MSME Registration is an optional Registration under the MSMED Act that provides Micro, Small and Medium sized enterprises with a host of benefits and access to subsidies and schemes.
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:
Manufacturing Enterprises-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.
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, as notified,vide S.O. 1642(E) dtd.29-09-2006 are as under
|Enterprises||Investment in plant & machinery|
|Micro Enterprises||Does not exceed twenty five lakh rupees|
|Small Enterprises||More than twenty five lakh rupees but does not exceed five crore rupees|
|Medium Enterprises||More than five crore rupees but does not exceed ten crore rupees|
|Enterprises||Investment in equipment’s|
|Micro Enterprises||Does not exceed ten lakh rupees:|
|Small Enterprises||More than ten lakh rupees but does not exceed two crore rupees|
|Medium Enterprises||More than two crore rupees but does not exceed five core rupees|
Nature of Activity: 1- Manufacturing,
2 – Services
Category: 1- Micro,
2 – Small,
3 – Medium
MSME registration is replaced with Udyog Aadhar registration since any small and medium small industries want to start any business; they need to do the registration with MSME. This facility is called Udyog Aadhar. This Aadhaar is a 12 digit number. Ministry of Micro, Small and Medium Enterprises (MSME) has notified the Udyog Aadhaar Memorandum (UAM) under the MSMED Act, 2006 vide gazette notification [SO No. 2576(E)] dated 18-09-2015 in order to promote ease of doing business for MSMEs.
Type of enterprise classification :
|Type of Enterprise||Micro||Small||Medium|
Central Government vide notification number S.O.5622 (E), dated the 2nd November, 2018 has directed that all companies, who get supplies of goods or services from micro and small enterprises and whose payments to micro and small enterprise suppliers exceed forty five days from the date of acceptance or the date of deemed acceptance of the goods or services as per the provisions of section 9 of the Micro, Small and Medium Enterprises Development Act,20OG (27 of 2006) (hereafter referred to as “Specified Companies”), shall submit a half yearly return to the Ministry of Corporate Affairs stating the following:
(a) the amount of payment due; and
(b) the reasons of the delay;
And whereas, in exercise of power under section 405 of the Companies Act, 2013, (18 of 2013) the Central Government, considers it necessary to require “specified Companies” to furnish above information under said section of the Act.
The above initiative is a good indicator of governance towards protecting the MSMEs and strengthen the corporate governance framework. Consecutively to contribute to this initiative and in compliance of the referred notification, the companies will need to ensure that they follow and adhere to the new requirement.
The Company should establish an internal control checklist to monitor the payments within the prescribed timeline;
|Name of the Party||Type of Enterprise|
|Address||Category : applicable A/B/D/E|
|UAM – Udyog Aadhar Memorandum||PAN – Permanent Account Number|
|Date of receipt of goods/ service||Date of Payment|
|Number of days between Date of Receipt of goods/Service v/s Payments||Reason for Delay|
In view of the increase in the corporate governance standards and in a journey for the development of the MSME sector which forms an important component of the industry and to provide them with financial security , all companies are encouraged to take correct initiative measures, develop and comply proper systems and create awareness for the sectoral growth .
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