Act provides for facilitating the promotion and development as well as enhancing the competitiveness of Micro, Small and Medium enterprises.
Categorization of Micro, Small and Medium Enterprises
As per Act, The categorization of Micro, Small and Medium is based on investment in Plant and Machinery as below
|Category of Enterprise||Manufacturing Enterprise||Service Enterprise|
|Micro||Not exceeding Rs. 25 lakhs||Not exceeding Rs. 10 lakhs|
|Small||More than Rs. 25 lakhs but less than Rs. 5 Crores||More than Rs. 10 lakhs but less than Rs. 2 Crores|
|Medium||More than Rs. 5 Crores but less than Rs. 10 Crores||More than Rs. 2 Crores but less than Rs. 5 Crores|
For the purpose of computation of investment in plant and machinery, the cost of pollution control, R&D, Safety Devices etc. is excluded
Delayed Payments to MSME
Payment shall be made by buyer to MSME for receipt of goods or service within the period agreed between buyer and supplier. The period shall not exceed 45 days from the date of acceptance of goods or rendering of services. If the payment is not made within due date buyer is liable to pay compound interest with monthly rests to supplier from the date of acceptance of goods or rendering of services or from the date immediately following agreed due date at three times of bank rate notified by RBI.
Disclosure in Notes to accounts
Where buyer is required to get accounts audited, the buyer shall furnish the additional information in notes to accounts as per below format
Treatment of MSME Interest in Computation of Income as per Income Tax Act
Interest payable or paid under MSMED Act is disallowed for computation of income under income tax act.
Non –furnishing of information demanded by Central or State Government officers related to MSME is liable for penalty. In case of first conviction liable for fine upto Rs. 1,000 and in case of subsequent conviction liable for fine which shall not be less than Rs. 1,000 but may extend up to Rs. 10,000.
Non-disclosure of details related to MSME in notes to accounts is punishable with fine up to Rs. 10,000.