Everything You Need To Know About MSME Registration

The Ministry of Micro, Small, and Medium Enterprises (MSME) is the top administrative authority for creating and executing laws, regulations, and legislation pertaining to micro, small, and medium startups in India. It is a federal agency of India. Since 31st May 2019, Nitin Gadkari has been the Union Minister of Micro, Small, and Medium Enterprises, while Pratap Chandra Sarangi has been the Minister of State. The Government of India gives numerous grants, subsidies, and benefits under the MSMED Act to assist and develop MSME. The MSMED Act allows micro, small, and medium-sized enterprises to register as MSMEs in both the production and service industries. Even though MSME registration is not mandatory, it is undoubtedly advantageous to businesses. It gives various advantages such as reduced credit rates, customs relief programs, tax rebates, electricity tariff discounts, capital expenditure subsidies, and other assistance.

 After registering, any enterprise is eligible to make use of the MSMED Act’s incentives. Easy approval of loans (prerogative sector financing), a cheaper rate of interest, a tariff relief program, relief from some tax laws, and governmental support are only a few of the perks provided by the central government. State governments and union territories have also put up their set of MSMEs-friendly amenities and subsidies. The creation of specialized business parks, tax rebates, electricity tariff discounts, capital expenditure tax deductions, and other aid are some of the benefits offered by the state legislatures for MSMEs. Both the centre and the state aim to provide bonuses and assistance programs to all units registered under them, either by mandate or otherwise. MSME has been included in the exemption notices of banking regulations, excise policies, and direct taxation. 

Advantages of MSME registration certificate:

1. Reduced rates of interest on loans  
2. Financial institutions provide No Collateral borrowing
3. In the production sector, favourable reservation policies are implemented.
4. Acquiring license, permits, and clearances are uncomplicated.
5. Qualification for CLCSS (Credit Linked Capital Subsidy Scheme) – Established SSIs 
6. Special recognition for overseas trade exhibitions
7. Exemption of security deposit by the administration 
8. Exemptions on electricity costs
9. Discount on stamp duty and enrollment expenses
10. Compensation of ISO certification expenses
11. Waiver governed by statutory tax legislation
12. No interest rate on Over Draft
13. Rebate for NSIC performances and credit score costs
14. Reimbursement for patent applications
15. Discount on barcode certification
16. Qualifying for the IPS subsidy

The MSME Act of 2006 categorized Micro Small and Medium Enterprises (MSMEs) mainly based on their investments. Nevertheless, in 2020, the Finance Minister of India, Ms. Nirmala Sitharaman, expanded this concept and created a combination of requirements. The term “turnover” was also associated with the definition. 

The revised MSMEs categorization is listed below : 

1. Micro companies are classified as businesses with an invested capital of less than Rupees 1 Cr. and revenue of less than Rupees 5 Cr.
2. Small businesses are with a capital investment of less than Rupees 10 Cr. and revenue of less than Rupees 50 Cr. 
3. Medium businesses are defined as businesses with a capital investment of less than Rupees 20 Cr. and revenue of less than Rupees 100 Cr. 

Each of these groups has its own set of restrictions. Any firm that begins as a micro, small, or medium enterprise has the challenge of expansion, as well as the additional challenge of not surpassing these boundaries. As a result, several corporate executives have expressed their displeasure and sought a more adaptive categorization that facilitates flexibility and expansion. The government has lately implemented significant reforms in response to this desire, as part of the Atma Nirbhar Bharat Abhiyan (ABA). Previously, specific investment limitations were assigned to the service and production industries. The revisions have established a hybrid structure in which expenditure and yearly revenue of enterprises are assessed when classifying enterprises as MSME. 

The procedure for registering an MSME is outlined below:

• Digital (Online) –

• Go to https://msme.gov.in/online-application to access the MSME online registration portal.
• Enter information such as Aadhar number, PAN number, social category and gender, MSME number, investment amount, and other details. 
• Fill out the form and submit it
• The screening process will now begin, which might require up to two business days
• Enrolment will be completed after the application is accepted
• The certificate of MSME registration will then be delivered

• Physical (Offline) –

• Sign in to the MSME portal to download your registration form
• Enter the relevant information, such as your Aadhar number, PAN number, social category and gender, MSME number, and investment amount
• The information should then be uploaded to the portal
• Fill out the application form and submit it
• The screening process will now begin, which might require up to two business days
• Enrolment will be completed after the application is accepted.
• The certificate of MSME registration will then be delivered.

Nitin Gadkari has proposed the registration procedure for Micro, Small, and Medium Enterprises. He asserted that just PAN and Aadhaar would be necessary for MSMEs to be registered on UDYAM, the portal for MSME. Gadkari feels that small businesses should be given training in entrepreneurism and other relevant areas. He reiterated that the MSME Ministry would provide complete assistance and also expressed confidence that financial institutions and NBFCs will do the same for small companies. Gadkari further stated that to make India a worldwide economic behemoth, the MSME plan intends to provide a supportive infrastructure for MSMEs to increase their input to the country’s five trillion dollars GDP. He stated that the government had launched a unique incentive program dubbed “Aatmanirbhar Bharat Abhiyan” of Rupees. Twenty lakh crore to stimulate the economic activities of MSME.  As of 16th June 2021, this site had allowed the registration and categorization of thirty-three lakhs sixteen thousand two hundred and ten businesses.

MSME registration has several advantages:  

1. Enterprises that have completed the enrolment process may be eligible for a loan with a lower interest. 
2. If your company is classified as an MSME, you can receive bank loans at a cheaper interest rate.
3. The MSME Legislation allows you to take advantage of tax subsidies.
4. The MAT, or minimal alternate tax, can, i.e., prolonged to fifteen years instead of ten years.
5. MSME-registered businesses are given priority when applying for government-issued permits and certifications.
6. Your organization can get discounts & refunds on the costs of copyrighting and setting up your business.
7. Numerous government contracts are exclusively awarded to MSME-registered businesses.
8. The loan is simple to come by for an MSME.

Documents for MSME Registration: 

1. Aadhar card.
2. Property papers.
3. Rent agreement.
4. Cancelled cheque.
5. Partnership deed (for partnership firms).
6. Memorandum of Association (for companies).
7. Articles of Association (required solely by companies).
8. Permanent Account Number Card.
9. General, SC, ST, or OBC form (if any).
10. Physical ability form (if any).
11. Documentation of registered office: allocation letter, property tax slip, and possession letter for a self-owned property.
12. Printed copies of the sale bill and the purchase bill are acceptable proofs of company registration (raw material).
13. Machinery permit and sales bills: Hard copy of an industrial license and sale invoices for equipment & installations.

MSME Certificate:

Claimants receive an MSME certificate after completing the MSME enrolment process. This acts as proof of enrolment. that may be used to apply for any programs, exemptions, or authorizations. If a single registrant wishes to incorporate several MSMEs, then they must complete a separate application for everyone. A unique MSME certification would be provided for every one of these.