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Micro, Small and Medium Enterprises : MSME Registration

The Micro, Small and Medium Enterprises (MSME) are considered essential for our Indian Economy as this sector not only acts as a job creator for our youth but also plays a crucial role in the Industrialization of the Rural and Backward areas. An MSME Registration is obtained as per the MSMED Act. However, obtaining registration is not at all mandatory, but it shall be taken into consideration that the businesses or entity with MSME Registration are eligible to avail the benefits and schemes made by the Government.

Examples of such benefits are exemption from the Direct Tax, Private-Sector lending, exemption from Excise Duties, power tariff subsidies, capital investment subsidies. Some of the prominent and well-known MSMEs in India are DFM Foods, Ankur Scientific Energy Technologies, Molecular Connections, SL Packaging, Chem Process System, Mynd Solutions, etc.

Further, MSMEs and SSIs (Small Scale Industries) are eligible to obtain registration under the MSMED Act. Furthermore, according to the MSMED (Micro Small and Medium Enterprise Development) Act, 2006, the term MSME includes the following two listed:

  • Service Enterprise: This Industry is mainly engaged in providing services to other industries.
  • Manufacturing Enterprise: This Industry is engaged in manufacturing activities.

However, the same distinction has been eliminated by the Ministry of Finance by way of an announcement made on May 13, 2020.

What is a Micro Small and Medium Enterprise?

As per the MSMED Act, 2006, MSMEs and SSIs were enacted to strengthen and boost the Small-Scale sector in India. Earlier, both Service and Manufacturing were considered distinct and separate from each other, having different amount prescribed for the Investment Required.

However, as per the latest amendment made in the definition of MSME by the Ministry of Finance, the difference between the manufacturing and service sectors has been eliminated, Investment Limits have been Revised, and a Turnover Criteria has been introduced. This amendment was announced by our Finance Minister, Mrs. Nirmala Sitharaman, on 13 May 2020.

The following listed are considered as MSMEs under the MSMED Act, 2006:

Micro-Enterprise

Type of Industries

Type of Investment

Investment Amount

Turnover Amount

Manufacturing and Service Sector

In Plant and Machinery

Less than Rs 1 Crore

Less than Rs 5 Crore

 

Small-Enterprises

Types of Industries

Type of Investment

Investment Amount

Turnover Amount

Manufacturing and Service Sector

In Plant and Machinery

Rs 1 Crore to Rs 10 Crore

Rs 5 Crore to Rs 50 Crore

 

Medium Enterprises

Types of Industries

Type of Investment

Investment Amount

Turnover Amount

Manufacturing and Service Sector

In Plant and Machinery

Rs 10 Crore to Rs 20 Crore

Rs 50 Crore to Rs 100 Crore

 

Eligibility Criteria for Udyog Aadhaar MSME Registration

To become eligible for obtaining MSME Registration, the owner is required to invest less than Rs 20 Crores and must have a turnover of less than Rs 100 Crore (as per the amendment made on 13 May 2020) in plant and machinery either for a Manufacturing or Service Sector.

If, at any point in time, these industries exceed the investment limit, then they are required to surrender or cancel their MSME Registration provided under the MSMED Act.

Who can Apply for Registration under MSME Act?

Anyone who can fulfill either one or multiple criteria mentioned below are eligible to apply for registration under the MSME Act:

  • You have a Limited Liability Partnership.
  • You are a part of the Hindu Undivided Family.
  • You are a Sole Proprietor
  • You own a Partnership Firm with another party in an Association
  • You are an owner of One Person Company
  • You own a Production Company that with the production of materials
  • You have a Private Limited Company
  • You have Co-operative Societies.

 

Benefits of Udyog Aadhaar MSME Registration

Although obtaining MSME Registration is not mandatory for the MSMEs dealing in service and Manufacturing Sector. However, one cannot avail the benefits or the advantages offered after obtaining MSME Registration. The following listed are the benefits of Online MSME Registration:

  • Any company which holds an MSME Registration is able to obtain loans from banks at a comparatively cheaper rate, approximately 1- 1.5 percent. This is much lower than the normal bank rates.
  • Various Tax Rebates and Exemptions are provided to MSMEs.
  • MSMEs are permitted to carry forward the credit for MAT (Minimum Alternate Tax) up to a period of 15 years, which in the general case is ten years.
  • There are various tenders available only for the industries having registration in MSME Act.
  • MSME receives easy credit facility from various Financial Entities.
  • Industries having registration in MSME Act are given higher preference in comparison to normal industries.
  • Companies or the industries holding an MSME Certificate have better growth opportunities as they get direct entry in major national and international trade fairs and also have better occasions to present themselves to the world.
  • MSMEs are qualified to obtain Collateral free loans as banks do not accept any collateral security for the loan amount up to Rs 10 Lakhs.
  • Industries having registration under MSME are qualified to get reimbursement of ISO Certification.

