MSME stands for Micro, Small, and Medium Enterprises, and it plays a crucial role in the growth of the Indian economy. The Ministry of Micro, Small and Medium Enterprises has launch a new portal call “udyam registration” for MSME.
Classification of a Micro, Small or Medium Enterprise
According to the Micro, Small and Medium Businesses Development (MSME) Act of 2006, an enterprise’s classification as micro, small, or medium relies on its yearly revenue and investment in machinery, equipment, and plant.
For manufacturing enterprises, the investment in plant and machinery is consider, while for service enterprises, the investment in equipment is consider.
Here’s the classification criteria:
- Micro Enterprise: investment in machinery and/or equipment is limited to one crore rupees.
Annual turnover does not exceed Rs. 5 crores
- Small Enterprise: Investment in plant and machinery or equipment is more than Rs. 1 crore but does not exceed Rs. 10 crores
Annual turnover is more than Rs. 5 crores but does not exceed Rs. 50 crores
- Medium Enterprise: Investment in plant and machinery or equipment is more than Rs. 10 crores but does not exceed Rs. 50 crores
Annual turnover is more than Rs. 50 crores but does not exceed Rs. 250 crores
It is important to note that the investment and turnover figures mention above are subject to periodic revisions by the government. The latest updates on the same can be obtain from the official website of the Ministry of Micro, Small and Medium Enterprises.
The point should keep in mind before MSME /UDYAM registration
Before registering your enterprise as an MSME/Udyam enterprise, here are some important points to keep in mind:
- Eligibility Criteria: The enterprise should meet the eligibility criteria as per the Micro, Small and Medium Enterprises Development (MSME) Act, 2006. The enterprises can be classify base on their investment in plant and machinery or equipment and turnover.
- Business Entity: The registration is applicable to only those businesses that are constitute as Proprietorship, Partnership, Hindu Undivided Family (HUF), Private Limited Company, Limited Liability Partnership (LLP), or any other legal entity that falls under the MSME Act.
- NIC Code: Selecting the right National Industrial Classification (NIC) code is important, as it determines the eligibility for government schemes and subsidies. Make sure to choose the correct NIC code that best describes your business activity.
- Require Documents: Keep all the require documents ready before starting the registration process. The documents include Aadhaar card, PAN card, bank account details, business address proof, and other relevant documents.
- Information Accuracy: Ensure that all the information provide during the registration process is accurate and up-to-date. Any incorrect information could lead to rejection of the application or legal complications in the future.
- Registration Fee: Currently, there is no fee for MSME/Udyam registration, and the process is free of cost. If you come across any website or agency that is charging a fee for MSME registration, it is likely a scam.
By keeping these points in mind, you can ensure a smooth and hassle-free registration process for your MSME/Udyam enterprise.
MSME/ UDYAM Registration Process
- Visit udyam registratration portal.
- Choose “For New Entrepreneurs who are Not Already Register as MSME/UDYAM.”
- Enter your Aadhaar number and click on “Validate & Generate OTP.”
- Once you receive the OTP on your register mobile number, enter it in the require field.
- Fill in the require details, including name, PAN number, bank account details, business activity, and other details, as applicable.
- Select the appropriate industry code from the National Industrial Classification (NIC) code list.
- Upload the necessary documents like Aadhaar card, PAN card, and other relevant documents.
- Click “Submit” once the papers have been upload.
- A registration certificate will be generate and sent to your register email address.
- Once you have complete the above steps, your enterprise will be register as an MSME/Udyam enterprise. You can also update or make changes to your registration by logging in to the portal and clicking on the “Update Udyam Registration” option.
Documents require for MSME registration
To register an enterprise as an MSME, the following documents are require:
- Aadhaar Card: The Aadhaar card of the owner or authorize signatory of the enterprise is mandatory for MSME registration.
- PAN Card: The Permanent Account Number (PAN) card of the enterprise and the owner or authorize signatory of the enterprise is require.
- Bank Account Details: A cancel cheque or the first page of the bank passbook showing the account details of the enterprise is require.
- Business Address Proof: Documents such as electricity bill, telephone bill, or property tax receipt that shows the ownership or possession of the premises where the business is locate.
- Nature of Business: A brief description of the nature of the business activity carry out by the enterprise.
- Other relevant documents: Depending on the type of enterprise, additional documents such as partnership deed, memorandum of association, articles of association, or any other registration certificate may be require.
It is crucial to confirm that all of the submit documents are current and valid. Any incorrect or outdate documents may lead to rejection of the application or delay in the registration process.
Major Advantages of MSME Registration for Indian Companies
MSME registration is beneficial for businesses in India in several ways. Here are some of the key benefits:
- Access to government schemes and subsidies: MSMEs are eligible for various government schemes and subsidies such as credit guarantee scheme, technology upgradation scheme, and marketing development assistance scheme, among others. MSME registration is a prerequisite for availing these benefits.
- Easy availability of credit: MSME registration helps in improving the creditworthiness of the enterprise, making it easier to obtain loans from banks and financial institutions.
- Protection against delaye payments: MSMEs can avail the benefit of the MSME Development Act, which mandates that the buyer must make payment to the supplier within 45 days. In case of delay, the buyer is liable to pay interest to the supplier.
- Reduce tax liability: MSMEs can avail various tax benefits and exemptions provide by the government. For instance, the Goods and Services Tax (GST) exemption limit is higher for MSMEs compare to larger businesses.
- Recognition and credibility: MSME registration provides recognition and credibility to the enterprise, making it easier to establish trust with customers, suppliers, and other stakeholders.
- Access to tenders and contracts: Many government tenders and contracts are reserve for MSMEs, providing a significant business opportunity.
- Ease of doing business: MSME registration simplifies the process of compliance and reduces the burden of regulatory compliance for the enterprise, allowing it to focus on core business activities.
- In summary, MSME registration provides several benefits to small and medium-sized enterprises, including access to government schemes, easier access to credit, protection against delaye payments, tax benefits, recognition and credibility, access to tenders and contracts, and ease of doing business.
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conclusion
In conclusion, MSME registration is a crucial step for small and medium-sized enterprises in India. It provides various benefits, such as access to government schemes and subsidies, easier access to credit, protection against delayed payments, tax benefits, recognition and credibility, access to tenders and contracts, and ease of doing business. MSME registration also simplifies the compliance process and reduces the burden of regulatory compliance, allowing businesses to focus on their core activities. Therefore, it is recommended for eligible enterprises to register themselves as MSMEs to avail these benefits and grow their businesses.