prpri MSME – Benefits and Package MSME – Benefits and Package

Q1. What is MSME?



♥ Engaging Manufacturing or Production of goods as well as enterprises engaging in providing or rendering of services other than:

02 Forestry and Logging

03 Fishing and Aquaculture

45 Wholesale and retail trade and repair of Motor Vehicle and Motorcycles

46 Wholesale trade except of Motor Vehicle and Motorcycles 47

47 Retail Trade Except of Motor Vehicles and Motor Cycles

97 Activities of Households as employees for domestic personnel

98 Undifferentiated goods and services producing activities of private households for own use

99 Activities of extraterritorial organization and bodies

Q2. What should be the investment & turnover?


Eligibility Micro Small Medium
Investment Upto Rs 1 Cr Upto Rs 10 Cr Upto Rs 20 Cr (Rs 50 Cr)*
Turnover Upto Rs. 5 Cr Upto Rs. 50 Cr Upto Rs. 100 Cr (Rs. 250 Cr)*

* Based on the cabinet decision announced on 1st June 2020.

Prior to announcement of the package, Hon Finance Minister, there was no criteria of turnover and investment limit was very low. Now, such units can invest in plant & machinery and continue to enjoy the benefits of MSME.

Q3. What are the benefits of MSME?

 Ans: 1. Prime Minister Employment Generation Program

2. Performance and Credit Rating Scheme

3. Credit Guarantee “Trust Fund for Micro Small Enterprises

4. Interest Subsidy Eligibility Certificate

5. Science and technology Scheme

6. Market Promotion & Development Scheme

7. Revamped Scheme of Fund For Regeneration of Traditional Industries

8. Coir Vikas Yojana

9. Coir Industry Technology Upgradation Scheme

10. Science & Technology (S&T) for Coir

11. Skill Upgradation & Mahila Coir Yojana

12. Export Market Promotion

13. Domestic Market Promotion Scheme

14. Trade & Industry Related Functional Support Services

15. Welfare Measures (Pradhan Mantri Suraksha Bima Yojana)

16. Financial Support to MSME in ZED Certification Scheme

17. Promoting Innovation , Rural Industry & Entrepreneurship

18. National Manufacturing Competitiveness Programme

19. Credit Linked Capital Subsidy for Technology Upgradation

20. ISO 9000/ ISO 14001 Certification Reimbursement

21. Marketing Support / Assistance to MSMEs

22. Lean Manufacturing Competitiveness for MSMEs

23. Design Clinic for Design Expertise to MSMEs

24. Technology and Quality Upgradation Support to MSMEs

25. Entrepreneurial and Managerial Development

26. Enabling Manufacturing Sector to be Competitive

27. Building Awareness on Intellectual Property Rights

28. International Cooperation

29. Marketing Assistance Scheme

30. Procurement and Marketing Support Scheme

31. Assistance to Training Institutions

32. Micro & Small Enterprises Cluster Development

Q4. What are other Benefits?

 Ans: Benefits offered by MSME Ministry: Apart from above schemes, MSMEs are eligible to avail following schemes :


  • The Micro, Small and Medium Enterprise Development (MSMED) Act, 2006 contains provisions of Delayed Payment to Micro and Small Enterprise (MSEs). (Section 15- 24). State Governments to establish Micro and Small Enterprise Facilitation Council (MSEFC) for settlement of disputes on getting references/filing on Delayed payments. (Section 20 and 21)
  • MSEFC of the State after examining the case filed by MSE unit will issue directions to the buyer unit for payment of due amount along with interest as per the provisions under the MSMED Act 2006.
  • The buyer is liable to pay compound interest with the monthly rests to the supplier on the amount at the three times of the bank rate notified by RBI in case he does not make payment to the supplier for his supplies of goods or services within 45 days of the acceptance of the goods/service rendered. (Section 16)
  • Every reference made to MSEFC shall be decided within a period of ninety days from the date of making such a reference as per provisions laid in the Act.
  • If the Appellant (not being the supplier) wants to file an appeal, no application for setting aside any decree or award by the MSEFC shall be entertained by any court unless the appellant (not being supplier) has deposited with it, the 75% of the award amount. (Section 19)
  • For filing online application by the supplier MSE unit against the buyer of goods/services before the concerned MSEFC of his/her State/UT.
  • These will be viewed by MSEFC Council for their actions.
  • These will be also visible to Concerned Central Ministries, Departments, CPSEs, State Government, etc. for pro-active actions.