What is the Significance of MSME Registration for SSI?

The points that deals with the significance of MSME Registration is mentioned below:

  • Obtaining MSME registration is essential for organizations, as it brings both credibility and clarity in the functioning of the entity.
  • If in case anyone is planning to start an MSME anywhere in India, then, in this case, the MSME department authorized by the Indian Government will help in the promotion of his or her enterprise.
  • Registration in MSME is a must for availing benefits such as incentives, subsidies and bank loans.

Who has the Authority to Issue MSME Registration Certificate?

The process of obtaining MSME registration is entirely done online, and every state has its own separate department to deal with this. Further, the DIC (District Industries Centre) is responsible for MSME registration. The DIC department also has the power to issue the MSME Registration Certificate along with the MSME Number.

What are the Details be submitted for MSME Registration in the Application Form?

Following are the list of documents and information that you have to provide as per the application form:

  • Aadhar Card Details
  • Owner’s name as per the Aadhar Card
  • Social category- whether the said applicant belongs to the General, OBC, SC or ST category
  • Gender
  • Physical status- whether the concerned applicant is physically disabled or not
  • Name of the enterprise
  • Type of enterprise- select from the provided list.
  • PAN (Permanent Account Number) Card Details
  • Location of the Plant
  • Address of the Plant
  • Incorporation Date of the Entity
  • Previous Registration Details- if in case any
  • Bank details
  • The Activity of Enterprise
  • NIC Code
  • Employment Information- Total Number of Employees working in the organization
  • Investment Details in Plant and Machinery

Documents Checklist for Udyog Aadhaar MSME Registration

The documents needed for obtaining online MSME Registration are as follows:

  • PAN Card Details of the proprietor/ all the directors/all the partners.
  • Aadhar Card Details of the proprietor/all the directors/all the partners.
  • Proof of ownership of the place being used as a Registered Office such as the Allotment Letter/Lease Agreement/Possession Letter/Property Tax Receipt.
  • If in case the place being used is a rented premise, then the Rent Agreement with the No-Objection Certificate (NOC) from the landlord together with the utility bill.
  • Copy of Purchase Bill of every raw material purchased.
  • Copy of Sale Bill for each end product.
  • A Copy of Partnership Deed in the case of a Partnership Firm.
  • Copy of Memorandum of Association (MOA) and Articles of Association (AOA) and Certificate of Incorporation (COI) in the case of Private Limited Company together with the Board's Resolution passes authorizing the director to sign the application.
  • Copy of the Industrial License as acquired under the Industrial Development and Regulation Act, 1951.
  • An affidavit on Rs. 10/-Non-Judicial Stamp Paper duly attested by the Notary Officer declaring the Power Requirement and the Status of the Machinery Installed etc.
  • Purchase Bill of the Machinery Installed.
  • Bills relating to Purchasing and Installation of plant and machinery.
  • Bank Account Statement.

Procedure of Online Udyog Aadhaar MSME Registration

msme registration process

The steps involved in the process of obtaining MSME Registration are mentioned below:

  • Fill the MSME Form: In the first and foremost step, the applicant is required to fill the application form with all the required details. After that, the applicant is required to submit the form to the concerned MSME department. This step can be commenced either offline or online.
  • Prepare all the required Documents: Now, in the next step, the applicant is required to prepare all the documents needed for obtaining MSME Registration. Such documents should be according to MSME Registration application Form. Usually, this process takes about two to three working days to reach the next step.
  • Filing the MSME Application: In the third step, the applicant is required to upload all the needed documents and submit the application to the MSME Registrar. Then the regulatory authorities will process and verify the authenticity and genuineness of all the documents in the next two working days.
  • Approval of Application and the Issuance of Certificate: After the successful verification of all the documents submitted, the regulatory authorities will issue the Certificate of Incorporation to the company. Hence, the said company will be considered as registered under the MSME.

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  • Consultation on Registration
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  • Registration Certificate

FAQs for MSME Registration

MSME is the abbreviated form for the Micro, Small, and Medium Enterprises, which is defined under the MSMED Act, 2006 based on the investment made in plant and machinery and equipment.

It is always better to apply for an MSME registration before commencing the business operations as this specific registration will assist in obtaining clearance from many government bodies.

When the Provisional Registration Certificate (PRC) is issued, it shall remain valid for a period of five years. Thus, after the expiry of five years, PRC shall lapse.

