The Micro, Small, and Medium Enterprises (MSME) sector is a crucial component of the Indian economy, as it generates employment opportunities and contributes significantly to industrial production and exports. These enterprises, which were previously referred to as Small Scale Industries (SSI), are now officially designated and identified under the Micro and Small Enterprises Development Act, 2006, passed by the Government of India to encourage and foster small-scale businesses nationally.
Understanding MSME Classification
Based on the new MSME definition, enterprises will fall under three categories depending on their investment in plant and machinery, as well as the annual turnover. The classifications are used to determine businesses that can enjoy government schemes and benefits.
- Micro Enterprises refer to enterprises investing up to 25 lakhs in manufacturing or 10 lakhs in service industries.
- The investment in Small Enterprises ranges between 25 lakhs to 5 crores in manufacturing and 10 lakhs to 2 crores in services.
- The investments in the Medium Enterprises are characterized as ₹5 crores to 10 crores in manufacturing and 2 crores to 5 crores in service sectors.
Through this classification, the government is able to offer specific financial assistance, technical help and subsidies to deserving businesses.
MSME Registration Advantages in India
The MSME registration is associated with numerous beneficial factors to consider in case a company aims to scale up with the lowest possible compliance burden and the maximum number of financial benefits.
- Tax Benefits: MSMEs can avail a number of tax benefits, depending on the type of business, like exemptions and deductions in the initial years of operations.
- Easy Payment Clearance: Businesses that are registered under MSME have better legal grounds in terms of pursuing overdue payments from their clients and buyers.
- 50% Reduction on Trademark and Patent Filing: An enterprise with an MSME certificate can claim a 50% reduction on government filing fees on trademarks and patents.
- Credit Guarantee Scheme: The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGTMSE) provides collateral-free credit to the registered MSMEs, thus assisting them in getting finances in times of financial distress.
- Reduced Interest Rate on Overdrafts: Banks shall provide overdrafts to MSMEs at reduced interest rates, as they are aware that they contribute to the economy.
- Eligibility of MUDRA Loans: An MSME-registered enterprise may access the advantages of the Pradhan Mantri MUDRA Yojana, which helps micro-enterprises easily.
Online Registration Process of MSME
Although the MSME registration is optional, it is advisable that businesses should be registered so that they can take advantage of the government incentives.
Registration is easy and can be accomplished online by following the steps:
1. Go to the government portal https://msme.gov.in/.
2. Complete the Udyam Registration Form with the basic details such as:
- Aadhaar no of applicant
- Name, gender, PAN, email ID and mobile number
- Name of business, PAN, address of business and business activity
- Name of employees and commencing date
- Plant and Machinery investment particulars
- Bank account number and IFSC code
3. There are no registration fees.
4. Apply and get an exclusive MSME registration number immediately.
The process is quite easy to operate, but to ensure accuracy, it is better to take the help of a professional when making applications under the financial schemes, and changing or updating the business information.
Documents Required for MSME Registration
During the registration of MSME, the following documents have to be produced based on your type of business and premises:
Address Proof of the Business:
- In case of self-owned premises: possession letter, allotment letter, lease deed, property tax receipt, or a municipal license.
- In case of rented premises: rent receipt, utility bill (electricity, water), and no-objection certificate (NOC) of the owner of the premises.
Sale and Purchase Bills:
- Sale bill for every product that the business is going to provide.
- Buy bill for every raw material or component that is purchased.
Company Documents:
- Where the business is a Partnership Firm, a copy of the partnership deed.
- In the case of a Company, the copies of the Memorandum of Association (MoA), Articles of Association (AoA), and Certificate of Incorporation.
- Board resolution to empower one of the directors to make an application to have the company registered as an MSME and to sign various documents in this respect.
Licenses and Machinery Bills:
- Industrial licenses (where a copy is necessary).
- Invoices and receipts regarding the purchase and installation of plant and machinery.
Having all the documents prepared beforehand will assist in accelerating the application procedure and prevent rejection or mistakes.
Conclusion
Be it a start-up, a small service provider or a manufacturing unit, MSME registration will bring you into a nurturing ecosystem that is geared to power your business growth. Though the procedure is simplified and online, it is always better to have a professional like Kanakkupillai to make your MSME registration without any hassle, and also you need not be left out of any benefits or changes in regulations.
Make your business get the recognition and boost it ought to have- register as an MSME now.
