April 10, 2020

MSME Registration : Government Scheme, Eligibility, Documents Required

From creating large scale employment to gaining economic stability, MSME plays an important role to ensure the country’s economic growth. In India, more than 50 million people got employment through MSME, and it has almost 8% contribution to our nation’s GDP.

Though there are several issues related to infrastructure, lack of proper market linkages has disturbed the flourishing of MSME, both central and state governments across the country have taken some important measures to encourage.

Registration of MSME does not have any legal obligation, but the registration always helps to reap various benefits from numerous government schemes.

Registering as MSME can aid you with credit at a much lower interest rate, incentives on products you export as an enterprise, exemption on excise duty, etc. Not only that but also businesses registered under MSME enjoy several statutory aids like reservations and the interest on delay in payments because of unavoidable situations.

1. Classification of Micro, Small and Medium-Sized enterprises

The benefits offered under the scheme depends on the classification of Medium small and micro-enterprises.

Following conditions are applicable to the businesses engaged in the preservation and processing of food items, manufacturing of goods,

1.1 Category Investment in machinery and plant by Manufacturing Units

Micro enterprises: less than Rs. 25 lakh
Small enterprises: more than Rs 25 lakh to Rs. 5 crore
Medium enterprises: more than Rs 5 crore to Rs 10 crore

1.2 Category investment in equipment and furniture by Service Providing Units

Microenterprise: less than or equal to Rs 10 lakh
Small enterprise: In between Rs 10 lakh to Rs 2 crore
Medium enterprise: More than Rs. 2 crores to Rs. 5 crore

2. Key Benefits of MSME Registration Government Offers

From reservation, entrepreneurial memorandum to credit guarantee fund trust and capital aid for technological upgradation businesses registered under MSME get several benefits.

Here have a look at the key benefits below,

The businesses registered under MSME get bank loans at a much cheaper interest rate.
Different tax rebates are also offered to businesses under MSME
MSMEs can carry forward Credit for minimum alternate tax (MAT) for 15 years instead of 10 years
Government offers several tenders reserved only for MSMEs
MSMEs gets easy credit access
Higher preferences are given for government license and certification to the businesses registered as MSME
One time settlement fees are available for non-paid amounts in case of MSMEs

3. Documents Require for MSME Registration

Business entities need to submit documents like a copy of purchase bill, business address proof, a license from regulatory bodies.

Aadhaar No. of Any Partner
Pan Number of Firm
Name of Enterprises
Location of Plant Detail
Office address of Enterprises
Date of Commencement
Bank details:
- Account Detail
- IFSC Code
Major Activity (Manufacturing/Traders) ( Please specify which type of Manufacturing/Trading)
Person Employed
Investment (Plant & Machinery/ Equipment’s)

4. Government Launched Schemes for MSMEs

In recent times, the Indian Government has introduced several schemes under MSME. The schemes are as follows,

Zero Defect Zero Effect
Udyog Aadhaar Memorandum
Incubation
Grievance Monitoring System
Women Entrepreneurship
Quality technology Tools & Quality Management Standards
Women Entrepreneurship
Credit linked Capital Subsidy Scheme

4.1 Udyog Aadhaar Memorandum

An Indian resident holding an Aadhaar Card can avail of the scheme. Moreover, a person with a business registered under the scheme can avail of loans, credits, and government subsidies. Registering under the scheme is easy as you can do it both through online and offline mode. Benefits of the Udyog Aadhaar Scheme,

Protection against delayed payment
Collateral free bank loans
Octroi benefits
Subsidy on barcode registration
Concession on Electricity bills
Subsidies on NSIC Performance and Credit ratings
Waive off stamp duty and registration fees
IPS subsidy is also available
A raise on the extent of guarantee cover from 75% to 80%
Subsidy of 50% on patent registration

4.2 Zero Defect Zero Effect

To encourage the manufacturer and exporter of goods, the government of India has introduced this scheme. As per the scheme, businesses can avail ZED certification by exporting goods with zero defects alongside maintaining the ecological needs while manufacturing. Businesses with ZED certificate can have the following benefits,

0.5% concession on interests on Loans
Rs. 25 lakh for technology adaptation
50% concession on processing fees
Rs. 25 lakh for setting up of new ETP
Along with that, allotment of Rs 5 lakh for testing equipment purchase is also available
Rs. 20 lakh for International and Rs 10 lakh for domestic patent registration
On the ZED certification cost 80%, 60%, and 50% subsidy

4.3 Quality Management Standards and Quality Technology Tools

Registration under this scheme can avail you with a clear understanding and implementation of the quality standards. However, the purpose of the scheme is to make the micro, small, and medium enterprises used to with new technology. Therefore, businesses registered under the scheme can get access to different awareness campaigns, seminars, and activities.

4.4 Grievance Monitoring System

The Government of India has shown strong intent to empower small, micro and mid-sized businesses through this scheme. Hence, if your business is registered under the scheme, you can complain about any issue you face to avail of any service as an MSME. You can check the status of your complaint alongside you can raise further complaints if you are not satisfied with the outcome of the previous one.

4.5 Incubation

The Government has launched this scheme to promote new ideas. Alongside that, promoting state of the art products, and designs is also one of the main ideas behind this scheme. Hence, if you are an innovator you can be beneficial under the scheme to implement your ideas. Registering to this scheme can offer you from 75% to 80% funding from the Government.

4.6 Women Entrepreneurship

The Women Entrepreneurship scheme is started for women who are looking to establish themselves as successful entrepreneurs. However, the government offers training, counselling, and capital to women to help them manage and expand their business.

5. Conclusion

As said earlier, MSME plays a vital role in deciding a country’s economic growth. With so many schemes and funding offering things have become much easier to register and start your business.

Read more on Formats of Invoices under GST

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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