  • The Public Procurement Policy for Micro and Small Enterprises (MSME) order 2012 has mandated Every Central Ministry/Department/PSU shall set an annual goal for procurement from the MSE sector at the beginning of the year, with the objective of achieving an overall procurement goal of minimum 25 per cent of the total annual purchases from the products or services produced or rendered by MSMEs. Out of 25% target of annual procurement from MSMEs.


On SAMPARK Portal,  recruiters can do candidate search and for contacting candidate, recruiter is required to register.

  • Recruiters may approach contact centre for their job postings without self registration and necessary assistance will be provided in registration and job posting
  • Recruiters can do a candidate search without registration also, however to contact the candidate registration is must.
  • One has to register in the portal with basic minimal information and need to update profile post registration which will help the candidate to have better reach to recruiters.
  • Candidate need to provide name, institute name & date of birth for registration.
  • Candidates with incorrect credentials / data feeding would not be allowed to further register themselves on the portal and access will be denied.
  • Candidates may carry out job search without registration, however, cannot contact the employer without registration in portal.

Benefits offered to MSME by RBI:

  • Priority Sector Lending for MSME – MSME are considered in priority sector and there is a reduction in rate to the extent of 1%.

Priority sector lending include only those sectors as part of the priority sector, that impact large sections of the population, the weaker sections and the sectors which are employment-intensive such as agriculture, and Micro and Small enterprises. Detailed guidelines on Priority sector lending are available in our Master Direction on Priority sector lending no. FIDD.CO.Plan.1/04.09.01/2016-17 dated July 7, 2016

  • Interest Subvention Scheme – Govt of India provides interest subvention @2% for manufacturing goods falling under specified custom tariff heading.
  • Trade Receivables Discounting System (TReDS)
  • It is an electronic platform that allows auctioning of trade receivable. The process is also commonly known as ‘bills discounting’, a financier (typically a bank) buying a bill (trade receivable) from a seller of goods before it’s due or before the buyer credits the value of the bill. In other words, a seller gets credit against a bill which is due to him at a later date. The discount is the interest paid to the financier.
  • TReDSis a digital platform for MSMEs to auction their trade receivables at competitive rates through online bidding by Financiers
  • The objective is to address the critical needs of MSMEs
    • Promptly finance trade receivables
    • Financing trade receivables based on Buyers credit rating
  • Settlement
    • Settlement through NACH supports many-to-many situation
    • Reversal of unsettled transactions handled automatically and resolves issues related to reconciliation of payments
  • Liberalized Provisioning and Debt Restructuring

The Ministry of MSME, Government of India and SIDBI set up the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) with a view to facilitate flow of credit to the MSE sector without the need for collaterals / third party guarantees. The main objective of the scheme is that the lender should give importance to project viability and secure the credit facility purely on the primary security of the assets financed. The Credit Guarantee scheme (CGS) seeks to reassure the lender that, in the event of a MSE unit, which availed collateral – free credit facilities, failing to discharge its liabilities to the lender, the Guarantee Trust would make good the loss incurred by the lender up to 85 per cent of the outstanding amount in default.

