The procedure for MSME registration in India has now become extremely simple and easy. Moreover, upon registering, the MSMEs can enjoy various benefits and schemes which are provided by the Government of India.
The following topics have been covered in this article:
- About MSMEs
- Benefits of MSME Registration
- Documents Required for MSME Registration
- How to Register an MSME?
- Government Launched MSME Schemes
1. About MSMEs
The Micro, Small, and Medium Enterprise (MSME)sector is considered as the backbone of a developing economy like India. It was established to facilitate the development of micro, small, and medium enterprises.This sector is a major contributor towards employment, manufacturing, exports, and industrial units in India.The economy’s growth is dependent on the growth of the MSME sector. The MSME industries are also referred to as the Small Scale Industries (SSIs).
There are two categories of MSME whose eligibility criteria can be defined as per their investment in plant and machinery:
- Manufacturing Enterprises: Less than Rs. 25 lakhs in micro enterprises, less than Rs. 5 crores in small enterprises, and less than Rs. 10 crores in medium enterprises.
- Service Enterprises: Less than Rs. 10 lakhs in micro enterprises, less than Rs. 2 crores in small enterprises, and less than Rs. 5 crores in medium enterprises.
- Both categories of MSME can register themselves under the MSME Act.
2. Benefits of MSME Registration
Some main benefits of MSME registration are:
- Cheaper bank loans because of much lower interest rates (around 1% to 1.5%) as compared to regular loans
- Various tax rebates are offered especially to MSMEs
- Credit for Minimum Alternate Tax (MAT) allowed to be carried forward up to 15 years (as opposed to regular 10 years)
- Several government tenders especially open to MSME
- Easily accessible credit
- Reduced costs of getting patented, industry set-up, etc. due to special availability of rebates and concessions
- Higher preference given to registered MSMEs for license and certification by government
- One Time Settlement Fee for amount unpaid by MSME
3. Documents Required for MSME Registration
In order to register an MSME, the following documents are required:
- Address Proof of Business:
o Self-owned premises: Possession letter, allotment letter, property tax receipt, or lease deed. If a municipal license exists in the name of the business or its proprietor, partner, or director, then no other possession document will be required.
o Rented premises: Rent receipt, NOC from landlord, and utility bill or its equivalent as evidence to landlord’s ownership.
- Copies of every sale bill and purchase bill
- Partnership Deed/Memorandum of Association (MoA) and Articles of Association (AoA) along with certificate of incorporation and copy of board resolution which has authorized a director to sign the MSME application
- Copies of licenses and bills of purchased machinery
4. How to Register an MSME?
It is best recommended to take the help of an expert while registering an MSME. However, the following details may be kept in mind in order to register an enterprise under the MSME Act:
- Business owner is required to fill out the MSME registration file offline or online
- An individual may register for more than one industry through individual registration
- The applicant should have personal details like name, Aadhaar, name of industry, address,PAN, mobile number, 2-digit NIC, bank account details, etc.
- Self-attested certificated can also be provided by the individual for the same
- Registration fee is not applicable for this process
- Upon entering required details accurately and uploading the required documents, the applicant will receive the registration number for the business.
5. Government Launched MSME Schemes
The government has launched various schemes for registered MSMEs, such as:
- Udyog Aadhaar Memorandum: Registration under this scheme mandatorily requires the entity to have an Aadhaar card.It can be done both online and offline. It benefits MSMEs by providing easily available loans, credit, and government subsidies.
- Zero Defect, Zero Effect: Registration under this scheme requires goods manufactured for export to match the prescribed standards. This will enable their acceptance in foreign nations and keep them from being returned to India. The entities registered under this scheme enjoy certain rebates and concessions for their exported goods.
- Quality Management Standards and Quality Technology Tools: Registration under this scheme will help MSMEs to understand and maintain the required quality standards with new technology. This scheme conducts activities (seminars, campaigns, etc.) to enlighten businesses about new technology which is available in the market.
- Incubation: Registration under this scheme will help innovative MSMEs with their implementation of new ideas, designs, and products. The government can finance from 75% to 80% of the project costs of MSMEs registered under this scheme.
- Grievance Monitoring System: Registration under this scheme benefits MSMEs by addressing the complaints of business owners. The status of complaints can be checked by the owners and keep the complaints open in case the outcome is dissatisfactory.
- Women Entrepreneurship: This scheme has been launched especially for women entrepreneurs. Benefits of registration under this scheme include of capital, training, counseling, and teaching of delivery techniques by the government to the women-run MSMEs. It aims at facilitating women to manage and expand their businesses.
- Credit Linked Capital Subsidy Scheme: Registration under this scheme provides MSMEs with new technology as a replacement for their old and obsolete technology. The MSMEs are given a capital subsidy so as to upgrade their business. MSMEs registered under this scheme can approach banks directly in order to avail these subsidies.
There are various other schemes which the government has launched so as to provide a support to these MSMEs.
The government has not yet made MSME registration mandatory. However, registration can prove to be extremely beneficial in terms of taxation, credit facilities, loans, business set-up, etc.