An Overview of MSME Registration in India
The MSME stands for Micro, Small and Medium Enterprises and is the main Government body that deals with the management & preparation of guidelines, rules, and laws regarding small scale industries in India. On October 02, 2006, the MSME (Micro, Small and Medium Enterprises) became operational and it was introduced to facilitate, develop & promote the competitiveness of the MSME. The MSMEs are considered vital for the Indian Economy as this sector plays a vital role in the industrialisation of the Rural & Backward areas. MSME Registration is attained as per the MSMED Act, 2006 and obtaining MSME Registration in India is not mandatory, but it shall be taken into consideration that the entities or businesses with MSME Registration are eligible to avail of various schemes and benefits made by the Government.
Definition of MSME
In May 2020, the Indian Finance Minister, Mrs Nirmala Sitharaman introduced a new amendment to the definition of MSME; in this amendment, the difference between the manufacturing & Service sectors has been eliminated, and Investment Limits have been revised and a turnover criterion has been introduced.
As per the revised definition of MSME, MSME includes any class or classes of enterprises, whether proprietorship, Hindu Undivided Family (HUF), the association of persons, partnership firm, co-operative society, company/undertaking, by whatever name called. Following is the classification of businesses under the MSME Acts:
Manufacturing Enterprises and Enterprises Rendering Services
Investment in Plant & Machinery or Equipment: Up to INR 1 crore
Investment in Plant & Machinery or Equipment: Up to INR 10 crore
Investment in Plant & Machinery or Equipment: Up to INR 50 crore
Annual Turnover: Up to INR 5 crore
Annual Turnover: Up to INR 50 crore
Annual Turnover: Up to INR 250 crore
Note: Earlier, the MSME Registration covered only service & manufacturing industries. But, in July 2021, the Government of India announced that the Retail & Wholesale Trade would come under the MSME Classification and can apply for MSME Registration of their retail or wholesale trade business except for motor vehicles & motorcycles. Hence, manufacturing & service industries and wholesale & retail trade are covered and eligible to apply for the registration.
What are the Benefits of MSME Registration in India?
Following are some benefits of MSME Registration in India:
- Any company that holds an MSME Registration can obtain loans from banks at a comparatively cheaper rate, approximately 1- 1.5 %. 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 under 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 into 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;
Who can apply for MSME Registration in India?
Following is the list of eligible applicants who can apply for MSME Registration in India:
- Hindu Undivided Family (HUF);
- Limited Company;
- LLP or Limited Liability Partnership;
- One Person Company (OPC);
- Any association of persons’
- Partnership Firm;
- Co-operative Societies or any other undertaking can get MSME Registration in India.
Documents Required for MSME Registration in India
Only PAN Card and Aadhaar Car are the documents required for MSME Registration. The registration is entirely online and no proof of documents is required. PAN & GST linked details on investment & turnover of enterprises will be taken automatically by the online Udhyam Registration Portal from the Government databases and this portal is completely integrated with Income Tax & GSTIN System.
Following are some important details to be mentioned in the Application form:
- Aadhar Number;
- Name of the entrepreneur as per Aadhar Card;
- Organisation type such as Private or Public Limited Company, LLP, Proprietorship, HUF, Co-operative Society, Partnership Firm, Society or Trust;
- PAN Card;
- Office address of the enterprise;
- Account number and IFSC Code of the bank;
- Number of employees;
- Investment amount in plant & machinery (in case there is no investment in plant & machinery, entrepreneurs can write it as zero);
- Location of unit or plant;
- Social categories such as OBC, General, SC or ST;
- Enterprise name;
- Commencement date of business or incorporation of enterprise registration;
- NIC Code of the primary activity;
- Business activity of an enterprise.
Procedure for MSME Registration
The applicant can apply for MSME Registration through Udyam Registration; it's a government-based portal in sync with the GSTIN & Income Tax system. Obtaining GST Registration is not compulsory for enterprises that fall outside the ambit of GST Law. However, the enterprises that come under the ambit of the GST Regime need to obtain GST Registration to obtain Udyam Registration.
- The MSME Registration can be attained by applying on the Udyam website and the portal shall charge no fees for rendering such a registration;
- After that, a confirmation message will appear on your screen enclosing the reference number of the application;
- AFTER COMPLETING THE VERIFICATION FORMALITIES, the MSME, the Ministry shall grant the MSME Certificate or Udyam Registration Certificate to the applicant's email id. The MSME shall grant the MSME Registration after 2-3 days from the date of application submission;
- The certificate remains valid for a lifetime and seeks no renewal;
- The applicant can download the certificate from the account created on the website of the Udhyam Registration.
Important Points to Remember:
- Those who obtain UAM Registration or any other registration permitted by any authority under the MSME must seek re-registration on the Udyam Registration Portal by selecting the option “For New Entrepreneurs who are not registered yet as MSME/those with EM-II”.
- The enterprises or companies having UAM Registration need to migrate to Udyam Registration by 30/06/2022. If the entrepreneurs having UAM Registration didn’t mitigate to Udyam Registration by this date, then the UAM Registration is invalid & they will not be able to avail of the benefits provided to the MSMEs.
Validity of MSME Registration Certificate
MSME Certificate is valid as long as the business is in operation and is issued for a lifetime as long as the classification criteria are met.
Why Swarit Advisors?
Swarit Advisors is one of the leading platforms for Government Registration & Licensing Services. We ensure that our clients get top-notch services regardless of the quantum of compliances & rules set out under various acts.
