How to Start a MSME REGISTRATION

service package

Overview of MSME Registration in India

MSME stands for Micro, Small, and Medium Enterprises, which is a crucial sector for the Indian economy. The Ministry of Micro, Small, and Medium Enterprises (MSME) is responsible for formulating guidelines, rules, and policies that govern small-scale industries in India. MSME was established on October 02, 2006, to promote, develop, and enhance the competitiveness of small businesses in India.

Though MSME Registration is not mandatory, businesses registered under the MSME Act are eligible for various government schemes and benefits aimed at fostering growth in this sector.

Definition of MSME (Revised in 2020)

In May 2020, the Indian Finance Minister, Mrs. Nirmala Sitharaman, announced amendments to the MSME definition, including revised investment limits and the introduction of a turnover criterion. The difference between manufacturing and service sectors was also eliminated, and retail and wholesale trade businesses were brought under the MSME classification.

Classification of MSMEs

Under the revised MSME criteria, businesses are classified based on investment in plant & machinery or equipment and annual turnover. The classification applies to manufacturing, services, and even wholesale/retail trade (excluding motor vehicles and motorcycles).

Classification Micro Small Medium
Investment in Plant & Machinery/Equipment Up to INR 1 crore Up to INR 10 crore Up to INR 50 crore
Annual Turnover Up to INR 5 crore Up to INR 50 crore Up to INR 250 crore

Note:

  • The MSME Registration now includes manufacturing, services, wholesale, and retail trade businesses.
  • Retail and Wholesale Trade were included in the MSME classification in July 2021, with the exception of motor vehicles and motorcycles.

This revised definition aims to streamline and promote the growth of MSMEs across multiple sectors, offering them a wider range of support and benefits.

 
 
 

Benefits of MSME Registration in India

Obtaining MSME Registration offers several advantages for businesses. Some of the key benefits are as follows:

  1. Access to Cheaper Loans: Companies with MSME Registration can avail of loans from banks at lower interest rates, typically 1-1.5% lower than the regular bank rates.

  2. Tax Rebates and Exemptions: MSMEs enjoy various tax benefits, including exemptions and deductions that help reduce their overall tax liabilities.

  3. Carry Forward MAT Credit: MSMEs are allowed to carry forward Minimum Alternate Tax (MAT) credit for up to 15 years, compared to the usual 10 years allowed for other businesses.

  4. Exclusive Tenders: MSME-registered businesses can apply for government tenders and contracts that are exclusively available to MSMEs.

  5. Easier Credit Access: MSMEs have easier access to credit facilities from various financial institutions due to the government's focus on supporting small businesses.

  6. Preference in Government Policies: Registered MSMEs enjoy priority treatment and better opportunities compared to unregistered businesses in areas such as procurement, government schemes, and policy implementations.

  7. Global Exposure: MSME-registered businesses are given better opportunities to participate in national and international trade fairs, helping them expand their reach and visibility.

  8. Collateral-Free Loans: MSMEs are eligible for collateral-free loans of up to INR 10 Lakhs, making it easier for small businesses to obtain financial support without the need for asset backing.

  9. ISO Certification Reimbursement: MSME-registered companies are eligible for reimbursement of ISO certification costs, which enhances their credibility and marketability.

Who Can Apply for MSME Registration in India?

The following entities are eligible to apply for MSME Registration in India:

  • Hindu Undivided Family (HUF)
  • Limited Company
  • Proprietorship
  • Limited Liability Partnership (LLP)
  • One Person Company (OPC)
  • Partnership Firm
  • Co-operative Societies
  • Any other undertaking that qualifies as a small or medium enterprise under the MSME criteria.

This wide eligibility ensures that a variety of businesses, from individuals to larger corporate entities, can benefit from MSME registration.

Documents Required for MSME Registration in India

MSME Registration in India is a straightforward process, requiring minimal documentation. The entire registration process is online, and the necessary information is fetched automatically from government databases. Only Aadhaar Card and PAN Card are required for registration. The Udhyam Registration Portal automatically collects details related to investment and turnover from PAN and GST records.

Here are the key details to be provided in the MSME registration application:

  • Aadhaar Number
  • Name of the Entrepreneur (as per the Aadhaar Card)
  • Type of Organization (e.g., Private or Public Limited Company, LLP, Proprietorship, HUF, Co-operative Society, Partnership Firm, Society, or Trust)
  • PAN Card
  • Gender
  • Office Address of the enterprise
  • Bank Account Number and IFSC Code
  • Number of Employees
  • Investment in Plant & Machinery (if applicable; if no investment, enter "zero")
  • Annual Turnover
  • Location of the unit or plant
  • Social Category (e.g., OBC, SC, ST, General)
  • Enterprise Name
  • Commencement Date of business or Incorporation Date
  • NIC Code of the primary activity
  • Business Activity of the enterprise

This simple, streamlined process makes it easier for businesses to register under the MSME Act and avail of various government schemes and benefits.

Procedure for MSME Registration

To obtain MSME Registration, applicants must apply through the Udyam Registration Portal, which is integrated with the GSTIN and Income Tax systems. Here's the step-by-step process for MSME Registration:

  1. Visit the Udyam Registration Portal
    The application can be submitted online on the Udyam Registration Portal. There are no fees charged for MSME Registration.

  2. GST Registration (if applicable)
    GST Registration is mandatory only for enterprises that fall within the GST regime. Businesses outside the scope of GST laws do not require GST Registration to apply for Udyam Registration.

  3. Fill in the Application
    Complete the registration form with details such as the enterprise name, type, address, PAN, Aadhaar, and investment amount, among others.

  4. Confirmation and Reference Number
    Once the application is successfully submitted, a confirmation message will appear on the screen along with a reference number for future tracking.

  5. Verification and Issuance of Certificate
    After verification of the provided information, the Ministry of MSME will grant the MSME Certificate (Udyam Registration Certificate). This typically takes 2-3 days from the date of application submission.

  6. Download the Certificate
    The MSME Certificate can be downloaded from the applicant's account on the Udyam Registration Portal.

Key Points to Remember:

  • Re-registration for UAM Holders
    If you have a UAM Registration (previous MSME registration), you must migrate to Udyam Registration by 30/06/2022. Failure to do so will invalidate your UAM Registration, and you will lose access to MSME benefits.

  • No Renewal Required
    The MSME Registration certificate is valid for a lifetime, as long as the enterprise meets the classification criteria. No renewal is necessary unless there is a change in the enterprise’s status or classification.

Validity of MSME Registration Certificate

The MSME Registration certificate issued through the Udyam portal remains valid for life, provided the business continues to operate and meets the relevant classification criteria.

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