The CGTMSE would provide cover for credit facility up to Rs. 200 lakh which have been extended by lending institutions without any collateral security and /or third party guarantees. A guarantee and annual service fee is charged by the CGTMSE to avail of the guarantee cover. For more details you may visit

A viable/potentially viable unit may apply for a debt restructuring if it shows early stage of sickness. In such cases the banks may consider to reschedule the debt for repayment, consider additional funds etc. A debt restructuring mechanism for units in MSME sector has been formulated and advised to all commercial banks. The detailed guidelines have been issued to ensure restructuring of debt of all eligible small and medium enterprises. Prudential guidelines on restructuring of advances have also been issued which harmonises the prudential norms over all categories of debt restructuring mechanisms (other than those restructured on account of natural calamities). The relevant circulars in this regard are circular DBOD.BP.BC.No.34/21.04.132/2005-06 dated September 8, 2005 and circular DBOD.No.BP.BC.37/21.04.132/2008-09 dated August 27, 2008 which are available on our website

  • Bank’s lending to the Micro ,Small and Medium enterprises as under is eligible to be reckoned for priority sector advances:

MSMEs engaged in the manufacture or production of goods to any industry specified in the first schedule to the Industries (Development and Regulation) Act, 1951 and as notified by the Government from time to time is reckoned for priority sector advances.

MSMEs engaged in providing or rendering of services and defined in terms of investment in equipment under MSMED Act, 2006.

Detailed guidelines on lending to the Micro, Small and Medium enterprises sector are available in our Master Direction FIDD.MSME & NFS.12/06.02.31/2017-18 dated July 24, 2017. The instructions issued by RBI, to banks, on various matters are available on our website

As part of the financial sector liberalisation, all credit related matters of banks including charging of interest have been deregulated by RBI and are governed by the banks’ own lending policies. With a view to improve transparency in the methodology followed by banks for determining interest rates on advances and the efficiency of monetary policy transmission, from April 1, 2016, banks are required to sanction all their advances with reference to the Marginal cost of fund based lending rates (MCLR). In no case the interest rates on advances shall fall below MCLR. However, loans sanctioned under the Base rate/BPLR regime shall continue till the maturity or renewal. Banks shall have to provide an option to the customers to switch to the MCLR from Base rate/BPLR and this should not be treated as a foreclosure of existing facility.

In terms of our circular RPCD.SME&NFS.BC.No.79/06.02.31/2009-10 dated May 6, 2010, banks are mandated not to accept collateral security in the case of loans upto Rs 10 lakh extended to units in the MSE sector. Further, in terms of our circular RPCD/PLNFS/BC.No.39/06.02.80/2002-04 dated November 3, 2003, banks may, on the basis of good track record and financial position of MSE units, increase the limit of dispensation of collateral requirement for loans up to Rs.25 lakh with the approval of the appropriate authority.

  • Ministry of Corporate Affairs (MCA):

Ministry of Corporate Affairs have made mandatory to report in MSME FORM-I of the payment not made within 45 days to MSME and also made mandatory to provide a declaration in the Audited Financial Statement and Annual Report.

Further, there is a separate Fast Track Procedure for exit scheme pertaining to closure of company.

  • Ministry of Finance (MoF):

Declaration of Atmnirbhar Package :



    • An emergency credit line has been allowed to business/MSMEs from banks and NBFCs up to 20% of their entire outstanding credit as on 29.2.2020
    • Eligibility: Borrowers having outstanding up to Rs. 25 Crores and turnover of Rs. 100 crores are eligible to take benefit.
    • Tenure: The tenure of the loan would be 4 years with moratorium of 12 months on Principal repayment.
    • Interest: Interest to be capped
    • 100% credit guarantee: There will be 100% credit guarantee cover to Banks and NBFCs on principal and interest.
    • Validity: This scheme can be availed till Oct 31, 2020
    • No fresh collateral: It has been clearly specified that there would not be any guarantee fee or fresh collateral requirement for availing benefit under the scheme


  • With a view to aid the functioning MSMEs that are NPA or are stressed, the Govt. has proposed provision of Rs. 20,000 crores as subordinate debt. Under the scheme promoters of the MSME will be given debt by banks which will then be infused by promoter as equity in the unit. The CREDIT GUARANTEE FUND TRUST FOR MICRO AND SMALL ENTERPRISES (CGFTMSE) will provide partial Credit Guarantee support to banks.