MSME Registration FAQs
The term “MSME” stands for Micro, Small, and Medium Enterprises. It is defined under the MSMED Act, 2006 based on the investment made in plant and machinery and equipment.
As per the latest amendment announced by the Finance Ministry on 13.05.2020, the definition of the term “MSME” has been modified after the elimination of the difference between the manufacturing and service sector, along with the revision in investment limits and introduction of turnover criteria.
The main reason behind the need to apply for MSME Registration is that it helps the owner to obtain clearances from various governmental bodies.
A Provisional Registration Certificate (PRC) remains valid for a period of 5 years. That means the applicant needs to apply for its renewal, or else PRC will lapse.
No, it is not obligatory and compulsory for an individual to obtain MSME registration in India. However, an MSME Registration will act as a medium to avail of several government benefits, such as subsidies and incentives.
The term “Udyog Aadhar” denotes an Aadhar issued by the MSME Department in the business name. This is issued only to an MSME (Micro, Small, and Medium Enterprises) and is a 12-digits Identification Number.
Usually, MSMEs over regular business entities become the first choice for the banks to grant loans. Further, the interest rates offered on loan for MSMEs by the banks are comparatively lower than those offered for normal business entities. Also, preferential treatment is given to an MSME in case of a delay in repayment.
The original value of a Plant and Machinery is taken into consideration for obtaining MSME registration.
Swarit Advisors provides services related to Micro, Small, and Medium Enterprises registration across all over India. Moreover, we have successfully completed the MSME registration for various clients located in Mumbai, Delhi, Chennai, Gujarat, Bangalore, Uttar Pradesh, Kolkata, etc.
Yes, Aadhar Card is a compulsory requirement for obtaining Udyog Aadhar Scheme Registration in India. Further, if in case the applicant is other than the sole proprietor, then the Aadhar card of the said partner or director will be needed.
No, the MSME sector deals only with the Manufacturing and Service Industries. That means the Trading companies are not included under the domain of MSME. Moreover, the MSME sector supports start-ups by providing them subsidies and benefits, but trading companies are just similar to intermediaries, i.e., a link between the customer and manufacturer. Therefore, they are not covered under the scheme.
Till date, in total, 20 items are being reserved to be manufactured only by the MSME sector.
No, the MSME or the Udyog Aadhar certificate is enough for a single entity regardless of multiple branches or plants. However, it shall be relevant to note that the information concerning all the various branches or plants must be furnished.
The Ministry of MSME notified that Udyog Aadhar is taking a cue from the Prime Minister's radio show named “Man ki Baat” held in September 2015.
The term “NSIC” stands for the National Small Industries Corporation. It is an organisation that arranges raw materials in bulk for small businesses and is also a part of the Ministry of MSME.
The entities eligible to apply as Micro Enterprise are the ones that are having the investment in Plant and Machinery up to Rs 1 crore and Turnover up to Rs 5 crore.
The entities eligible to apply as Small Enterprise are the ones that are having the investment in Plant and Machinery up to Rs 10 crores and Turnover up to Rs 50 crores.
The entities eligible to apply as Medium Enterprise are the one that are having the investment in Plant and Machinery up to Rs 20 crores and Turnover up to Rs 250 crores.
The form 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. is MSME Form- 1.
The term “Credit Rating” denotes an estimate to figure out the ability of an enterprise or an entity to meet all the financial needs on the basis of the previous year dealings. Further, it is not compulsory to obtain a credit rating. However, it is suggested that all the MSME borrowers get their credit rating done as it would assist them in the credit pricing of the loans taken from banks.
Yes, it is mandatory to have an Aadhar Card to obtain MSME Registration in India.
Yes, MSMEs are qualified to obtain Collateral free loans from banks up to Rs 10 Lakhs.
No, Credit Score is not necessary for MSME Registration.
The MSME certificate is provided online, the registered applicant can download it as per his/her requirement from the portal.
The term “MSME” stands for Micro, Small, and Medium Enterprises.
Some of the renowned and prominent examples of MSME Companies are DFM Foods, Ankur Scientific Energy Technologies, Mynd Solutions, SL Packaging, Molecular Connections, Staragiri Warehousing and Collateral Management, Chem Process System, Emmbi Polyarns, and Astha Minmet India.
Yes, a Sole Proprietorship Firm can apply for MSME Registration in India.
The term SSI stands for Small Scale Industries.
Yes, Publishing Books comes under the ambit of the MSME Sector.
The benefits of MSME Registration are Lower Interest Rates, Excise Duty Exemption Schemes, Subsidy Tariffs, Reservation Schemes for the Manufacturing and Service Sector, Opportunity to present in the International Trade Fairs, Tax Subsidy, collateral Free loans from banks, and Reimbursement of ISO Certification.
Yes, both new and existing businesses can apply for MSME or Udyog Aadhar registration in India. However, in the case of existing unit, it should not only be functioning but must also meet the threshold limits for the registration.
Yes, an individual can apply for MSME registration on his/her own. He/she just needs to visit the government’s official portal. However, it is always advised to take assistance from experts as it reduces the scope of mistake.
The Applicant needs to file the Initial Return by the 3rd of May of every financial year. However, the half-yearly return is needed to be filed by the 31st October for the period between April to September, and on 30th April for the period between October to March.
No, an MSME Form-1 cannot be filed with a “Zero” outstanding amount.
There is no difference between them both, and earlier, the MSME Registration was known as the SSI (Small Scale Industries) Registration.