Micro Small and Medium Enterprises Development (MSMED) Act 2006
The MSMED Act 2006, which came into effect from 02/10/2006 is a single comprehensive act for development and regulation of small enterprises and had been a long outstanding demand of the sector so as to free it from a plethora of laws and regulations, which it had to face with limited awareness and resources.
In addition, recommendations to provide for a proper legal framework for small sector to relieve it of the requirements to comply with multiple rules and regulations were made by the Committees such as the Abid Husain Committee and Study Group under Dr. S.P. Gupta.
In a fast growing economy like ours, the natural mobility of small enterprises to medium ones has to be facilitated through appropriate policy interventions and legal framework. With these objectives in view, the Government came with an exclusive legislation for micro, small and medium enterprises known as the Micro, Small and Medium Enterprises Development Act, 2006.
- Memorandum is to be filed with the District Industries Centre ,by a Micro , Small or Medium Enterprises, as the case may be, under sub section(1) of section 8 of the Micro, Small & Medium Enterprises Development (MSMED) ACT, 2006.
- Three copies of Memorandum for Micro and Small Enterprises and Four copies for Medium Enterprises should be filed.
- There are no fees for processing the Memorandum.
- Existing units should fill up only part II of the Memorandum.
- In case of any change in the information, at any point of time, please inform the details with in three months to DIC.
- The buyer has to make payment on or before the date agreed on between him and the supplier in writing or, in case of no agreement before the appointed day (Appointed date means the day following immediately after the expiry of a period of 15 days from the date of acceptance or the date of deemed acceptance of the goods and services).Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed 45 days from the date of acceptance or the day of deemed acceptance.
- If, the buyer fails to make payment of the amount to the supplier, he shall be liable to pay interest at the rate as mentioned in the agreement entered or as per the law in force or be liable to pay compound interest with monthly rests to the supplier on the amount from the appointed day or, on the date agreed on, at three times of the Bank Rate notified by Reserve Bank
- If, the buyer fails to make payment of the amount to the supplier, he shall be liable to pay interest at the rate as mentioned in the agreement entered or as per the law in force or be liable to pay compound interest with monthly rests to the supplier on the amount from the appointed day or, on the date agreed on, at three times of the Bank Rate notified by Reserve Bank.
- In case of dispute with regard to any amount due, a reference shall be made to the Micro and Small Enterprises Facilitation Council, constituted by the respective State Government.
- The buyer has to disclose the total amount due to the supplier in his annual statement of accounts. If the buyer defaults in disclosing the said amount, then he shall be punishable with a fine which shall not be less than Rs. 10,000.
- Further, the supplier can also opt for Micro and Small Enterprise Facilitation Councils to settle the disputed amount. Any reference of dispute to the council shall be settled within a period of 90 days from the date of making the reference.