Source: https://msme.gov.in/
https://udyamregistration.gov.in/Government-India/Ministry-MSME-registration.htm
1. What are the benefits available for MSME
# |
Item |
Benefit snapshot |
1 |
Collateral Free Bank Loans |
A Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is introduced to provide Credit Guarantee and collateral-free credit to the MSMEs https://my.msme.gov.in/MyMsme/Reg/COM_CgtmseAppForm.aspx |
2 |
Credit Linked Capital Subsidies for MSMEs |
Under this scheme, MSMEs are provided upgraded technology to replace their old and obsolete ones. The Scheme aims to provide 15% capital subsidy for technology upgradations. There is also a ceiling in 15% capital subsidy which is 15 Lakh for induction of well-established and improved technology. It is given for in approved sub-sectors/products http://www.dcmsme.gov.in/schemes/SCLCS_FOR_TU_SSI_UNITS.pdf |
3 |
Incubation Scheme For MSME |
The incubation scheme has been launched in May 2019 to provides opportunity to the innovators in developing their new innovative ideas for the creation of new innovative products. Nature of assistance are as follows:
- Under this scheme financial assistance up to 15 lakh is provided for developing and nurturing of an idea
- Financial assistance up to 1.00 Cr. is provided for procurement and installation of Plant and Machines in BI. This will strengthen the technology-related R&D activities of BI
- Financial assistance of up to 1.00 Cr. provided as grants in aid for the seed capital support to HIs/BIs for promoting them to converting their ideas into start-ups
https://my.msme.gov.in/MyMsme/Reg/COM_IncubationForm.aspx
|
4 |
Market Development Assistance Scheme for MSME |
Under this scheme, The Central Government follows a Price and Purchase Preference policy Wherein around 358 items are listed for exclusive purchases by Central Government from the MSME units only. They are numerous support like marketing assistance even for those products, which are manufactured by MSMEs and do not fall under the purview of Reservation Policy. https://my.msme.gov.in/MyMsmeMob/MsmeScheme/Pages/0_2_5.html |
5 |
Tax exemption for start-ups / MSMEs |
1. Tax Holiday: No Income Tax required to be paid in 3 year out of 7 Years – ie. Startups are eligible for getting 100% tax exemption on profit for a period of three years in a block of seven years provided that annual turnover does not exceed Rs 25 crores in any financial year (Section 80-IAC). Minimum alternate tax (MAT) is allowed to be carried forward for up to 15 years instead of 10 years. 2. Tax exemption to Individual/HUF on investment of long-term capital gain in equity shares of eligible Startups u/s 54GB 3. Exemption from tax on long-term capital gains u/s 54EE 4. Set off of carry forward losses and capital gains allowed in case of a change in Shareholding pattern for eligible startups 5. Tax Exemption under Section 56 of the Income Tax Act (Angel Tax) – in case start-up company issues shares above the fair market value https://www.startupindia.gov.in/content/dam/invest-india/Templates/public/198117.pdf |
6 |
Procurement and Marketing Support |
From time to time government has announced many tenders where only MSME Industries can apply. Recently, as a part of Covid-19 relief package, the Finance minister has announced that there are issues of unfair competition from foreign companies in government procurement tenders due to the size and strength differ and govt will not allow global tenders in such schemes up to Rs 200 crore. https://my.msme.gov.in/MyMsme/Reg/COM_Matu.aspx |
7 |
Prime Minister Employment Generation Programme for MSMEs |
This scheme provides a subsidy for Employment Generation. The national-level nodal agency is Khadi and Village Industries Commission (KVIC) and it implements the scheme at national level. At the State level it is implemented through State KVIC Directorates, State Khadi and Village Industries Boards, District Industries Centres and banks. The Government subsidy under the Scheme is routed by KVIC through the partner banks for distribution to the entrepreneurs directly in their Bank accounts. https://my.msme.gov.in/MyMsme/Reg/COM_PMEGPForm.aspx |
8 |
Subsidy on Patent Registration |
50% subsidy is given to the MSMEs for the Patent and Trademark registration fees |
9 |
Overdraft Interest Rate Exemption |
MSMEs can avail a benefit of up to 1% on the Over Draft (OD) facility provided by several banks. As per Union budget 2019 MSMEs registered under GST can get 2% interest subvention. It is available for incremental loans of Rs 1 crores under the MSME Credit Scheme. |
10 |
Protection against Delayed Payments from customers |
