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MSME registration helps the Micro, Small, and Medium (MSME) industries to obtain various benefits provided by the government for their growth. In a developing country like India, MSME industries are the backbone of the economy. When these industries grow, the country’s economy grows and flourishes. These industries are also known as small-scale industries or SSIs. The Government of India introduced the Micro, Small, and Medium Enterprises Development (MSMED) Act in 2006 to define and regulate MSMEs in India. According to the Act, MSMEs are defined as enterprises engaged in producing, manufacturing, processing, or preserving goods and commodities.
Types of MSMEs
MSMEs in India are classified into three types based on their size and investment, as per the MSMED Act. These types are:
- Manufacturing Enterprises:Manufacturing enterprises are those enterprises that are engaged in the production or manufacturing of goods. These include small-scale industries, food processing units, textile manufacturers, etc.
- Service Enterprises:Service enterprises are those enterprises that provide services to customers. These include consulting firms, software development companies, restaurants, and other service-based businesses.
- Trading Enterprises: Trading enterprises are those engaged in buying and selling goods. These can include wholesale and retail traders, importers, and exporters.
Revised Classification: (Composite Criteria: Investment and Annual Turnover)
Classification based on Manufacturing and Service Investment
- Micro < Investment of Rs. 1 cr. and Turnover Rs.5 cr.
- Small < Investment< Rs. 10 cr. and Turnover < Rs.50 cr.
- Medium Investment < Rs. 20 cr. and Turnover < Rs.100 cr
Benefits of MSME Registration
Below listed are the MSME registration benefits:
- Due to MSME Registration India, bank loans become cheaper as the interest rate is very low, around 1-1.5%, much lower than interest on regular loans
- It also allowed credit for minimum alternate tax (MAT) to be carried forward for up to 15 years instead of 10 years
- Once registered the cost of getting a patent done, or the cost of setting up the industry reduces as many rebates and concessions are available
- MSME registration helps to acquire government tenders easily as Udyam Registration Portal is integrated with Government e-Marketplace and various other State Government portals which give easy access to their marketplace and e-tenders
- There is a Time Settlement Fee for non-paid amounts of MSME
- The MSME registration will help the MSMEs in availing the benefits of government schemes such as the Credit Guarantee Scheme, Credit Linked Capital Subsidy Scheme, Public Procurement Policy, Protection against delayed payments, etc.
- MSMEs are eligible for priority sector lending from banks
- MSMEs get the benefit of a government security deposit waiver that is helpful while participating in e-tenders
- Any number of activities, including service or manufacturing or both, may be added or specified in one MSME registration
- Barcode registration subsidy
- Exemption scheme from direct taxes
- ISO certification fees reimbursement
- Electricity bills concession
- Special consideration in International trade fairs
Who can Apply for Udyam Registration?
All manufacturing, service industries, wholesale, and retail trade that fulfill the revised MSME classification criteria of annual turnover and investment can apply for MSME registration. Thus, the MSME registration eligibility depends on an entity’s annual turnover and investment. The following entities are eligible for MSME registration:
- Individuals, startups, business owners, and entrepreneurs
- Private and public limited companies
- Sole proprietorship
- Partnership firm
- Limited Liability Partnerships (LLPs)
- Self Help Groups (SHGs)
- Co-operative societies
- PAN number
- Aadhar number
- Business address
- Bank account details
- Business activity details
- Investment details
- Turnover information according to MSME definition
- Partnership deed
- Bills of sales and purchases
- Machinery licenses and bills (copies)
Process for MSME Registration
MSME registration in India is an uncomplicated and clear-cut procedure that can be accomplished online. To obtain an MSME registration in India, you will first need to determine whether your business is eligible. The eligibility requirements vary depending on the type of business you are running. However, most businesses that are eligible for an MSME registration must meet at least one of the following conditions:
- Your business must be a new or startup business.
- Your business must be manufacturing or producing goods or services.
- Your business must have a minimum annual sales volume
- Your business must not be part of a group or joint venture with another company
The subsequent stages implicated in MSME registration:
- Visit the Udyam Registration Portal:The first step is to visit the Udyam Registration portal, the official government portal for MSME registration. Here, you will need to provide your Aadhaar number for authentication.
- Fill in the Application Form:Complete the online application form once your Aadhaar number is authenticated. The application form will require you to provide basic details such as your name, PAN, GSTIN, and other relevant information about your business.
- Provide Business Details:After filling in your details, you will need to provide information about your business such as the type of enterprise, location, and date of commencement.
- Submit Documents:Afterward, the subsequent step is to upload the obligatory credentials, including a PAN card, Aadhaar card, and additional business registration documents. The papers must be in PDF format and should be scanned appropriately.
- Verification and Payment:After submitting the documents, you must verify the details in the application form. Once verified, you will need to make the payment for the registration process.
- Receive the Certificate:Once the payment is made, you will receive a confirmation message and the Udyam registration certificate at your registered email address.
It is important to note that MSME registration is a one-time process, and the certificate obtained is valid for a lifetime. However, if there are any changes in the business, such as investment or turnover, the entrepreneur needs to update the information on the Udyam Registration portal.
How can we help with MSME registration?
- Legal Compliance: We can assist MSMEs in complying with various legal requirements that are essential for MSME registration. We can help businesses in obtaining the necessary licenses, permits, registrations, and approvals required for their operations.
- Entity Formation: We can guide MSMEs in choosing the appropriate form of business entity, such as a sole proprietorship, partnership, LLP, private limited company, or a one-person company, based on the business needs and objectives. We can also assist in the incorporation process, including filing necessary documents with the Registrar of Companies.
- Intellectual Property Protection: We can help MSMEs in protecting their intellectual property rights, such as trademarks, patents, copyrights, and designs, which are crucial for building brand value and safeguarding innovations.
- Taxation: We can assist MSMEs in complying with various tax laws, including GST, income tax, and customs duties. We can help MSMEs in availing tax benefits and exemptions available to them and in filing their tax returns on time.
- Contract Drafting and Review: We can assist MSMEs in drafting and reviewing various types of contracts, such as employment contracts, vendor contracts, lease agreements, and customer agreements. This can help MSMEs in avoiding legal disputes and protect their business interests.
We can help MSMEs in navigating the legal landscape and complying with various legal requirements essential for their growth and success.