In case you have been wondering whether your business entity can go for MSME registration or not, you are at the perfect place. Before we dive deep into the eligibility for MSME registration, let’s first quickly understand what MSMEs are.
MSME stands for Micro, Small and Medium Enterprises. They are such a vital part of India’s developing economy that the government of India has created a separate ministry to support and promote MSMEs. Through the MSMED Act, 2006, the Indian government provides special benefits to the MSMEs in the form of cheaper loans, tax benefits, and various schemes and subsidies.
If you are an existing business owner or an aspiring entrepreneur, you can receive multiple benefits through MSME registration. MSME registration is not mandatory. However, if you are seriously interested in availing the benefits the government provides to small businesses and entrepreneurs, you should go for it.
Who can Apply?
Any business entity can obtain MSME registration or Udyog Aadhaar registration. Proprietorship firms, LLPs, public and private limited companies, Hindu Undivided Family (HUF), Partnership firms, One Person Companies, Co-operative Societies, Association of Persons, or any other form of the undertaking can obtain MSME registration. Aadhaar number is mandatory for MSME registration. The entrepreneur who is willing to register his/her entity with the government must possess a valid Aadhaar number.
Under the MSME Development (Amendment) Bill, 2018, a new classification system has been introduced. Any business with a turnover of up to ₹5 crore will be considered a ‘micro-enterprise’. The other slabs are ₹5-75 crore for ‘small enterprise’ and ₹75-250 crore for ‘medium enterprise.’
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Documents Required For MSME Registration
MSME registration can be done online as well as offline. There are no registration fees involved, and it’s an easy and hassle-free process. The MSME registration documents you would need are as follows:
- Business Address Proof: Possession letter, property tax receipt, lease deed, allotment letter, municipal license, utility bills, rent receipts, and a No Objection Certificate from the landlord, any of these documents would work as a proof of your address.
- Copies of Sale Bill and Purchase Bill: For each raw material that is used in the production process, a purchase bill has to be submitted. Similarly, for every manufactured product or service supplied, a sale bill must be submitted.
- Documents of Legal Incorporation: If the entity is a partnership firm, the partnership deed and registration certificate are required. If the entity is a company, a copy of Memorandum of Association (MoA) and Articles of Association (AoA), and certificate of incorporation is required to be submitted. Along with this, a copy of the board resolution sanctioning the registration of the company as an MSME is also required.
- Other Essential Documents: In some cases, the applicant has to submit a copy of an industrial license which can be obtained from the Indian government after applying. All bills reflecting the purchase and installation of machinery and equipment must also be produced.
There is an online, free process for MSME registration. Although it’s not a must before you begin your enterprise, it is highly recommended because of the benefits it comes with. You need to fill out an application form which will require the following details:
- Aadhar number of the applicant
- Name, gender, PAN number, email id, and mobile number of the applicant
- PAN, location, and address of the organization
- A number of employees and the date, you are planning to start your business
- Bank account number and IFSC code
- The basic business activity of the enterprise
- NIC 2 digit code.
- Investment in plant and machinery/equipment
Once the process of registration is complete, you will get the MSME certificate. The Ministry will not issue any hard copy for it. A virtual certificate is what you will receive.
Benefits of MSME Registration
MSME registration will give you a host of monetary and non-monetary benefits. Amongst the many benefits are lending from lenders on a priority basis, lesser interest rates, as low as 1 to 1.5% are given, along with availability to greater credit. Market assistance from the government and export promotion, capital and other types of grants for infrastructure development, exclusive purchases and sheltering from competition and technology and quality up-gradation support. In the initial years of the business, one can get tax rebates. The registered enterprises also have been provided with a Barcode subsidy. Owners are also allowed credit for minimum alternate tax (MAT) to be carried forward for up to 15 years instead of 10 years. Some government tenders are specifically open for registered MSMEs, which reduces competition and allows the sector to grow. Moreover, 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. Specific subsidy such as based on NSIC performance and Industrial Promotion Subsidy (IPS) can also be availed by the registered MSMEs.
The Way Ahead
In your business journey, whenever you feel the need to expand or buy new business equipment or need cash to fuel growth, you would be looking for easy business loans. As an MSME, one of the easiest ways you can secure a loan is from us at ZipLoan. Minimum paperwork needs to be done for our quick credit evaluation. Based on that, we process a loan in just three days to help you in fulfilling your business dreams. All the best!