Buyers are required to make the payment on or before the agreed date of payment or within 15 days from the day they had accepted the goods and services from MSMEs. If the buyer delays the payment beyond 45 days after accepting the products or services, it has to pay compound interest with monthly rests. The interest rate is three times the rate that is notified by the Reserve Bank of India. |
11 |
Lower electricity rate |
MSMEs are provided concession in the electricity rates |
12 |
Reimbursement of ISO Certification Charges |
The registered MSME enterprises can claim reimbursement of the expenses that were spent for the ISO certification |
2. Basis of classification / definition of Micro, Small & Medium Enterprise (MSME)
Classification |
Micro |
Small |
Medium |
Manufacturing Enterprises and Enterprises rendering Services |
Investment in Plant and Machinery or Equipment: Not more than Rs. 1 crore and Annual Turnover: not more than Rs. 5 crore |
Investment in Plant and Machinery or Equipment: Not more than Rs. 10 crore and Annual Turnover: not more than Rs. 50 crore |
Investment in Plant and Machinery or Equipment: Not more than Rs. 50 crore and Annual Turnover: not more than Rs. 250 crore |
3. Definition of Plant and Machinery or Equipment
"Plant" includes ships, vehicles, books, scientific apparatus and surgical equipment used for the purposes of the business or profession but does not include tea bushes or livestock or buildings or furniture and fittings.
The definition EXCLUDES the cost of pollution control, research and development, industrial safety devices and such other items as may be specified, by notification, shall be excluded
The purchase (invoice) value of a plant and machinery or equipment, whether purchased first hand or second hand, shall be taken into account excluding Goods and Services Tax (GST)
4. Definition of Annual Turnover
Exports of goods or services or both, shall be excluded while calculating the turnover of any enterprise whether micro, small or medium, for the purposes of classification.
Information as regards turnover and exports turnover for an enterprise shall be linked to the Income Tax Act or the Central Goods and Services Act (CGST Act) and the GSTIN
5. Who can apply for MSME Registration
All types of legal entities / organization engaged in the manufacturing process and/or rendering services are eligible to apply for MSME Registration
Persons/entities engaged in pure trading activities are not eligible for MSME registration / benefits, as of now. Following activities / NIC Codes are not eligible for MSME registration:
NIC Code |
Activity |
02 |
Forestry and logging |
03 |
Fishing and aqua-culture |
45 |
Wholesale and retail trade and repair of motor vehicle and motorcycles |
46 |
Wholesale trade except of motor vehicles and motorcycles |
47 |
Retail trade except of motor vehicles and motorcycles |
97 |
Activities of households as employees for domestic personnel |
98 |
Undifferentiated goods and services producing activities of private households for own use |
99 |
Activities of extraterritorial organization and bodies |
(Source: https://udyamregistration.gov.in/docs/OM_UAN_17_7_2020.pdf)
You can see details of other NIC Codes in the link below:
https://udyamregistration.gov.in/docs/NIC-code-for-MSME-classification-defination.pdf
6. Whether MSME registration is mandatory
No, MSME registration is optional. There are certain benefits which MSME can avail if they get themselves registered as MSME which is mentioned below
7. What are the documents required for MSME registration
- Permanent Account Number (PAN) of the organization/entity/enterprise (Optional upto 31st March 2021. Mandatory Effective 1st April 2021)
- GST Identification Number (GSTIN) of the organization/entity/enterprise(Optional upto 31st March 2021. Mandatory Effective 1st April 2021)
- Aadhaar number: The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm, of a karta in the case of a Hindu Undivided Family (HUF), of authorized signatory in case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust
- Investment in Plant & Machinery or Equipment
- Turnover
8. What is the process of MSME registration
- Visit https://udyamregistration.gov.in/Government-India/Ministry-MSME-registration.htm
- Select the applicable link for initiating the registration
- Refer the manual for completion of the registration as below:
- If the enterprise has PAN – follow the process given in the link below
https://udyamregistration.gov.in/docs/process_msme_regisration_new_pan_Yes.pdf
- If the enterprise does not have PAN - follow the process given in the link below
https://udyamregistration.gov.in/docs/process_msme_regisration_new_No_pan.pdf
- PAN and GSTIN is mandatory for all MSME registration with effect from 1st April 2021
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