What are Micro, Small and Medium Enterprises (MSME)

An enterprise shall be classified as a micro, small or medium enterprise on the basis of the following criteria, namely: –

(i) a micro enterprise, Investment in Plant and Machinery or Equipment:
Not more than Rs.1 crore and Annual Turnover ; not more than Rs. 5 crore

(ii) a small enterprise, Investment in Plant and Machinery or Equipment:
Not more than Rs.10 crore and Annual Turnover ; not more than Rs. 50 crore

(iii) a medium enterprise, Investment in Plant and Machinery or Equipment:
Not more than Rs.50 crore and Annual Turnover ; not more than Rs. 250 crore

How to register MSME?

The MSME registration process is entirely online, without the use of paper, and is based on self-declaration.

For registering an MSME, no paperwork or proof are required to be uploaded.

• to register, you will only need your aadhaar number.

• pan and GST-related information on investment and turnover of businesses will be automatically retrieved from government databases.

• the income tax and GSTIN systems are fully connected with the UDYAM registration portal.

• no business may submit more than one udyam registration. In one registration, however, any number of activities, including production, service, or both, may be stated or added.

* GST is not required for businesses that are not required to register under the GST statute. However, businesses that are required to obtain GST registration under the GST regime must first obtain GST registration before applying for Udyam Registration.

* Those with an EM-II or UAM registration, or any other registration issued by a Ministry of MSME, will need to re-register on the Udyam Registration Portal.

Enterprises with UAM registration must switch to Udyam Registration by December 31, 2021. If entrepreneurs with UAM registration do not migrate to Udyam Registration by December 31, 2021, their UAM registration will become invalid, and they will no longer be eligible for MSMEs incentives.

Fees for MSME registration

The MSME registration can only be obtained by submitting an application through the udyam site. Filling out and submitting the MSME registration form is free of charge. On the udyam portal, MSME registration is completely free.

Certificate of MSME registration

A notice of successful registration with a reference number will display after submitting the MSME registration form online. After verifying the registration form completed on the portal, the ministry of MSME will send the udyam registration certificate or MSME certificate to the entrepreneur’s email address.

After a few days have passed after the registration form was submitted, the ministry will provide the MSME certificate. The MSME registration certificate is valid for the rest of your life. As a result, it does not need to be renewed.

The Advantages of MSME Registration

Collateral-Free Loans:

The Credit Guarantee Trust Fund Scheme, which is one of the top MSME registration benefits, is a joint endeavour by the Government of India, SIDBI (Small Industries Development Bank of India), and the Ministry of Micro, Small, and Medium Enterprises to provide collateral-free loans.

Patent Registration & Industrial Promotion Subsidy:

Businesses that are registered under the MSME Act are eligible for a 50% rebate on patent registration. In addition to this, one of the great MSME registration benefits is to earn subsidies for industrial development advised by the Government.

Overdraft facility with interest rate exemption: as part of the credit guarantee trust fund scheme, businesses or companies that are registered as MSME/ssi under the MSME act are entitled for a 1% overdraft benefit. Although this can differ from one bank to the next.

Concession on power:

One of the most straightforward MSME registration perks is the ability to receive a discount on electricity bills. They only need to submit the bills, together with an application and a copy of the MSME-registered certificate.

Protection against delayed payments: a buyer is obligated to pay for goods/services within 15 days of purchase under the MSME registration perks. If a customer delays payment for more than 45 days, the business is entitled to levy compound interest at three times the rate set by the RBI

Reimbursement for iso certification fees:

A registered small or medium business can claim reimbursement for ISO certification expenses.

Availability of government tenders:

Registered businesses can readily obtain government tenders without having to pay a security deposit to participate. MSMEs are not required to pay the security bid money.

Technological and quality support:

The government provides MSMEs with technological and quality support in order to encourage them to deploy energy efficient technologies in order to lower production costs and minimise greenhouse gas emissions. Subsidies will be granted to MSMEs for asset purchases.

Tax audit:

MSMEs are not subject to tax audits upto specified turnovers. Tax audits are not required for MSMEs with a revenue of less than rs. 5 crores, according to the union budget 2020. The MSMEs’ turnover threshold for tax audit relief has been raised from rs. 1 crore to rs. 5 crore.

IMPORTANT NOTES

• Udyog Aadhaar Registration has been replaced by Udyam Registration for MSME registration. If a micro, small, or medium-sized firm wants to start up, they can apply for MSME/Udyam registration.

• Businesses that fall within the MSME category are not required to apply for MSME registration. However, it is preferable to gain MSME/Udyam registration because the government offers a variety of incentives to MSME-registered businesses, including lending facilities, quick access to credit, low-interest rates, and eligibility for a variety of government programmes.

• Both existing and new businesses can apply for MSME/Udyam registration, as long as the existing unit is operational and meets the registration requirements. To take advantage of the MSMEs’ incentives, businesses with a UAM registration must re-register for an Udyam registration.

• Previously, MSME registration only applied to manufacturing and service industries. The scheme does not cover trading companies. However, the government declared in July 2021 that wholesale and retail commerce will fall within the MSME categorization, allowing wholesale and retail businesses to apply for MSME registration.