MSME Registration

By Jitender Sharma - August 09, 2018

MSME is the cornerstone of several economies in the world. It not only requires less investment but also contributes significantly to the GDP of a country.

Also it has been influential in proliferating employment opportunities, one of the main reasons why MSME Registration in India has been regarded as an evolver of a developing economy and actuating the entrepreneurs into The MSME has been instrumental in its outreach towards rural as well as backward areas, consequently mitigating regional disparity and 1 It is responsible for the formulation and administration of rules and regulations regarding micro, small and medium. MSME is defined in the MSME Act, 2006 as Small and medium scale enterprises (SMEs) are understood in India as enterprises where the investment in plant and machinery or equipments is between Rs. 25 lakh to Rs. 10 crores  in case of a manufacturing industry and between Rs. 10 lakh to Rs. 5 Crore  in case of a service sector enterprise. MSME (Micro, Small and Medium Enterprises) is a branch of Government of India primarily responsible for the creation of employment opportunities, whereby it hascontributed a towering percentage of 69.

For every MSME, though registration is not necessary, certainly beneficial for one’s enterprise. MSME registration in India is quite uncomplicated and one can register with ease. Any business enterprise can register for MSME. A Sole Proprietorship, One Person Company, Partnership Firm, Joint Hindu Family, Co-operative Society Company are eligible for MSME Registration in India. The only category which requires compulsory registration is the medium enterprises which undertake production of goods. The enterprise for the purpose of registration has to approach the District Industries Department of their respective places. For MSME registration no documents are required, but provision of Aadhaar Number is mandatory at the same time. A form named Entrepreneurs Memorandum has to be filled up, this form includes two parts. The first part of the Memorandum provides the intention of the enterprise to provide services and submit it to the District Industries Department. The second part is to be filled up after the production of goods or rendering of services is actually put into motion. A project report concerning the details of his/her enterprise needs to be filed. The details relate to requirement of plant and machinery, land and building, raw material, manpower etc.

MSME Registration in India is worthwhile since it provides innumerable benefits. Likewise, any enterprise which does not register is at a complete loss and does not gratuitously avail of the benefits available to him. The benefits of MSME Registration in India can be noted down as follows:

1.      Free bank loans:  Enterprises which register with the MSME avail the benefit of collateral-free credit to micro and small enterprise sector. The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS) has been established by the Government of India for the purpose of credit free loan.

2.      Direct Tax Law: Enterprises which have registered under MSME are exempted from paying Direct Tax in the early years of business.

3.      Licenses: Licenses are easily approved to those enterprises which have registered themselves with the MSME. While dealing with licenses, one just needs to show the Certificate of MSME registration and the license can be approved.

4.      Rate of Interest from banks: Banks have been provided with the target of achieving a credit growth of 20% to small and micro enterprises, 10% growth in the number of micro enterprises. Along the same lines, the banks need to lend 60% to the micro and small enterprises. The division of the 60% being, 40% of the advances to be offered to the manufacturing sector of the small and micro enterprises which deal in investment of plant and machinery upto 10 lakh and service sector’s equipment investment upto 4 lakh; 20% of the total advances to be given to the manufacturing sector of small and micro enterprises which deal in investment of plant and machinery between 10 lakh and 25 lakh and in case of service sector, investment of machinery above 4 lakh.

5.      Stamp duty and Registration fees: All new industrial units which have registered under MSME are exempted from payment of Stamp duty and Registration fees.

6.      Patent Registration subsidy: Enterprises can avail the opportunity of 50% subsidy for the purpose of patent registration to respective authority if it is registered.

7.      Tenders: Enterprises having registration themselves under MSME have an edge over other Enterprises, since they get a preference in procuring government tenders.

8.      Default by buyers: The MSME Registration provides protection against default payments of the buyers. The buyers need to make the payment on or before the date of payment. In case of default, the buyer gets an extension of 15 days from the agreed date of payment. If the buyer makes a default again, then he has to pay compound interest with monthly interest to the supplier from the agreed date of payment or fifteen days of extension. The interest is three times higher than that of the Bank rate.

9.      Exemptions by MSME: While applying for Government tenders, the Ministry of Micro, Small and Medium Enterprises provide for certain benefits if an Enterprise comes under the MSME Registration in India. The benefits are:

·         Issuance of tender free of cost
·         Waiver of security deposit
·         Exemption from payment of earnest money.

Thus, MSME Registration is of vital importance for availing the innumerable benefits that an entity can imbibe for its own expansion and development. MSMEs are evolving the economy like never before, its upto us now to make the most of it. For getting your MSME Registration Certificate visit Company Vakil and become part of India’s Micro Small and Medium Enterprises clan today and reap all its benefits.

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