Section

Details

Introduction

The Ministry of Corporate Affairs (MCA) has introduced the Specified Companies (Furnishing of Information about Payment to Micro and Small Enterprise Suppliers) Amendment Order, 2024. Effective from July 15, 2024, this amendment aims to improve transparency and ensure timely payments to micro and small enterprises (MSEs).

Key Updates

New Reporting Requirements

- Companies must report payments pending to MSEs for more than 45 days from the date of acceptance or deemed acceptance of goods or services.

Comprehensive Financial Reporting

- Amounts paid within 45 days.

- Amounts paid after 45 days.

- Amounts outstanding for 45 days or less.

- Amounts outstanding for more than 45 days.

- Reasons for any payment delays.

Continuous Reporting Obligation

- Previously, companies were required to file MSME-1 Returns only if there were outstanding amounts at the end of the reporting period (March 31 and September 30).

- The new amendment requires reporting on payments made after 45 days during the half-year period, regardless of whether amounts are outstanding at the end of the reporting period.

Implications for Companies

Ensuring Compliance

- Companies must comply with the updated MSME Form-1 requirements to avoid penalties.

- Continuous reporting underscores the need for transparent and timely financial transactions with MSME suppliers.

Strengthening Supplier Relationships

- Enforcing detailed reporting on payment practices aims to ensure timely payments to MSE suppliers.

- This initiative fosters stronger relationships between companies and their MSE suppliers, promoting a healthier business ecosystem.

Conclusion

- The revised MSME-1 Form is a significant step towards greater financial accountability and support for MSMEs.

- Companies must provide detailed information on payments to MSME suppliers, ensuring timely financial transactions and supporting the growth and stability of the MSME sector.

- Adhering to these new regulations helps companies avoid penalties, strengthens supplier relationships, and contributes to a more transparent and reliable business environment.

References

- Ministry of Corporate Affairs Notification, July 15, 2024.

- Specified Companies (Furnishing of Information about Payment to Micro and Small Enterprise Suppliers) Amendment Order, 2024.