The Micro, Small and Medium Enterprises Development Act, 2006
This Act is enacted to facilitate the promotion, development and enhancement
of the competitiveness of the micro, small and medium enterprises and to address
the matters connected therewith or incidental thereto.
This Act came into force from 16th June, 2006.
Classification of Enterprises
The classification of enterprises into the three categories of micro, small
and medium can be of proprietorship, Hindu undivided family, association of
persons, co-operative society, partnership firm, company or undertaking, by
whatever name called.
Micro Enterprise An enterprise engaged
in the manufacture or production of goods pertaining to any industry
specified in the First Schedule to the Industries (Development and
Regulation) Act, 1951, where the investment in plant and machinery is
below rupees twenty five lakh |
An enterprise engaged in providing or rendering of services, where
the investment in equipment is below rupees ten lakh |
Small Enterprise An enterprise engaged
in the manufacture or production of goods pertaining to any industry
specified in the First Schedule to the Industries (Development and
Regulation) Act, 1951, where the investment in plant and machinery is
above rupees twenty five lakh but below rupees five crore |
An enterprise engaged in providing or rendering of services, where
the investment in equipment is above rupees ten lakh but below rupees
two crore |
Medium Enterprise An enterprise engaged
in the manufacture or production of goods pertaining to any industry
specified in the First Schedule to the Industries (Development and
Regulation) Act, 1951, where the investment in plant and machinery is
above rupees five crore but below rupees ten crore |
An enterprise engaged in providing or rendering of services, where
the investment in equipment is above rupees two crore but below rupees
five crore |
Protection to Micro and Small Enterprises for delayed payments by the
buyer of goods or services
Liability of buyer to make the payment
The payments to micro and small enterprises by the buyers of goods or
services from such enterprises should be made on or before the date agreed in
writing or where there is no agreement then on the appointed day. However in no
case the period agreed upon in writing between the parties shall exceed 45 days
from the day of acceptance or the day of deemed acceptance. (Section 15)
In case of delay in payment, date from which and rate at which interest
is payable
Where the buyer fails to make payment as mentioned above, the buyer shall
notwithstanding anything contained in any agreement between the buyer and the
supplier or in any law for the time being in force, be liable to pay compound
interest with monthly rests to the supplier on the amount outstanding from the
appointed day or, as the case may be from the
date immediately following the date agreed upon, at three
times of the bank rate notified by the Reserve Bank.
(Section 16)
Recovery of amount due
For any goods supplied or services rendered by the supplier, the buyer shall
be liable to pay the amount with interest thereon as provided above (Section
17).
Reference to Micro and Small Enterprises Facilitation Council
If there is any dispute between the parties as to the amount due towards the
goods supplied or services rendered as well as the interest charged as mentioned
above then a reference can be made to the Micro and Small Enterprises
Facilitation Council
(Section 18).
Requirement to specify unpaid amount with interest in the annual
statement of accounts
Where any buyer of goods or services from Small, Micro and Medium Enterprises
is required to get his annual accounts audited under any law for the time being
in force, such buyer shall furnish the following additional information in his
annual statement of accounts
(i) the principal amount and the interest due thereon (to be shown
separately) remaining unpaid to any supplier as at the end of each accounting
year;
(ii) the amount of interest paid by the buyer, along with the amounts of the
payment made to the supplier
beyond the appointed day during each accounting
year;
(iii) the amount of interest due and payable for the period of delay in
making payment (which have been paid but beyond the appointed day during the
year) but without adding the interest specified under this Act;
(iv) the amount of interest accrued and remaining unpaid at the end of each
accounting year; and
(v) the amount of further interest remaining due and payable even in the
succeeding years, until such date when the interest dues as above are actually
paid to the small enterprise, for the purpose of disallowance as a deductible
expenditure under section 23 of this Act.
Interest not to be allowed as deduction from Income as per Income-tax
Act, 1961
Notwithstanding anything contained in the Income-tax Act, 1961, the amount of
interest payable or paid by any buyer, under or in accordance with the
provisions of this Act, shall not, for the purposes of computation of income
under the Income-tax
Act, 1961, be allowed as deduction.
Back to Top
|