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| Complying with the Disclosure Norms |
Micro, Small, and Medium Enterprises (MSMEs) in India is not just a sector; it is a catalyst for economic dynamism, job creation, and innovation. Aspiring entrepreneurs keen on navigating the intricacies of setting up an MSME business in India can find an array of opportunities awaiting them. This article discusses about the important disclosure required to be made by the Companies in their Financial Statements w.r.t. dues payable to MSME suppliers.
Important Disclosure in the Financial Statements w.r.t. MSME Suppliers
In accordance with Schedule III, Division II (Section 129 of the Companies Act, 2013), the companies are required to disclose the following with regard to trade payables:
1. On the face of the balance sheet - (for non-current and current trade payables)
Trade Payables:
(i) total outstanding dues to micro and small enterprises; and
(ii) total outstanding dues of suppliers other than micro and small enterprises
2. The following details relating to micro, small and medium enterprises shall be disclosed in the notes forming part of Financial Statements:
(a). the principal amount and the interest due thereon (to be shown separately) remaining unpaid to any supplier at the end of each accounting year;
(b). the amount of interest paid by the buyer in terms of section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 (27 of 2006), along with the amount of the payment made to the supplier beyond the appointed day during each accounting year;
(c). the amount of interest due and payable for the period of delay in making payment (which has been paid but beyond the appointed day during the year) but without payment of interest for the delayed period as specified under the Micro, Small and Medium Enterprises Development Act, 2006;
(d). the amount of interest accrued and remaining unpaid at the end of each accounting year; and
(e). the amount of further interest remaining due and payable even in the succeeding years, until such date when the interest dues above are actually paid-off to the small enterprise, for the purpose of disallowance of a deductible expenditure under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.
3. Further ageing needs to be provided as mentioned in the above Division for the trade payables standing at the end of the financial year.
In the financial statements, trade payables shall include micro and small enterprise to whom the amount shall be DUE or NOT DUE. Only the amounts which are due should be disclosed as total outstanding dues of micro and small enterprises and the amount which are not due should be disclosed as total outstanding dues of suppliers other than micro and small enterprises.
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