Impact of Delayed Payment to MSME Vendor

by Avadhesh Sharma SEO Analyst

MSME stands for Micro Small Medium Enterprise, is a new branch of the Indian government. The apex body of the MSME has a unique formulation of administrative rules and regulations. Lots of laws have been implemented by the Indian government to enhance the usefulness of the MSME.

The primary concept of creating the MSME is to provide loans to small-scale business organizations at a low-interest rate. The government provides subsidies to run MSME in the village and rural areas. MSME has huge benefits, and it can help poor and helpless people to start new businesses.

Objective of MSME

The unique objective of MSME is as follows-

1.  MSME is useful to promote small-scale business, IT infrastructure, electronics, and telecommunication industries.

2. It promotes electronics hardware manufacturing and software development processes.

3.   It can promote the innovation of new skills and business structures.

4.   MSME promotes the growth of the overall business development of the country.

Features   of MSME

The unique features of MSME are as follows-

1. It works for the welfare of the workers

2. It provides a minimum credit limit against the banks

3. It promotes business development.

4. It assists the import and export business

5. It provides modern facilities to the business firms for promoting their business

6. It supports the food processing industry.

7. In rural India, MSME has a huge demand due to its unique benefits and facilities

8. It has several acts according to the company act 2013

Provision of Companies Act, 2013 for MSME

As per the companies act 2013, there is a specific action for the impact of the late payment for MSME. In section 15, there is an agreement between the buyer and supplier for writing the invoice regarding the MSME payment.

In section 16, when buyers fail to make payment to the supplier, the buyer has to make payment with the compound interest.

In section 22, when buyers are required to get their annual audited report under any law, they have to pay the principal amount with interest at the end of each accounting year.

In section 23, the further interest and amount that is due or payable in the succeeding years until the interest dues.

Impact of Delay Payment in MSME

When a company or general people take a loan under the MSME scheme, they may not repay the loan amount within time, which may cause several negative impacts on the economy.

1. If a company makes payment to the MSME vendor after 45 days of the service acceptance, the companies have to perform the following tasks-

a. A company must file an e-form MSME-1 every half year with the registrar of companies.

b. A company should provide the financial statement on the basis of principal amount and interest due for MSME

c.  The amount of interest that becomes due to the late payment.

d.  The unpaid amount

e.  The amount is due for the succeeding years.

MSME Registration Process

MSME registration process is unique and functional. Ministry of MSME distributed the certificate in the name of Udyog. In 2015, the MSME department changed the name of the MSME certificate to Udyog Aadhaar certificate with a unique reference number. Udyog certificate has lifetime validity for a company or a person.

But later on, the Indian government has created several norms for the MSME manufacturing and service sector. MSME classification is performed as per the organization turnover and amount of investment in machinery, plant, and equipment.

Benefits of MSME registration

The unique benefits of having an MSME certificate are as follows-

1.  The interest rate of the MSME is lower than commercial banks; thus, it is easy to repay the loan amount for MSME

2. MSME loan is 100% collateral-free loans from any bank as per the bank policy

3.  It gets special consideration on international trade fairs.

4.  MSME loan gets a 50% subsidy for patent registration.

5. The maximum state government offers subsidies on taxes, entry to state-run industrial estates, and power.

6.  It gets tax benefits

7. When a business gets registration under the MSME scheme, it gets a higher preference for government certificates and licenses.

8. Business organizations can get special tenders that are open only for the MSME industries.

Documents Essential for MSME Registration

The essential documents that are useful for MSME registration are as follows-

1.         Name of the company or business organization

2.         Nature of the business

3.         Date of incorporation

4.         Mobile number and e-mail address of the enterprise

5.         Company address of the enterprise

6.         PAN Card of the company

7.         Number of employees in the enterprise

8.         Investment in machinery, plants, and equipment

9.         Applicant name and details

10.       GST number of the company

11.       Aadhar card and pan card of the company's director

Process of Choosing MSME Registrar

When you decide to register or buy an MSME certificate, you can contact an authentic Chartered accountant who can guide you properly about the MSME registration process. It is not effective to know all the detail about the MSME registration. In such a case, various CA firms can help you drastically.

Company Bio

PKP Consult is an authentic charter accountant firm that offers huge facilities to its clients regarding MSME registration. You can contact this CA firm through e-mail or phone, and they will provide adequate information about the MSME registration as per their knowledge.

They always follow the essential government rules and regulations regarding MSME registration, and it can help its clients to stay relaxed during the registration process. They charge a reasonable price for MSME registration that can help small and medium scale businesses.

It is a renowned CA firm in India that tries to do its level best to satisfy the client's requirements. 

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Created on Nov 27th 2021 07:24. Viewed 151 times.

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