  • The Govt. has proposed to set up Funds of Funds (FoF) with corpus of Rs. 10,000 that would provide equity funds for MSMEs with growth potential and viability. The FoF will be operated though Mother Fund and few Daughter funds. The fund structure will help leverage Rs. 50,000 cr. of funds at daughter funds level. This step would help to expand MSME size as well as capacity and will also encourage listing of MSMEs on main board of stock exchanges.


  • In order to protect the MSMEs from unfair competition from foreign companies, the Govt. has decided to take a major step towards Self-reliant India by disallowing Government procurement tenders up 200 crores for foreign Companies, this step would give major boost to medium enterprises in India which faces tough competition at hands of foreign players.


In order to curb the marketing and liquidity problems, Govt. aims to promote e- market linkage for MSMEs which would act as a replacement for trade fairs and exhibitions. The Finance Minister also made major announcement that MSMEs receivable from Govt. and CPSEs shall be released in 45 days.  


In order to increase take away salary for the employee, and to support businesses, the Govt. had proposed under the Pradhan Mantri Garib Kalyan Package (PMGKP), a payment of 12% of employer and 12% of employee contribution was made into eligible EPF accounts for month of Mar, Apr, and May now this has been proposed to further extend for next three months of Jun, July and August for wage earner below Rs. 15000 p.m. and business having less than 100 workers.


The Statutory PF contribution for both employee and Employer has been reduced from 12% to 10% for all establishments covered by EPFO. For Govt. undertaking the contribution shall remain at 12%.



Government of India will provide Interest Subvention of 2% for prompt payees for a period of 12 months.

Tax Related Benefits :

> Direct Tax – Income Tax : Filing Relaxations:

    • Due date for filing belated and revised return of income for financial year (FY) 2018-19 relevant to AY 2019-20, extended from 31 March 2020 to 30 June 2020.
    • Due date of issue of notice, intimation, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents and time limit for completion of proceedings by the authority and any compliance by the taxpayer, where the time limit is expiring between 20th March 2020 to 29th June 2020, shall be extended to 30th June 2020.
    • Linking of Aadhar and PAN – Extension has been granted for linking of Aadhaar with PAN from 31st March 2020 to 30th June 2020.

> Direct Tax – Income Tax : Deferral for Tax Payment:

  • Reduced interest rate from 1% per month to 0.75% if paid till 30th June 2020 in following cases,
    • Advance tax (section 234B / 234C of the Income-tax Act),
    • Self-assessment tax (Section 234A of the ITA),
    • Regular tax (Section 220(2) of the ITA),
    • TCS (Section 206C of the ITA),
    • Equalisation levy (Section 170 of the Finance Act (FA) 2016),
    • Securities Transaction Tax (STT) (section 104 of the Finance (No.2) Act 2004),
    • Commodities Transaction Tax (CTT) (section 123 of the FA 2013)
  • Reduced interest rate from 1.5% per month to 0.75% if paid till 30th June 2020 in following cases,
    • Tax Deducted at Source (TDS)
  • Vivad se Vishwas – 100% taxpayment due date has been extended from 31st March 2020 to 30th June 2020. (Tax payment equal to 110% was required to be paid under the scheme is paid after 31st March 2020)
  • Guidelines issued for faster refund process.

