The MSME sector in India is developing at a rapid pace. This industry helps in promoting employment opportunities in rural and backward areas.
The MSMED Act, 2006 (Micro, Small and Medium Enterprises Development Act) came into existence to address different issues pertaining to policy development and improvement of this sector. There is a particular ministry authorising all the activities of MSME. This ministry is known as the Ministry of Micro, Small and Medium Enterprises (M/o MSME)
Meaning of Micro Small and Medium Enterprise?
Under the MSME registration process, there are different forms of small-scale industries. Under MSME registration process, there is Micro, Small and Medium Enterprises. All small-scale industries present under this are considered as MSME.
There are different eligibility criteria for qualifying for as Micro, Small and a Medium enterprise. The turnover would determine the type of registration required for a particular entity under the MSME registration process.
On 1st June 2020, the Finance ministry revised the criteria for turnover to be eligible under MSME registration.
On 2nd July, 2021, Retail and wholesale trade enterprises were brought under the MSME Act
Criteria for MSME Registration
1. Micro-Enterprise: Any enterprise or entity would be classified as a Micro-enterprise, if the investment in plant and machinery is not more than Rs. 1 Crore AND the turnover is not more than Rs. 5 Crore.
2. Small Enterprise: Any enterprise or entity would be classified as a small enterprise, if the investment in plant and machinery is not more than Rs. 10 Crore AND the turnover is not more than Rs. 50 Crore.
3. Medium Enterprise: Any enterprise or entity would be classified as a medium enterprise, if the investment in plant and machinery is not more than Rs. 50 Crore AND the turnover is not more than Rs. 250 Crore.
Benefits of MSME Registration
1. Bank Loans: MSMEs can easily secure loans. This would become seamless, once an MSME is registered with the relevant authorities.
2. Tax Exemptions: MSMEs can claim different form of tax exemptions and rebates which are provided by the government.
3. Minimum Alternative Tax (MAT): Registered MSMEs have the benefits to carry forward minimum alternative tax for 15 years. Usually, this benefit is only for 10 years.
4. Secure Tenders: Registered MSMEs would have access to government contracts and tenders. It is easier to secure a tender for a registered MSME, as they would have authenticity. Apart from this, registered MSMEs would be notified by the relevant authority regarding a tender.
5. Ease of Credit: It is easier to secure a different form of credit facilities from financial entities. Hence MSME which are registered have this benefit. Hence MSME registration is required for securing faster credit.
6. Higher benefits from Government: Registered MSMEs have more benefits when it comes to government facilities. Not only the government but even the general public would have more confidence and faith in a registered MSME when compared to an unregistered MSME.
7. Opportunities for Growth: MSME registration provides more opportunities in terms of diversification. An individual, who considers MSME registration, would get more recognition. Apart from this, registered MSMEs would be recognised when it comes to international commercial conventions and export-oriented fairs.
8. Collateral Loans: Registered MSMEs would also secure the benefits of collateral free loans. Usually, loans provided to MSMEs would be of a minimum value of less than Rs 10 lakhs. Banks would not require any form of collateral for any loan value below the above amount.
9. ISO Certified: Through MSME registration, an individual can secure the benefits of ISO certification process. Apart from this, all MSMEs which are registered as per the requirement would get any form of reimbursement for ISO certification.
10. Trademark Fees Discount: One can get a discount of 50% on compulsory government fees of Trademark, if they are registered under MSME
Documents/Details Required for MSME Registration Process
1. Identification Details- Name, Address, Pan card Information, Aadhaar
2. Social Category- Belonging to which group
3. Gender Category
4. Address of the Plant or the Premises
5. Location of the Plant or Premises
6. Physical Status of the Applicant
7. Incorporation Details of the Entity
8. NIC Code
9. Information Pertaining to Bank
10. Any investment information with the plant and machinery
11. Equipment Related Information.
Frequently Asked Questions