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Msme registration
MSMED stands for Micro, Small and Medium Enterprises. In order to create more accountability and to support these industries, Government of India has classified them into a category known as MSME, based on certain thresholds. All the organizations, who want to avail the benefits available to such enterprises shall need to follow a registration procedure to get itself registered under MSMED Act. All forms of organizations such as proprietorship firms, LLPs, public and private limited companies can get itself registered as MSME.
Following are the thresholds based on which, the organizations are classified into Micro, Small and Medium enterprises:
|
Category |
Investment in Plant & Machinery does not exceed |
|
|
For Manufacturing sector |
For Service sector |
|
|
Micro enterprises |
Rs. 25 lakhs |
Rs. 10 lakhs |
|
Small enterprises |
Rs. 5 crores |
Rs. 2 crores |
|
Medium enterprises |
Rs. 10 crores |
Rs. 5 crores |
Advantages of registration:
- Protection against the delay in payment from Buyers: As per the provisions of MSMED Act, the buyers are required to make the payment to MSMED enterprises within 45 days from the date of acceptance.
- Interest on delayed payments: MSMED have the right to claim interest on the delayed payments being made to them by buyers.
- Benefits from banks: Banks provide higher sanctioned loan limits for these MSMED with lower bank interest rates. There may also be preferential treatment in case of delay in repayment.
- Tax benefits: MSMED enjoy various types of both Direct tax and Indirect tax benefits during the tenure of their business.
- Support from Central and state governments: There are multiple government tenders which are open only to MSMEs to promote small business participation in the India.
Procedure for Registration
Procuring the documents and other details from the client.
Drafting the application to be filed along with the details about nature of the industry.
Submission of the application along with the documents with the Regulatory Authority.
Obtaining the certificate of Registration as MSMED
Documents required
- Copy of the bank statement/ electricity bill/ telephone bill;
- NOC from the landlord, in case of rented premises;
- Copy of telephone bill/ electricity bill/ gas bill, etc as proof of place of business;
- Copy of PAN card and Adhaar card of Authorized person;
- Details about the nature of business;
- Details about investment in Plant and Machinery
FAQ’s
1) Is it mandatory to obtain MSMED certificate?
No. It is not mandatory to obtain the MSMED certificate. However, in order to avail benefits under MSMED Act, it is necessary to register under MSMED Act.
2) What is the validity of the MSMED registration?
MSMED certificate/ registration has lifetime validity.
3) What all are considered while calculating the value of the Investment?
Only the investment made by the entity in Plant and Machinery original cost (excluding land and building and furniture, fittings and other items not directly related to the goods sold/ service rendered) shall be considered while calculating the investment for the purpose of checking the eligibility of the organization as MSMED.
4) How does obtaining the certificate of MSMED help in improving the finances of the Organisation?
The buyers are liable to pay the dues within 45 days otherwise they shall be liable to pay the interest. Further, banks provide such organization with high sanction limits at reasonable interest rates.