Micro, Small and Medium Enterprises or the MSME is an important linchpin contributing to the prosperity of the Indian Economy.
With the help of various subsidies, schemes and incentives the Government promoted the MSMEs through the MSMED Act introduced in 2006.
Let us look into how the manufacturing and service enterprises are defined in terms of their investment:
|CATEGORY||MANUFACTURING SECTOR INVESTMENT||SERVICE SECTOR INVESTMENT|
|MICRO ENTERPRISE||Upto 25 lakh||Upto 10 Lakh|
|MACRO ENTERPRISE||Above 25 lakh- 5 Crore||Above 10 Lakh- 2 Crore|
|SMALL ENTERPRISE||Above 5 Crore-10 Crore||Above 2 Crore- 5 Crore|
It is very important for all the micro, small and medium sized enterprises to get the MSME Registration done for them to avail various benefits and also MSME has played a crucial role in creating employment opportunities with lower capital costs and also industrialization of rural and backward areas which n turn balances the distribution of national income.
Is MSME registration voluntary or mandatory
MSME registration is totally voluntary. Businessmen and entrepreneurs usually get this done to utilise the advantages offered under it. The registration process is quite easy and simple. You can easily avail it (provided you have a manufacturing plant or a commercial space where you render services), many businesses opt for it over other registrations.
DOCUMENTS REQUIRED FOR MSME REGISTRATION
Self-owned Premises – Allotment letter, possession letter, lease deed or property tax receipt.
Rented Premises – Rent receipt and a no objection certificate from the landlord is required.
Business is required to submit copy of sale bill related to each end product that it will supply.
If the business is a partnership firm, it has to submit its partnership deed. In case of a company, copy of Memorandum of Association and Articles of Association, and certificate of incorporation has to be submitted.
In few cases, the applicant has to submit a copy of industrial license which is to be obtained by giving an application to Govt. of India and if required all bills and receipts related to purchase and installation of plant and machinery.
Aavana Corporate Solutions offering various business registrations can also help clients in procuring MSME Registration. We do the complete registration process from collecting documents, filling in the application, and getting the final MSME Registration certificate at the best possible prices.
Advantages of MSME registration
Cheaper bank loans
The rate of interest on loan offered to MSMEs is 1-1.5% lower compared to typical business loan interest.
Easy access to credit
PM Modi has introduced the Mudhra Loan scheme, which provides loans to MSME / SSI without collaterals.
Quicker approvals from state and central government bodies
Business registered under MSME are given higher preference in terms of government license and certification.
MSME / SSI registered businesses enjoy multiple income taxes and capital gains tax subsidies from the government.
Charges are lower for MSME registered company for facilities such as electricity and VAT exemptions. In fact, other business services such as patents are also cheaper for MSMEs.
Access to tenders
There are multiple government tenders which are open only to MSMEs to promote small business participation in the India.
- The buyer is to make payment on or before the date agreed on between him and the supplier in writing or, in case of no agreement, before the appointed day.
- The agreement between seller and buyer shall not exceed more than 45 days
- If the buyer fails to make payment of the amount to the supplier, he shall be liable to pay compound interest with monthly rests to the supplier on the amount from the appointed day or, on the date agreed on, at three times of the Bank Rate notified by Reserve Bank.
- For any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the interest as advised at above.
- In case of dispute with regard to any amount due, a reference shall be made to the Micro and Small Enterprises Facilitation Council, constituted by the respective State Government.