MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES NOTIFICATION NO. S.O. 1376(E) DATED MARCH 25, 2025.
REPORTING UNDER FORM MSME-I
Ministry of Micro, Small and Medium Enterprises vide its notification dated November 02, 2018, introduced the concept of reporting of amount whose payments to micro and small enterprise suppliers exceed 45 days from the date of acceptance or the date of deemed acceptance of the goods or services in form MSME-I on a half year basis i.e within a period of 30 days from the end of each half year.
In Form MSME-1, the Companies are required to give reason for delay in payment to Micro and Small Enterprises. In order to clarify on the reason of delay Ministry of Micro, Small and Medium Enterprises issued a notification on March 25, 2025 that the reason “as per agreement between the vendor and the Company” will not be considered as justifiable and the Companies are required to make the payment within the 45 days even if there is an agreement between the vendor and the Company.
Amendment: As per Section 15 of the Micro, Small and Medium Enterprises Development Act, 2006 , where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day: Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed forty-five days from the day of acceptance or the day of deemed acceptance.
Reason for Amendment: It was observed that some of the Companies were specifying the reasons as:
“As per agreement between the buyer and supplier due to which the payment is required to be made after 45 days. “
Therefore, Section 15 of the Act is added vide its notification dated 25.03.2025, to clarify that even if the agreement exists between the supplier and buyer to make the payment after 45 days, the said agreement shall not prevail.
Actionable: While filing Form MSME-1, the reason of the delay for the payment needs to be specified. The Companies are now required to give suitable reason for delay in payment even if the agreement exists between the supplier and buyer to make the payment after 45 days, the said agreement shall not prevail.
The Companies are required to clear the dues to MSME vendor(s) within 45 days even if the agreement exist between them. The reporting under Form MSME-I will be as per the existing format and timelines and there is no change therein.
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