The government of India is introducing new schemes to promote and to develop the Micro, small and medium entrepreneurs of the country. The contribution of MSMEs to India’s Industrial Employment, Exports, and all Industrial units is 45%, 50%, and 95% respectively.
MSMED Act had been initiated to aid and assist entrepreneurs in the country. Earlier, it was not easy to set up any business due to its colossal capital requirement and compliances. But now The Ministry of MSME is supporting MSMEs in all possible ways for their development and also for the economic development of the country.
Let’s proceed further to know about the classification of MSMEs, its registration process, benefits, documents requirement, etc.
What are MSMEs?
The Government of India has enacted MSMED (Micro, Small and Medium Enterprises Development) Act, 2006 for the promotion, enhancement, and development of MSMEs (Micro, Small and Medium Enterprises) in India. For the growth and survival of MSMEs in India, The Government of India is introducing new schemes regularly. There are different categories of MSMEs according to their investment share in the service and manufacturing sector.
Micro Enterprises are those who invest as follows in their respective major category:
Manufacturing Sector– Less than Rs.25 Lakhs.
Service Sector– Less than Rs.10 Lakhs.
Small Enterprises are those who invest as follows in their respective major category:
Manufacturing Sector– More than Rs.25 Lakhs but less than Rs.5 crores.
Service Sector– More than Rs.10 Lakhs but less than Rs.2crores.
Medium Enterprises are those who invest as follows in their respective major category:
Manufacturing Sector– More than Rs.5 crores but less than Rs.10 crores.
Service Sector– More than Rs.2 crores but less than Rs.5 crores.
What are the benefits of MSME registration?
After registered as MSMEs, the entrepreneurs of India can enjoy the following benefits:
- The foremost advantage of MSME registration is that companies registered under this can expand their business on national as well as on international pace. The government is proving full support to all MSMEs so that they can expand widely. Besides, MSMEs are also eligible for Industrial Promotion Subsidy as per government scheme.
- As per the government scheme, all MSMEs can enjoy a 50% subsidy on patent registration just by applying the concerned department.
- MSME registered companies can easily take loans from banks and financial institutions. As per the Credit Guarantee Scheme, all the micro and small enterprises can enjoy collateral-free loans from banks against any property.
- MSME registered companies can also get preference in the procurement of government tenders.
- Companies registered as MSME can enjoy first-year tax benefits, depending on the nature of their business. They can also avail subsidy on Stamp Duty and Octroi Refunds.
- MSMEs can also enjoy concession in the electricity bill of the operating house. The concession can be availed by making an application along with an MSME certificate to the concerned department.
- MSMEs can also avail first-year benefits on Excise duty according to the nature of their business operations.
- MSMEs can enjoy a one percent exemption on the interest rates of bank overdrafts.
- The ministry of MSME permits all the MSMEs to charge an interest rate on the delayed payments from their buyers. If there will be no payment date on the agreement, then the buyer has to make payment in 15-45 days. Otherwise, Conciliation or Arbitration will be preferred.
What are the documents required for MSME registration?
- Address and identity proof of directors (Aadhar card, Voter ID, Passport, Driving license, etc.)
- Contact details of the director(s)
- PAN card details of the Company
- Address proof of the operating unit (Property papers, Possession letter, and Lease agreement)
- Rent agreement and NOC from the landlord, if applicable.
- Copy of the raw material purchase bill
- Copy of sales bill of the end products
- Statements of all equipment and machines purchased for business purpose.
- Copy of the industrial license
- Current a/c canceled cheque
- NICC (National Industrial Classification Code)
- MOA/AOA/ Partnership deed of the Company
What is the procedure for MSME registration?
All the companies incorporated as Private LTD., Sole Proprietorship, LLP, etc. can register themselves as MSMEs to avail all the government benefits. The procedure for MSMEs registration is as follows:
- Firstly, the applicant or the entrepreneur needs to submit the details of their Aadhar Card.
- In the next window, the applicant needs to fill their name and click on “Validate and Generate OTP” to validate their Aadhar.
- After submitting OTP, the applicant needs to fill the following details:
- Selection of the Social category, whether General, OBC, SC, ST, etc.
- Gender of the applicant
- Name of the Organization
- Details of PAN card, in case of Company, is incorporated as Private Limited, LLP or Cooperative society.
- Type of Organization must be selected from the given option
- Location of their business plant.
- Address of the organization including State, District and Pin code
- Date of commencement of business
- Company’s Bank account details.
- Major Category of the Company whether service or manufacturing
- Selection of multiple NIC code of the Company.
- The total worth of plant and machinery equipped
- Location of DIC (District Industries Center)
- At last, to get the acknowledgment number of the application, the applicants can make their final submission by filling the second time generated OTP and CAPTCHA.
Therefore, the Ministry of MSME is supporting the Start-ups in all possible ways for their growth and development. The MSME registration neither requires extensive documentation, nor it has a very complicated registration process. Now, the applicants can apply online to do their MSME registration. They can obtain their MSME certificate in 2-3 days, but the duration will exceed in case of re-submission of the application form or absence of supporting documents. So, it would be better to hire professionals for your MSME registration.
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