Wondering how to gather funds for your business venture? Don’t you worry! The Government of India has set up a branch that funds micro, small, and medium enterprises known as the Ministry of Micro, Small and Medium Enterprises or MSME. As per the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006, MSME are categorized into two classes, manufacturing enterprises and service enterprises. This was the older classification system.
A new bill was introduced by Giriraj Singh, former Minister of MSME, in 2018. Many changes were incorporated in the existing MSMED Act 2006. The criterion for the classification of MSMEs was changed from the existing ‘investment in plant and machinery/equipment’ to ‘annual turnover’ of the enterprise. In the new bill, the following classification system will be followed:
- Micro Enterprise: Enterprises having annual turnover less than or equal to Rs 5 crores
- Small Enterprise: Enterprises having annual turnover between Rs 5 and Rs 75 crores
- Medium Enterprise: Enterprises having annual turnover between Rs 75 and Rs 250 crores
To acquire these funds, getting an MSME registration is necessary. Curious to know as to what goes into MSME registration? Let’s head further without wasting any time.
Earlier MSME registration was known as Small Scale Industry registration or SSI. The registration is not mandatory but necessary to enjoy several schemes run by the government. To get your business registered, you need to follow specific steps. Any entrepreneur having valid Aadhaar number can apply for MSME Registration online.
- First, the small and medium scale industry owner needs to fill a single form at the website, either online or offline.
- If a person wants to get more than one industry registered, he/she can do individual registration.
- Once the form is filled and uploaded with relevant details, a registration number is provided. The MSME Registration Certificate will also be issued immediately at email.
- The person can also offer self-certified certificates.
- Interestingly, there are no registration fees required for this process.
- As the government believes in environmental protection, no physical copy of MSME Certificate is issued. This is a paperless process.
Documents Required for MSME Registration
The documents necessary for the registration are personal Aadhar number, industry name, address, bank account details, and some standard information. Documents like copies of purchase and sale bill and licenses from regulatory bodies are also required. Partnership Deed/ MoA and AoA and Copy of Licenses and Bills of Machinery Purchased are also asked many times.
- If the premise is self-owned, allotment letter, lease deed or property tax receipt, and possession letter are necessary. If a municipal license is in the name of the business or the proprietor, director, or partner, no other possession document is asked to be submitted.
- If the premise is rented, rent receipt and a no-objection certificate from the landlord is mandatory. Also, any bill or document stating the landlord’s ownership is essential to be submitted.
- The entrepreneur/owner of the business has to submit a copy of the sale bill related to each product that he/she will supply. For each raw material that the owner will purchase, he/she has to submit a purchase bill.
- If the business is a partnership firm, the owner needs to submit the Partnership Deed/MoA and AoA. If the partnership firm is registered, it has to offer a registration certificate as well.
- In the case of a company, a copy of Memorandum of Association (MoA) and Articles of Association (AoA) and certificate of incorporation have to be submitted. With it, a copy of the resolution passed in general meeting and the copy of board resolution authorising a director to sign the MSME application also need to be submitted.
- In a few cases, the applicant has to submit a copy of an industrial license, which is to be obtained by giving an application to the Government of India. Furthermore, all bills and receipts handed over while purchasing or installing a plant and machinery have to be kept safe and produced on demand.
Benefits of MSME Registration
- Cheaper Bank Loans: The bank lends loans at a cheaper rate to the owners. The interest rate is meagre, around 1 to 1.5%. This is much lower than interest on regular loans. However, the loan application process is stringent.
- Tax Rebates: Various tax rebates or exemptions are offered to MSME at the initial year of business.
- Bar Code Registration Subsidy: Enterprises with MSME Registration can get bar code registration subsidy.
- MAT: Owners are also allowed credit for Minimum Alternate Tax (MAT) to be carried forward for up to 15 years instead of 10 years
- Government Tenders and Counter-guarantee: Many government tenders become open to MSME Industries alone. They also get a counter-guarantee from the Government of India through CGSTI.
- Credit Access: They get easy access to credit. The businesses, both new and existing, can enjoy collateral-free credit issued under the Credit Guarantee Fund Scheme.
- Concessions: Once registered, the cost of patent registration and setting up the industry is reduced as many rebates and concessions are available.
- Protection Against Buyers: The ministry of MSME protects the owners from delay in payments by the buyers and ensures the right of interest on delayed payment through arbitration and conciliation and settlement of a dispute in minimum time.
- Exemption from Security Deposit: The owner is waived off from the security deposit considering the monetary limit up to which the unit is registered.
- Subsidy on NSIC Performance: Businesses registered as MSME can avail subsidy on NSIC performance and credit ratings.
- Industrial Promotion Subsidy: MSME registered owners can avail Industrial Promotion Subsidy or IPS.
- Octroi Benefits: Refund on octroi is provided under the Package Scheme of Incentives, 1993.
- Exemption from Stamp Duty and Registration Fees: All new industrial units having MSME Registration are exempted from stamp duty and registration fees.
- High Preference: Businesses registered under MSME are majorly preferred for government license and certification. They get easy access in international exhibitions, buyer-seller meet, trade fairs, and for holding international conference and seminars.
- Easy License: Getting licenses, registrations, and approvals on any field for their business from the respective authorities becomes easy.
Want your business to get noticed and qualified for all the benefits of MSME registration mentioned above? Then hurry and get the MSME registration done.