> Indirect Taxes : GST : Filing / Procedural Relaxations

  • Due date of filing annual return in Form GSTR-9 & GSTR-9C for the FY 2018-19 has been extended till 30 June 2020 from 31st March 2020. (Notification no. 15/2020–Central Tax dated 23 March 2020)
  • Due date of issue of notice, intimation, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents and time limit for completion of proceedings by the authority and any compliance by the taxpayer, where the time limit is expiring between 20th March 2020 to 29th June 2020, shall be extended to 30th June 2020. (Ntf No. 35/2020 Central Tax dated 03.04.2020)
  • No late fees for delayed filing of GSTR-1. – for the months of Mar-20, Apr-20 and May-20, and for the quarter ending 31st March, 2020 if filed before 30th June 2020. (Notification No. 33/2020-Central Tax Dated 03.04.2020)
  • LUT for exports for the year 2020-21 can be filed by 30th June 2020. Old LUT reference can be mentioned till that time. (Ntf No. 35/2020 Central Tax dated 03.04.2020 and Circular No 137 dated 13.04.2020)
  • Special Refund Disposal Drive for faster refund disbursal.
  • Temporary Relaxation for reconciliation of input invoices – Operation of Rule 36 (4) has been suspended for the period February, March, April, May, June, July and August 2020. It will be cumulatively applied in the month of September 2020. (Notification No. 30/2020 – Central Tax)
  • Validity of E-way bills expiring have been extended during lockdown period.

Deferral for Tax Payment

Deferral for Tax Payment


> Indirect Tax – Customs :

Filing / Procedural Relaxations

  • Custom Department will be work 24 X 7.
  • Due date of issue of notice, intimation, notification, approval order, sanction order, filing of appeal, furnishing of return, statements, applications, reports, any other documents and time limit for completion of proceedings by the authority and any compliance by the taxpayer, where the time limit is expiring between 20th March 2020 to 29th June 2020, shall be extended to 30th June 2020.
  • No late fees for delay in filing of Bill of Entries pertain to IGMs filed on or after 20th March 2020, for the time being and till further orders. (Notification No. 33/2020-Central Tax Dated 03.04.2020)
  • Relaxation of the requirement to submit bonds prescribed under section 18, section 59 and section 143, and under notifications issued in terms of section 25 of the Customs Act, 1962, subject to compliance of conditions. (Circular No. 17/2020 – Customs Dated 03.04.2020).


  • Custom Department will be work 24 X 7.
  • Exports of specific medicines / Masks / Ventilators prohibited.
  • Special Refund and Drawback Disposal Drive.

> Ministry of Commerce:

Ministry of Commerce have already given the relaxation to all exporters including MSME. The brief summary is given below:

Foreign Trade Policy (FTP) :

  • Filing / Procedural Relaxations :
    • Extension of Foreign Trade Policy (15-20) up to 31st March 2021.
    • MEIS to be continued upto 31st December 2020.
    • Remission of Duties and Taxes on Exported Products (RoDTEP) will be notified separately.
    • The last date for filing of MEIS Application is 12 Months from the LEO Date. However, for S/Bills where LEO date falls during period 01.02.2019 to 31.05.2019 the MEIS application will be allowed to be filed in a period of 15 Months instead of 12 Months. (Public Notice No. 67/2015-20 Dt. 31.03.2020).
    • SEIS has to be filed within 12 Months from the end of the Financial Year. For FY 2018-19 the last date was 31.03.2020. It has been extended to 31.12.2020. (Public Notice No. 67/2015-20 Dt. 31.03.2020)
    • Validity for Status Holder Certificate which were to expire on 31.03.2020 will now be valid upto 31.03.2021. (Public Notice No. 67/2015-20 Dt. 31.03.2020)
  • Advance Authorisation
    • IGST & Compensation cess exemption extended to 31st March 2021.
    • The Validity of the Ad-hoc Norms has been extended up to 31st March 2021 from 31.03.2020.
    • The validity for Import for all Authorizations expiring between 01.02.2020 and 31.07.2020 by SIX MONTHS from the date of expiry. No separate permission / amendment required.
    • The Export Obligation period of all the Authorisation expiring between 01.02.2020 and 31.07.2020 by SIX MONTHS from the date of expiry. No separate permission / amendment required.
  • EPCG
    • IGST & Compensation cess exemption extended to 31st March 2021.
    • The validity for Import for all Authorizations expiring between 01.02.2020 and 31.07.2020 by SIX MONTHS from the date of expiry. No separate permission / amendment required.
    • Certificate of Installation of Capital Goods – where the six months period expires during 01.02.2020 to 31.07.2020, the period for submission of Installation Certificate is extended by further 6 Months from the Original Due Date.
    • Extension of the Export Obligation period,
      • Block-wise fulfilment of EO extended for six months if expiring between 01.02.2020 to 31.07.2020
      • Extension of Export obligation period by six months if expiring between 01.02.2020 to 31.07.2020
  • Special Provision in Insolvency & Bankruptcy

