What CFO Needs to Know about the Government Guidelines on Mandatory Reporting of MSME Dues

What CFO Needs to Know about the Government Guidelines on Mandatory Reporting of MSME Dues

The recent guidelines related to MSME dues outstanding from the ministry needs the attention of CFO and Auditors of corporations.The non-compliance of the MSME guidelines may attract penalty on account of interest according to the notification.  Every specified company shall file in MSME Form I details of all outstanding dues to Micro or small enterprises suppliers  within 45 days from the date of publication.  As per the MSME guidelines issued on 22/01/2019 the company the report on MSME on outstanding due shall include all the details as follows:

  • Particulars of the name of MSME
  • Suppliers and amount of payments due
  • Financial Years/Particulars, Name of MSME Suppliers
  • PAN of Suppliers Amount Due
  • Date from which Amount Due

If any delay in payment of dues to company should report by filing the MSME Form 1 with ROC. The MSME guidelines specify tow reporting now onward;

  • Initial Reporting: It is one time reporting – should report the dues as on 22/01/2019 with 30 days from notification
  • Half yearly Reporting as follows;

– For the period April to September – within 31st October of every year

–  For the period October to March – 30th April of every year

The Micro, Small and Medium Enterprises are defined as per MSME Act, 2006 and it is good to refresh such definition once more.

Enterprises engaged in the manufacture or production, processing or preservation of goods as specified below:

  • A micro enterprise is an enterprise where investment in plant and machinery does not exceed Rs.25 lakh;
  • A small enterprise is an enterprise where the investment in plant and machinery is more than Rs.25 lakh but does not exceed Rs.5 crore;
  • A medium enterprise is an enterprise where the investment in plant and machinery is more than Rs.5 crore but does not exceed Rs.10 crore

There are two classes under the definition of Micro, Small and Medium Enterprises (MSME) as given below;

  • Manufacturing Enterprises: he enterprises engaged in the manufacture or production of goods pertaining to any industry specified in the first schedule to the industries (Development and regulation) Act, 1951) or employing plant and machinery in the process of value addition to the final product having a distinct name or character or use. The Manufacturing Enterprise are defined in terms of investment in Plant & Machinery
  • Service Enterprises: The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment

It is good to make payment to MSME in time to avoid further communication from government authorities.  Also, it is time to list out such outstanding dues immediately and do the reporting as needed to avoid challans or payment of higher interest.

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