MSMEs refer to Micro, Small, and Medium businesses that take part in the service sector or in the manufacturing, processing, and preservation of various goods and communities. They play a very crucial role in the economy of a developing country like India. Government officials in December 2020 stated that a total of 30 percent of the GDP is contributed by the MSMEs. They also contributed 48% to the total exports of the government. This industry had also created 11 crore jobs till December 2020. It is a no-brainer that how much this industry has to be protected as well as uplifted at the same time.
The above shows the number of MSME and Annual Growth per year(Source- ResearchGate)
CRITERIA FOR CLASSIFICATION
According to the latest government notification, the criteria for any industry to be classified as micro, small or a medium enterprise is as follows:
|1.||MICRO ENTERPRISES||does not exceed 1 crore rupees|
(<Rs. 1 crore)
|does not exceed five crore rupees|
(<Rs. 5 crore)
|2.||SMALL ENTERPRISE||does not exceed 10 crore rupees|
(<Rs. 10 crore)
|does not exceed fifty crore rupees|
(<Rs. 50 crore)
|3.||MEDIUM ENTERPRISE||does not exceed fifty crore rupees|
(<Rs. 50 crore)
|does not exceed two hundred and fifty crore rupees|
(<Rs. 250 crore)
BENEFITS OF MSME REGISTRATION
There are various advantages that businesses get after obtaining MSME registration in India under the MSME act. They are as follows:
- COLLATERAL FREE BANK LOANS
Collateral free loans are loans provided to the lender by the borrower without any guarantee. One can approach a borrower for a loan even if he/she has nothing to invest in or pledge. The Government of India has made collateral-free credit available to all small and micro-business sectors. This initiative guarantees funds to micro and small-sector enterprises. Under this scheme, both the old as well as the new enterprises can claim the benefits.
- REGISTRATION SUBSIDY
A massive 50% subsidy is given to the establishment having a certificate of registration granted by MSME. This subsidy for patent registration can be availed by submitting applications to various ministries.
- CONCESSION ON ELECTRICITY BILLS
One of the big benefits to the MSMEs, corporations registered under the MSME act can get a concession on electricity bills. For doing this, they have to submit the bills along with an application and a copy of the registered certificate by MSME.
- PROTECTION AGAINST DELAYED PAYMENTS
Taking into account the uncertainty with the revenue generation by various businesses, the government provides a layer of shielding to them against payments. The Ministry of Micro, Small, and Medium Enterprise has given business owners and enterprises to collect interest on payments delayed by the buyer.
Under the MSME registration benefits, a buyer is expected to make a payment for the goods/services within 15 days of the purchase. If the buyer delays, the payment for more than 45 days, the enterprise is eligible to charge compound interest which is 3 times the rate notified by RBI.
WHO CAN APPLY FOR MSME REGISTRATION
Any legal business is registered under the local or central government rules & regulations can apply for MSME registration.
Going more into detail, the following are the list of businesses that are eligible to apply for MSME registrations:
- Partnership Firm
- Limited Company
- Producer Company
- One Person Company
- Private Limited Company
- Limited Liability Partnership
- Any association of persons
- Co-operative societies or any other undertaking can obtain MSME registration in India.
DOCUMENTS REQUIRED FOR MSME REGISTRATION
- Aadhar Card
- Rent Agreement
- Property Paper
- Canceled Cheque
- Sales or Purchase Bill and PAN card
- Business Address Proof
For self-owned premise: Lease deed, property tax receipt, possession letter, allotment letter, etc
For rented premise: NOC from the landlord, rent receipts, utility bills or documents evidencing the landlord’s ownership, etc.
- Copies of Sales and Purchase Bills
- Partnership Deed (Partnership Deed is an agreement between the partners of a firm that indicates the terms and conditions of partnership among the partners. It specifies the various terms such as profit/loss sharing, salary, interest on capital, drawings, admission of a new partner, etc.)
- Memorandum of Association(MoA)
- Articles of Association(AOA)
- Copies of Licenses and Bills of Machinery Purchased
We at AYP, can help you get an MSME registration in minimal time!