The MSME registration in India has now become easier for businesses. To add to this, the Government of India also offers a wide range of benefits and schemes to the MSMEs, which they can avail easily.
What are Micro, Small and Medium Enterprise?
The Micro, Smal, and Medium Enterprise (MSME) sector play a prominent role in the economic growth of a developing country like India. This sector has been established with an underlying aim of nurturing the micro, small, and medium enterprises in India. MSME sector in India also provides a significant contribution towards manufacturing, exports, employment, and industrial units in India. In short, the economic growth of India also relies on MSME sector development. MSME sector is also popularly known as the Small Scale Industry (SSI) in India.
Small Company Definition Changes
The ministry of corporate affairs stated that the small company definition is bound to change with the proposal by finance minister Nirmala sitharaman as per the union budget 2021. In the proposal, there was paid-up capital increase to 2Cr while there is turnover increase to 20Cr. It is going to come into effect from 1st April 2021
Two distinct categories of MSME exist in India, whose eligibility depends upon the investment in machinery and plant by the businesses. These two categories include:
- The micro-enterprises having income less than INR 25 lakh, small enterprises having income below INR 5 crore, and medium enterprises having total income less than INR 10 crore fall in this category
- The micro business with income less than INR 10 lakh, small enterprises with revenue less than INR 2 crores and lastly the medium enterprises with income less than INR 5 crore are considered as service enterprises in MSME sector
The enterprises of both categories can register themselves as the MSME under the MSME act.
Key Benefits of MSME Registration for Businesses in India
- Businesses can avail cheaper bank loans with lower interest rates (around 1 to 1.5 per cent) in comparison to regular loans
- Tax rebate availability
- Unlike the regular Minimum Alternate Tax (MAT) duration of 10 years for credit, MSMEs are allowed to carry forward this limit to 15 years for credit against MAT
- Special government tenders catering MSMEs mainly
- Easy credit accessibility Low-cost for industry set-up, patents, and so no due to special tax rebates and other concessions
- High preference from the government in terms of licencing and certification
- One time settlement option for the unpaid amount
Necessary Documents Required for MSME Registration in India
The important documents that are mandatory for MSME registration are given below:
- Address Proof (of Business)
- Rented Property: NOC from the landlord, Rent receipt, and a utility bill or its equivalent are mandatory as a proof of landlord’s ownership
- Self-owned Office: For self-owned offices, one must have allotment letter, possession letter, property tax receipt, or lease deed. If a municipal license exists against the business name or its proprietor, director or partner, then no need of a possession document
- Receipts/copies of every sale and purchase bills
- Bills of machinery purchased and the copy of important licences
- Articles of Association (AoA) and Memorandum of Association (MoA)/Partnership Deed along with the copy of board resolution and incorporation certificate
Brief Registration Procedure for MSME in India
It is highly recommended to take help of an expert while registering for an MSME. However, one should take note of the below-mentioned details for MSME registration under the MSME Act.
- The business owners must fill the MSME form online or offline while registering for the same
- Any individual can file their registration for more than one industry for MSME
- The business owners must accurately fill the personal details like name, Aadhar, the name of the industry, PAN, mobile number, bank account details during MSME registration
- Business owners are not required to pay any registration fee for MSME registration
- The individuals can also provide Self-attested certificates for the same
- One of the required details and documents are uploaded properly by the MSME application; they will receive the registration number for the business.