Although it is not mandatory to obtain MSME registration, but it is always advised to register as MSME in order to avail the several government benefits, such as subsidies and incentives.

Udyog Aadhar is an Aadhar for a business which is issued by the MSME department to the MSMEs (Micro, Small and Medium Enterprises). Further, it comprises of 12-digit government identification number.

Banks always prefer MSMEs over regular enterprises or businesses for granting loans. Moreover, the interest rates on loan offered are still low for an MSME in comparison to a normal enterprise. Further, Preferential treatment is also given to the MSMEs in the case of delay in repayment.

The original value of the Plant and Machinery is considered for obtaining MSME registration.

We provide services related to MSME registration across all over the India. Moreover, we have already completed MSME registration for various clients in Mumbai, Delhi, Chennai, Gujarat, Bangalore, Uttar Pradesh, Kolkata, etc.

Yes, Aadhar Card is compulsory for obtaining Udyog Aadhar Scheme Registration. Further, if in case the applicant is other than the proprietor, then the Aadhar card of the said partner or director will be required.

No, the MSME sector covers only the Manufacturing and Service Industries. Hence, Trading companies are not covered under the ambit of MSME. Further, the MSME sector supports start-ups by offering them subsidies and benefits, but trading companies are just similar to intermediaries, a link between customer and manufacturer. Therefore, they are not covered under the scheme.

No, the MSME or the Udyog Aadhar certificate is required only for a single entity regardless of multiple branches or plants. However, it shall be pertinent to note that the information regarding all the various branches or plants must be furnished.

Till date, in total, 20 items are being reserved to be manufactured only by MSMEs.

The Ministry of MSME notified that Udyog Aadhar is taking a cue from the Prime Minister's radio show named “Man ki Baat” in September 2015.

NSIC is the acronym form for the National Small Industries Corporation that arranges raw materials in bulk for small businesses and is also a part of the Ministry of MSME.

The following listed are eligible to apply for an MSME Loan:

  1. On the Basis of Turnover: Less than Rs 5 Crore;
  2. On the Basis of the amount invested in the plant and machineries: Less than Rs 25 Lakhs for the Manufacturing Enterprises and less than Rs 10 Lakhs for the Service Enterprises;
  3. On the Basis of Credit Requirement: Less than Rs 50 Lakhs

MSME Form- 1 is used by the MSMEs (Micro Small and Medium Enterprises) to file their half-yearly returns in the context of their outstanding payments, reasons for the delay, etc.

The term Credit rating means an estimate to figure out the ability of an enterprise or entity to meet all the financial needs on the basis of the previous year dealings. Further, even though obtaining credit rating is not compulsive in nature, but it is suggested to the MSME borrowers to get their credit rating done as it would assist them in the credit pricing of the loans taken from banks.

Yes, Aadhar Card is a mandatory prerequisite for obtaining MSME Registration.

Yes, MSMEs are qualified to obtain Collateral free loans as banks do not accept any collateral security for the loan amount up to Rs 10 Lakhs.

No, Credit Score is not necessary for MSMEs.

The MSME certificate is provided online, later you can download it as per your requirement from the portal.

The acronym MSME stands for Micro Small and Medium Enterprises.

The following listed are the prominent and famous MSME companies in India:

  1. DFM foods
  2. Ankur Scientific Energy Technologies
  3. Mynd Solutions
  4. SL Packaging
  5. Molecular Connections
  6. Staragiri Warehousing and Collateral Management
  7. Chem Process System
  8. Emmbi Polyarns
  9. Astha Minmet India

Yes, a Sole Proprietorship Firm is eligible to apply for MSME Registration.

The acronym SSI stands for the Small-Scale Industries.

Yes, Publishing Books comes under the ambit of the MSME Sector.

The following listed are the benefits of an MSME Registration:

  1. Lower rates of Interest
  2. Excise Duty Exemption Schemes
  3. Subsidy Tariffs
  4. Reservation Schemes for the Manufacturing and Service Sector
  5. Opportunity to present themselves in the International Trade Fairs
  6. Tax Subsidy
  7. Collateral Free loans from banks
  8. Reimbursement of ISO Certification

Yes, a new and existing business are eligible to apply for MSME or Udyog Aadhar registration. However, it shall be taken into consideration that the existing unit is not only functioning but also meeting the threshold limits for the registration.

Yes, an individual can apply for MSME registration by visiting the government’s official portal. However, it is always advised to take experts assistance for obtaining registration as it reduces the scope of mistake.

The Initial Return must to be filed on 3rd May of every year. However, the half-yearly return is required to be filed on 31st October for the period starting from April to September and on 30th April for the period starting from October to March.

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