Half-Yearly Return Mandated for Delayed Payments to MSMEs
The Ministry of Micro, Small and Medium Enterprises (MSME), through a notification dated 25th March 2025, has introduced a new compliance requirement for businesses dealing with Micro and Small Enterprises (MSEs). Companies procuring goods or services from MSEs must now submit a half-yearly return to the Ministry of Corporate Affairs (MCA) if payments exceed 45 days from the date of acceptance or deemed acceptance of the supply.
Key Compliance Requirements
As per Sections 9 and 15 of the MSME Development Act, 2006, the half-yearly return must include:
Outstanding Amount: Details of unpaid dues to MSEs.
Reasons for Delay: Justification for exceeding the 45-day payment limit.
This return aims to improve transparency, ensure timely payments to MSMEs, and enhance their financial stability.
Impact on Businesses
Increased Compliance: Companies must monitor their payment cycles and file returns regularly.
Penalty Risks: Failure to comply may attract penalties under the Companies Act, 2013.
Improved MSME Liquidity: The regulation encourages large companies to prioritize MSME payments.
Way Forward for Businesses
Ensure timely payments to MSEs within the 45-day limit.
Maintain proper records of transactions with MSEs.
File half-yearly returns with accurate details to avoid penalties.
Conclusion
This mandate reinforces the government’s commitment to strengthening MSMEs and ensuring a robust business ecosystem. By enforcing timely payments, the regulation seeks to protect the financial health of small businesses, enhance their cash flow, and foster a more equitable business environment. Companies must proactively comply with this requirement to avoid legal consequences and support the MSME sector’s growth.
