deemed acceptance of goods and services.

Details to be Reported in Form MSME 1:
- CIN and PAN of the company
- Name, address and e-mail of the company
- Name and PAN of the suppliers
- Outstanding amount due against the supply of goods or services
- Date from which the amount is due
- Reason for delay in payment of the amount due

Due Date of Filing:
30th April - for the period October to March
31st October – for the period April to September

Penalty for non-compliance of Filing Form MSME-1:
Non-compliance with filing MSME-1 by the specified companies will attract a penalty under Section 405(4) of the Companies Act, 2013. As per Section 405(4), if any company fails to file MSME-1, the company and every officer in default will be liable to a penalty of Rs.20,000. In case of continuing failure, the company and every officer in default will be liable for a further penalty of Rs.1,000 for each day the failure continues, subject to a maximum of Rs.3 lakh.

Therefore, adherence to MSME regulations is imperative, as failure to comply carries substantial consequences. To safeguard the interests of micro and small businesses and improve the payment flow, such provisions has been implemented. The provision encourages payment security and also eliminates the obstacles caused by multiple laws.

Any if you want to comply with filing of the form, click on the tab "Get Started Now" below.
Get Started Now
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