In this Article, I shall discuss about the Classification of MSME, New MSME Classification criteria, Registration Procedure for new and existing enterprise and Benefits of MSME Registration.
MSME registration shall be known as “UDYAM REGISTRATION”
The MSME Notification passed on 26th June, 2020 will be effective from 1st day of July, 2020 and the link of the same:
Under Micro, Small and Medium Enterprises Development(MSMED) Act, 2006, the Micro, Small and Medium Enterprises(MSME) are classified into two categories
1. Manufacturing Enterprises: These are those enterprises which are engaged in the manufacture or production of goods relating to industry specified in the first schedule to the industries(Development and Regulation) Act, 1951) or employment of plant and machinery to add value to the final product.
2. Service Enterprises: The enterprises which are engaged in providing or rendering of services. The categories and are defined in terms of investment in equipment.
|Investment in Plant & Machinery as Equipment and Turnover|
|Manufacturing & Service||Investment<1 Crore And||Investment<10 Crores And||Investment<50 Crores And|
|Turnover<5 Crore||Turnover<50 Crore||Turnover<250 Crores|
Any person who wants to establish a micro, small or medium enterprise may file Udyam Registration online in the Udyam Registration portal by furnishing self-declaration. There is no requirement to upload documents, papers, certificates or any proof
For instance: In an enterprise having investment of Rs. 4 Crore and Turnover of Rs.5 Crore then in which category enterprise shall fall?
As per the notification, if the investment falls under Small and turnover falls under Micro, then, the enterprise will be placed in the higher category i.e. Small.
For calculating the turnover of Micro, small or medium enterprise, export of goods or services or both shall be taken into account
Information as regards turnover and exports turnover for an enterprise shall be linked to the Income Tax Act or the Central Goods and Services Act (CGST Act) and the GSTIN.
The turnover related figures of such enterprise which do not have PAN will be considered on self-declaration basis for a period up to 31st March, 2021 and thereafter, PAN and GSTIN shall be mandatory.
The form for registration shall be as provided in the Udyam Registration portal.
There will be no fee for filing Udyam Registration.
Aadhaar number shall be required for Udyam Registration.
The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm and of a karta in the case of a Hindu Undivided Family (HUF).
In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organisation or its authorised signatory shall provide its GSTIN and PAN along with its Aadhaar number.
In case an enterprise is duly registered as an Udyam with PAN, any deficiency of information for previous years when it did not have PAN shall be filled up on self-declaration basis.
No enterprise shall file more than one Udyam Registration. Provided that any number of activities including manufacturing or service or both may be specified or added in one Udyam Registration.
Whoever intentionally misrepresents or attempts to suppress the self-declared facts and figures appearing in the Udyam Registration or updation process shall be liable to such penalty as specified under section 27 of the Act
Under Credit Guarantee Fund Scheme of Micro and Small Enterprises(MSEs), the Government has given collateral-free credit to MSEs. In a recent announcement, the govt has announced 3 lakh crore of credit guarantees to MSMEs which is intended to help MSMEs having 25 crore outstanding loan or less than 100 crore turnover.
1. Business registered under MSME are given higher preference for government license and certification
2. Cheaper bank loans as the interest rate is very low around~1 to 1.5%.
3. It allowed credit for minimum alternate tax(MAT) to be carried forward for up to 15 years instead of 10 years.
4. There are various tax rebates available
5. The expenses incurred for registration of patent and application of ISO certification are reimbursed to these enterprises subject to the limits
6. MSME can avail Bar Code Registration subsidy.
7. Concession in electric bills by making application to Electricity department
8. There is One Time Settlement Fee for non-paid amounts of MSME.