Micro, Small & Medium Enterprises Development (MSMED) Act, 2006, was introduced to encourage Micro, Small and Medium enterprises and facilitate their development in the competitive markets. The government through various schemes, subsidies and incentives tries to promote such enterprises. Through MSME registration is not mandatory but to avail those benefits MSME Registration is preferred.
What are the criteria for Micro, Small and Medium enterprises?
As per the official notification in February 2018, the classification of the enterprises is now made through‘annual turnover’, unlike earlier which was according to the ‘investment in plant and machinery/ equipments’.
1. A Micro Enterprise is a unit which has the annual turnover not exceeding Rs. 5.00 crore;
2. A Small Enterprisea unit which has the annual turnover more than Rs. 5.00 crore but not exceeding Rs. 75.00 crore;
3. A Medium Enterprisea unit which has the annual turnover more than Rs. 75.00 crore but not exceeding Rs. 250.00 crore.
The above amendment was brought to name the classification growth oriented and align the structure to the new tax regime revolving around GST.
What are the benefits of MSME registration?
1) Collateral free loans up to a limit of 50 lakh.
2) Various government ministries hold development programs at utmost stage increasing the overall productivity of MSMEs.
3) Support is provided to new micro and small enterprises. Guidelines on how to start a business assessing loans from banks are also provided.
4) Government also provides financial assistance for reimbursement of part of one-time registration fee and annual recurring fee for first three years for using bar coding.
5) The rates of interest on loan offered to MSMEs are comparatively lower.
6) Businesses registered under MSME are able to obtain government license and certification quicker than the regular process.
7) MSME registered businesses enjoymultiple income taxes and capital gains tax subsidies from the government.
8) Enterprises that have MSME Registration Certificate are also eligible to claim for reimbursements of ISO Certification expenses.
These are few benefits and there are plenty more available to MSME registered enterprises which makes the registration desirable for the eligible.
Who is eligible to apply for MSME Registration?
Following can apply for MSME registration:
1. Proprietary
2. Hindu Undivided Family (HUF)
3. Partnership
4. Co-Operative
5. Private Limited Company
6. Public Limited Company
7. Self Help Group
8. Others
What details are required to be noted in the MSME Registration Form?
1. Now adhaar card is now essential for the applicant or the authorized representatives.
2. Name of the owner
3. Social Category
4. Gender
5. Physically Handicapped status
6. Legal name of enterprise.
7. Type of Organization
8. PAN Number for Co-Operative, Private Limited, Public Limited and Limited Liability Partnership, OPC (optional for remaining types)
9. Locations of Plant
10. Official Registered Address
11. Date of Commencement
12. Previous Registration Details, if any
13. Complete Bank Details
14. Primary activities
15. National Industry Classification Code/s(NIC Code
16. Number of persons employed
17. Investment in Plant & Machinery/ Equipment
18. The details of the DIC (District Industry Center) nearest to such business.
What are the documents required for the MSME registration?
The entity making the application for MSME registration has to submit following documents:
1) Proof of registered address
a) Allotment letter, possession letter, lease deed or property tax receipt,or a municipal license in the business name or in the name of the proprietor, partner or director of the business, If the premise is self-owned.
b) Rent receipts or utility bills and a no objection certificate from the landlord is required, If the premise is rented.
2) Copies of Sale Bill and Purchase Bill:
a) Entity is required to submit copy of sale bill related to each end product that it will supply.
b) For each raw material that it will purchase, a purchase bill has to be submitted.
3) Partnership Deed and Registration Certificate for a partnership firm
4) Incorporation Certificate, Copy of MoA and AoA, in case of Private Limited Company along with Board’s Resolution authorizing the director to sign the application
5) Copy of Licenses
6) Purchase bill of machinery installed
7) Bank Account Statement
8) An affidavit of Rs. 10/-non judicial stamp paper duly attested by Notary Public affixed providing the status of machinery installed, power requirement etc.
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