WHAT CONSTITUTES MSME?
MSMED, Act 2006 was passed by the Government of India to encourage setting up of MSME’s by entrepreneurs and provide for special incentives to those units which have been registered as MSME under the said Act. Though, it is not mandatory to obtain the MSME registration but you can be benefited by obtaining MSME registration. Under the said Act, Government of India and many other Government institutions offer MSME registered units for subsidies, incentives, concessional rate loans, etc.
DEFINITION OF MSME AS PER THE MSMED ACT BENEFITS OF MSME
Manufacturing/ Production units – Investment made in plant and machinery
- Micro Enterprise: An investment of less than Rs. 25 lakhs
- Small Enterprise: An investment between Rs. 25lakhs to Rs. 5 crores
- Medium Enterprise: An investment between Rs. 5crores to Rs. 10 crores
Services industry – Investment made in equipment
- Micro Enterprise: An investment of less than Rs. 10 lakhs
- Small enterprises: An investment of more than Rs. 10lakhs but less than Rs. 2 crores.
- Medium Enterprise: An investment of more than Rs. 2 crores but less than Rs. 5 crores.
ADVANTAGES / BENEFITS OF REGISTRATION UNDER MSME
- Loans given to MSME’s are covered under by banks /financial institutions
- Lower interest rates and availability and access to greater credit
- Income Tax Benefits
- Credit Linked Guarantee Scheme
- Market assistance from the government and Export Promotion
- Capital and other grants for infrastructure development
- Reimbursement of ISO Certification cost
- Exclusive purchases and sheltering from the competition
- Technology and quality up-gradation support to MSMEs
- Reduced statutory fees for Intellectual Property Registrations
- Mandatory purchase from MSME under government procurement policy
WHAT ARE THE DOCUMENTS REQUIRED FOR MSME ONLINE REGISTRATION
- PAN Card of the proprietor/ all the directors / all the partners
- Aadhar Card of the proprietor/ all the directors / all the partners
- Proof of ownership of premises like lease agreement/allotment letter/ property tax receipt/possession letter.
- If rented properties and NOC from the landlord and the utility bill
- Copy of sale bill for each product
- Copy of purchase bill of each purchased raw material
- Copy of Partnership Deed for partnership firm
- Copy of Memorandum and Articles of association and certificate of incorporation
- Copy of Industrial License as acquired under Regulation Act,1951 and Industrial Development
- An affidavit on Rs. 10/- non-judicial stamp paper duly attested by Notary Public affixed provided that the status of power requirement, machinery installed, etc.
- Purchase bill of machinery installed
- Bills associated with installation and purchasing of plant and machinery
- Updated Bank Account Statement
How ASC Helps?
Incorporation and registration of MSME
- Incorporation of the organization as LLP, Partnership, company or as required
- Registration under the MSMED Act, 2006
- Getting the Adhaar number of the enterprise
Finance under MSME comes under priority sector lending for public sector banks, SIDBI is another specialized institution for lending to MSME:
- Helping in preparation of loan proposals and identifying potential buyers of goods and services.
- Inputs on industry/sector in which the MSME operates
- Technical and financial feasibility report
- Preparing future cash flows
- Identifying suppliers of raw material, land, and machinery and arranging quotations
- Sanctioning and disbursements of loans
- In case of default by debtors- Drafting notice and following up
- Taking up of case as per the provisions of MSMED Act, 2006 for recovery amount and compliance of procedure as per Section 15 of the Act.
- Taking up the matter with the MSME facilitation council for recovery as per section 16 and 17 of the Act.
- Ensuring the recovery through the calculation of the due amount, follow-ups from the vendors, any penalties and referring the matter to the MSME Council (MSME Samaadhan).
- After the order of the MSME Council, resolving the matter, and if required taking up the matter to the Arbitration and Conciliation centers for recovery of the money.
- If eligible, recovery under IBC, 2017 section 8 and 9.
Helping MSMEs participate in supplies in the government department through tenders
- Keeping watch on government procurement under various sectors
- Preparing the technical and financial bid for MSMEs
- Liasoning with the Government departments for approval of the tenders
Compliance, Legal and Additional Services for obtaining MSME registration
- MSME Registration under GST and filing periodic returns
- Filing returns and reporting to ROC under Companies Act, 2013
- Preparation and Audit of Balance sheet
- Holding Annual general meetings and adoption of financial statements
- Intellectual Property Rights registration
- Skill up-gradation as per the need of the market for MSMEs
- Income Tax filing and annual return, compliances for MSMEs
- Engagement of Advisors – Mr. DS RAWAT and Mr. Mukesh Mohan Gupta
Frequently Asked Questions
What is the new definition of MSME (Micro Small & Medium Enterprises)?
The classification of MSME (Micro Small & Medium Enterprises) has been revised from 1st July 2020. Therefore, as per the new classification, the following enterprises shall be considered MSME in India:
- Micro Enterprise: Investment in plant and machinery of not more than Rs. 1 crore and an annual turnover not exceeding Rs. 5 crores.
- Medium Enterprise: Investment in plant and machinery of not more than Rs. 10 crores and an annual turnover not exceeding Rs. 50 crore.
- Small Enterprise: Investment in plant and machinery of not more than Rs. 50 crore and an annual turnover not exceeding Rs. 250 crores.
How to obtain MSME registration?
MSME registration can be obtained by making an application for Udyam Registration Certificate. Once the application is filed, you will receive an Udyam Registration Number and the certificate can be downloaded immediately.
Whether the retail and wholesale business can be classified as an MSME (Micro Small & Medium Enterprises) business?
Yes. As per the office memorandum of the Ministry of MSME (Micro Small & Medium Enterprises), the retail and wholesale trade can also be classified as MSME.
Whether there is any restriction as to the legal form of business for getting registered as an MSME organization?
There is no restriction as to the legal form of business for getting registered as an MSME business. The applicant is required to satisfy the turnover and investment criteria in order to get registered as an MSME enterprise regardless of whether it is a proprietorship, partnership, company, or any other legal form.
Whether an MSME is eligible for a tax holiday under income tax law?
There is no specific provision under the income tax law providing a tax holiday to an MSME organization. However, deductions and exemptions can be claimed as per the normal provisions of the income tax law.