Existing limit of filing the case before NCLT for financial creditors and operational creditors has been extended from 1 Rs. Lac to Rs. 1 Cr.

Further, lot of amendments are proposed in Insolvency & Bankruptcy Code 2016.

  • State Government:

State Govt is also provides following benefits to the MSME. However, each state govt have different policies :

  • Stamp Duty Benefits
  • Concession in Electricity Bills
  • Exemptions and Cluster Approach

> Revival / Survival Policy :

Though, there are above benefits given by the central government to the MSME, these will not be sufficient for the revival / survival of MSME. We strongly recommend the Central Government to consider additional benefits / financial package by way of subsidy for sustainability of MSME, which is the backbone of Indian Economy. Indian Economy has to survive / grow then survival/ revival of MSME is must and hence it is recommend to give following relaxations :

  • Reimbursement of fixed cost of MSME or double weighted deduction
  • Pumping of money in Economy
  • Reduction of electricity bill and fixed demand charge
  • Wage Subsidy
  • Interest Subsidy
  • No interest on delayed payment of taxation
  • Bank financing and working capital financing at less than 5% interest
  • Speedy payment of pending refunds
  • Soft attitude and helping attitudes of bureaucrats – Compliance can be done later. Let us concentrate on growing business.

> Direct Tax / Income Tax :

  • Reduction in tax rates for Individuals – Salaried, Self employed, business.
  • SMEs – Reduction in tax rates
  • Industry based tax cuts for the industries which are hit hard due to Covid-19.
  • Tax Exemption to healthcare professionals, police and other frontline warriers.
  • Extension of sun-set clause for SEZ Units to boost cluster development.
  • Tax incentives for industries manufacturing Covid-19 relief material to boost further investment.
  • Weighted deduction of expenses incurred by companies on Covid-19 relief work.
  • Weighted deduction for salaries / wages or fixed cost incurred during the Covid-19 pandemic (6 months period).

> Indirect Tax :

  • Lowering in tax rates for essential goods like Masks / Sanitizers and other relief material.
  • Review of 28% GST Rate list with objective to lower tax to boost the demand and move economy northward.
  • GSTR-2A reconciliation to be suspended / removed.
  • Easy and Faster Refund – removing the recent mandates which adds to the burden of the exporter.
  • Exemption for custom duty for relief material required for Covid-19.
  • Extension of AEO certificate validity.
  • Creating supporting environment instead of coercive environment for non-compliances.
  • Funding to exporters at lower interest rate of 2-3% (pre-shipment packing credit etc)

> Foreign Trade Policy :

  • New scheme to attract new investment in India from possible shift of business from China.
  • Creating / supporting cluster developments in line with China’s set-up.
  • Extension of SEIS Scheme for service exporters for further period of 1 year.
  • Increase the export obligation period for all authorization open by one year / 6 months.
  • Funding to exporter at lower interest rates 2-3% to tide over this situation.
  • Granting relaxation of realization of export proceeds for granting MEIS benefit. Later on the Government may take negative statement from exporter like taken in DBK.

It is the duty of professionals & other stake holders to help MSME for revival and survival of MSME.


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