Thinking of a startup, the first step you would like to go for is MSME registration. Now you must be wondering why is it important and what actually it is?
Don’t take stress, In the following article, everything is elaborated in details. Have a look at it.
End Source: The end source goes to LeadingFile. Whereon, to go with the official guide, visit the link in blue: MSME Registration
Returning to the article i.e MSME registration. Let’s start with the definition.
Micro Small And Medium Enterprises. In developing countries like India, MSME industry is the backbone of the economy. No matter the company is in the manufacturing sector or in the service sector, registration for both areas can be obtained under MSME.
However, MSME registration is not mandatory yet, but there are many features of MSME registration. In this article, we will discuss eligibility criteria, benefits and documents for MSME registration in order to obtain MSME registration certificate.
Eligibility Criteria for registration to obtain MSME certificate
Eligibility Criteria is defined as an investment for manufacturing/service sector in plant and machinery/equipment:
|Manufacturing Enterprises||Up to Rs. 25 Lacs||More than Rs. 25 lacs but up to Rs. 5 crores||More than Rs. 5 crores but up to Rs. 10 crores|
|Service Enterprises||Up to Rs. 10 Lacs||More than Rs. 10 lacs but up to Rs. 2 crores||More than Rs. 2 crores but up to Rs. 5 crores|
Micro Small Medium Enterprise Development Act, 2006
According to the MSMED Act, 2006, an enterprise means an industrial undertaking or business concern or any other establishment:
- Engaged in the manufacture or production of goods related to any industry specified in the first Schedule (Development and Regulation) Act, 1951 for industries; Or
- Are engaged in providing or providing any services or services
According to the MSMED Act, 2006, Micro, Small and Medium Enterprises (MSME) is defined as:
- Enterprises engaged in the manufacture or production, processing or conservation of goods as given below:
- A micro enterprise is an enterprise where investment in plant and machinery does not exceed 25 lakhs
- A small enterprise is an enterprise where investment in plant and machinery is more than 25 lakh but does not exceed Rs. 5 crore
- A middle enterprise is an enterprise where investment in plant and machinery is more than 5 crores, but not more than Rs 10 crores
- Enterprises engaged in providing or providing services and whose equipment is invested (original cost, except land and buildings and furniture, fittings and other goods which are not directly related to service):
- A micro enterprise is an enterprise where investment in equipment does not exceed 10 million
- A small enterprise is an enterprise where investment in equipment is more than 10 lakh but not more than Rs. 2 crore
- A middle enterprise is an enterprise where investment in equipment is more than 2 crores, but not more than Rs. 5 crore
Investment in plant and machinery is the basic cost except land and building
However, in February 2018, the government has approved the basis for classifying micro, small and medium enterprises, from ‘investment in plant and machinery’ to ‘annual turnover’. Accordingly, MSME will be defined:
- A micro-enterprise will be defined as a unit where the annual turnover is not more than 5 crores
- A small enterprise will be defined as an entity where the annual turnover is more than Rs. 5 crores but does not exceed Rs. 75 crore
- A middle enterprise will be defined as a unit where the annual turnover is more than Rs. 75 crores but not more than Rs. 250 crores
Documents Required For MSME Registration:
- Self-verified copy of the base which is associated with mobile number to generate OTP.
- Self-verified copies of identity proofs
- Copy of enterprise utility bill evidence address. If the property is a rented, then a NOC from the owner.
- Copies of the sale/purchase bill
- Partnership Deed / AoA and MoA
- The license of purchased machinery and copy of a bill
- Details of a bank account.
- Enterprise pan
Benefits Of MSME Registration:
- MSME organizations can take advantage of 50% concession in trademark and patent registration.
- Easy approval of the loan and low rate of interest.
- 1% discount on the interest rate on OD outlined in the scheme
- Concessions on electricity bills by making an application to the electricity department
- Get some benefits under direct tax and indirect taxes.
- This allowed the credit for the minimum alternate tax (MAT) to take it forward for 15 years instead of 10 years.
- There are several government tenders which are open to MSME Industries only.
Here comes the end of the article.
Anything out of the box is a Trend these days. Apart from this, not abiding by any specific pattern makes us wonder how a singular idea can be versatile? Same is the case with the entrepreneurial spirit here.
With support from Government and youth’s interesting in starting a new business, the MSMEs are growing rapidly.
The following article credit goes to the leadingfile who helped us a lot in writing the article. And also they are leading businesses that helping in getting MSME registration.
Hope the article could be of some help to those who want to work for themselves or have business ideas but are not able to overcome a lot of confusions about how to start or fund their enterprises.
If nothing, the idea of registering your company can really be a good start in the direction of dreams