Registration under the Micro, Small and Medium Act (MSME Act)
Latest update:
MSME registration is now open for even traders – both retailers and wholesalers for certain limited purposes.
Micro, Small and Medium (MSME) Registration is one of the most important non-tax registrations for any business entity. Earlier the same was reserved only for manufacturers and service providers, now even traders can register under MSME for the limited matter of priority sector lending.
Definition of MSME has now been widened to include turnover as well as capital investment. Further Government has increased the limits so as to enable more firms to come under the ambit of MSMEs and take benefits applicable to them.
Presently the limits are as follows:
| Revised Classification applicable w.e.f 1st July 2020 | |||
| Composite Criteria: Investment in Plant & Machinery/equipment and Annual Turnover | |||
| Classification | Micro | Small | Medium |
| Manufacturing Enterprises and Enterprises rendering Services | Investment in Plant and Machinery or Equipment: Not more than Rs.1 crore and Annual Turnover ; not more than Rs. 5 crore | Investment in Plant and Machinery or Equipment: Not more than Rs.10 crore and Annual Turnover ; not more than Rs. 50 crore | Investment in Plant and Machinery or Equipment: Not more than Rs.50 crore and Annual Turnover ; not more than Rs. 250 crore |
Benefits of MSME are as follows:
- Timely payment within max 45 days as per Section 15 of the MSME Act. This is a big relief to MSME since Government has strictly enforced it by making mandatory reporting under the Tax Audit forms (Income Tax Act, 1961) and MSME Forms (Companies Act, 2013 )
- Mandatory Interest for Delayed Payment by Buyer – The interest shall be payable at a rate three times the bank rate and compounded at monthly rests.
- Dispute resolution under the MSME Samadhan Scheme.
- Priority Sector lending- MSMEs fall under the priority sector and can take benefit of lower interest rates.
- Other schemes – Entire schemes have been codified in a single pdf book by the MSME Ministry. It is available under the link.
Government has made overall MSME registration under the present UDYAM Scheme.
Entrecap Business Sevices urges all MSMEs – be it manufacturers, services providers or traders to register under the MSME Act.
For other registrations, you can read here.
