Accounting Services Blogs

Important Facts You Should Know About MSME registration

The term ‘MSME’ stands for Micro Small Medium Enterprises which is an initiative launched by the Government of India to protect the business of small and medium scale enterprises. It is very vital for every micro, small and medium scale business enterprises to opt for MSME registration to avail various incentives and benefits.

MSME are the pillars of any economy and is a sign of progress for the economic development of the country. It has played a crucial role in generating large-scale employment opportunities with lower capital costs. MSME has led to the development of rapid industrialization in rural and backward regions which in turn has led to an equal balance in the distribution of national income.  By looking towards the developing country like India whose economy is basically dependent on agriculture, applying for MSME registration could be considered as its backbone.

According to the MSME Act, 2006 MSME can be classified into 2 classes namely;

  • Manufacturing Enterprises
  • Service Enterprises

Manufacturing Enterprises that are engaged in the manufacture or production of goods with respect to any industry specified in the first schedule to the industries or employing plant and machinery in the process of value addition to the final product having a distinct name. The manufacturing Enterprise is defined in terms of investment in plant & machinery.

Service Enterprises are the enterprises engaged in providing services and are defined in terms of investment in equipment.

Let us look at the below table how the manufacturing and service enterprises are defined in terms of their investment.

EnterprisesManufacturing SectorService Sector
Micro EnterpriseDoes not exceed Rs. 25 lakhDoes not exceed Rs. 10 lakh
Small EnterpriseMore than Rs. 25 lakh but does not exceed Rs. 5 croreMore than Rs. 10 lakh but does not exceed Rs. 2 crores
Medium EnterpriseMore than Rs.5 crore but does not exceed Rs. 10 crore.More than Rs. 2 crores but does not exceed Rs. 5 crores.


To set up a new MSME unit is a big challenge. The overriding reason for any individual to think of establishing an MSME unit can be summarized in one word “Opportunity”. If an individual can see an opportunity to provide a product or a service in a manner to generate sufficient funds, then the best way is to start an MSME unit. This is very much true if one believes in the maxim. “Small is Beautiful”. MSME provide ample opportunities to emerge out of box ideas that one comes across by thinking about the lives of friends and neighbours. This can certainly generate ideas about products and services that can make things much easier and also at the same time improve the quality of life of the people.

MSME process is totally online but one still needs a qualified expert in filing the MSME registration forms. Though it is not mandatory, it is always advisable since it will have a government back-up for your enterprise.

Aadhar is now mandatory for registering under MSME act. An application is to be filed online using Udyog Aadhar Registration, and the same can be verified using e-Aadhar OTP.

Temporary MSME registration is given initially for a period of 5 years in case an entity has not started the business yet. During this period, one can obtain loans from banks, NBFC’s, and also can apply for various NOC’s from regulatory bodies. Once the entity commences its operations, it can apply for a permanent license which has lifetime validity, unless canceled.

Some of the respective documents required for the purpose of MSME registration are mentioned below:

  • Business Address Proof – Allotment letter, lease deed or property tax receipt
  • Rented premises proof – Rent receipt and a No Objection Certificate from the landlord. Beside any utility bills or documents showing the landlord’s ownership is to be submitted.
  • Sale Bill and Purchase Bill – One has to submit a copy of the Sale bill and Purchase bill related to each end product.
  • Copy of PAN Card and Aadhar
  • Copy of Partnership Deed – If the nature of the business is a partnership firm, then one has to submit the partnership deed.
  • Copy of MOA and AOA – In case of a company, one has to submit the copy of Memorandum of Association and Articles of Association along with the Certificate of Incorporation.
  • Copy of Licenses and Bills of Machinery Purchased – The applicant has to submit a copy of industrial license which is to be obtained by providing an application to the Government of India. Further, all bills and receipts related to the purchase and installation of plant and machinery have to be kept in safe custody and required to be produced on demand.

If you have any queries or clarifications about MSME registration process you can always seek the expert guidance from Aavana Corporate Solutions.

Write A Comment

Related Posts