Micro small and medium Enterprise (MSME)- 5 Things to know

India is Developing Country and that too developing very fast as compared to other economies in world as in fact, India is just behind China in terms of fastest growing economy as per UN trade Agency. Indian Government has always put a thrust on small business to grow right after independence but limited to some specific industries. However, Government passed and enforced “Micro, Small and Medium Enterprises Development Act, 2006” with effect from 2^nd October, 2006 which widened the scope. It comes under Ministry Of Small Scale Industries.

Now let us explore some important aspect of Micro small and medium Enterprise (MSME) which includes What is Micro small and medium Enterprise, Who regulate Micro small and medium Enterprise, What are Micro, Small & Medium Enterprises, How to get registered under MSME registration and What are the benefits of getting registered under MSME?

1. What is Micro small and medium Enterprise (MSME)?

Micro small and medium Enterprise (MSME) are enterprise who run their business but have a specific amount of investment in business, which is generally small investment.

2. Who regulate Micro small and medium Enterprise (MSME)?

Ministry Of Small Scale Industries regulate it and is covered under The Khadi and Village Industries Commission Act, 1956, The Coir Industry Act, 1953 and the Micro, Small and Medium Enterprises Development Act, 2006. Further many regulations and amendments tend to be notified by the central government from time to time.

3. What are Micro, Small & Medium Enterprises?

Definitions of Micro, Small & Medium Enterprises In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes:

1. Manufacturing Enterprises-he enterprises 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) or employing plant and machinery in the process of value addition to the final product having a distinct name or character or use. The Manufacturing Enterprise are defined in terms of investment in Plant & Machinery.

2. Service Enterprises:-The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment.

The limit for investment in plant and machinery/equipment for manufacturing/service enterprises are as under:-

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4. How to get registered under MSME registration?

Any person concerned with a Micro, Small & Medium Enterprises can get the enterprise registered under it.

5. What are the benefits of getting registered under MSME?

• Easy Bank Loans grant

All the banks in India provide easy and collateral free loans to MSMEs as directed by Government of India. This initiative guarantees funds to micro and small sector enterprises. Under this scheme, both the old as well as the new enterprises can claim the benefits. A trust named The Credit Guarantee Trust Fund Scheme was introduced by the GOI(Government Of India), SIDBI(Small Industries Development Bank Of India) and the Ministry of Micro, Small and Medium Enterprise to make sure this scheme is implemented (Credit Guarantee Scheme) for all Micro and Small Enterprise.

• ISO Certification Charges Reimbursement

The registered MSME enterprises can claim the reimbursement of the expenses that were spent for the ISO certification.

• Rebate on Electricity Bills

This concession is available to all the Enterprises that have the MSME Registration Certificate by providing an application to the department of the electricity along with the certificate of registration by MSME

• Protection against Payments

At times, the buyers of services or products from the MSME’s or SSIs tend to delay the payment. In case, if any MSME registered enterprise supplies any goods or services to a buyer then the buyer is required to make the payment on or before the agreed date of payment or within 15 days from the day they had accepted the goods and services from MSME or SCI registered business ( if there is no mention of the date of payment).

If the buyer delays the payment for more than 45 days after accepting the products or services then the buyer has to pay compound interest along with interests (monthly) on the amount that was agreed to be paid. The interest rate is three times the rate that is notified by the Reserve Bank of India.

• Industrial Promotion Subsidy Eligibility

Enterprises registered under MSME are also eligible for a subsidy for Industrial Promotion as suggested by the Government.

• Overdraft Interest Rate Exemption

Businesses or enterprises registered under MSME can avail a benefit of 1% on the Over Draft as mentioned in a scheme that differs from bank to bank.

• Subsidy on Patent Registration

A hefty 50% subsidy is given to the Enterprise that has the certificate of registration granted by MSME. This subsidy can be availed for patent registration by giving application to respective ministry.

• Income Tax Exemptions

There are several benefits that can save lakhs of amount that may be assessable to tax in the absence of this certificate. The benefit of a presumptive basis of taxation is available to enterprises, which relieves one from maintaining detailed books of accounts and undergoing audit procedures.

Disclaimer:– The above article is brief on basics of Micro, Small & Medium Enterprises, there are other important aspects also which are considered and are kept in mind while going for Micro, Small & Medium Enterprises registration. The above article is inclusive list and has many other important which are kept in mind while going for MSMEs registration as well as benefits to apply as stated above.

(The Author is Corporate Consultant and provides varied array of services including secretarial, financial, Intellectual property, start-ups, taxation, Audit, GST, Book keeping and other ancillary advisory service and can be contacted through email id:- triptishakyacs2017@gmail.com)