MSME REGISTRATION AND BENEFITS FOR MSME BUSINESS
MSME REGISTRATION AND BENEFITS FOR MSME BUSINES (UDYOG AADHAR REGISTRATION)
MSME stands for micro, small and medium enterprises and any enterprise that falls under any of these three categories. MSME enterprises are the backbone of any economy and are an engine of economic growth, promoting equitable development for all. Therefore, to support and promote MSMEs, the Government of India through various subsidies, schemes and incentives promote MSMEs through the MSMED Act. To avail the benefits under the MSMED Act from Central or State Government and the Banking Sector, MSME Registration is required.
Micro, Small and Medium sized enterprises in both the manufacturing and service sector can obtain MSME Registration under the MSMED Act, 2006. Though the MSME registration is not statutory, it is beneficial for business at it provides a range of benefits such as eligibility for lower rates of interest, excise exemption scheme, tax subsidies, power tariff subsidies, capital investment subsidies and other support.
A Micro Enterprise in the production field is a venture with less than Rs. 25 lakhs of investment in plant & machinery. A Micro Enterprise in the service field is an enterprise with less than Rs. 10 lakhs of investment in plant & equipment.
A Small Enterprise in the production market is a venture with more than Rs. 25 lakhs however not surpassing Rs. 5 crores of investment in plant & equipment. A Small Enterprise in the service sector is a business with greater than Rs. 10 lakhs yet not surpassing Rs. 2 crores of financial investment in plant & equipment.
A Medium Enterprise in the manufacturing sector is a venture with greater than Rs. 5 crores but not surpassing Rs. 10 crores of financial investment in plant & machinery. A Medium Enterprise in the service field is a business with more than Rs. 2 crores yet not exceeding Rs. 5 crores of investment in plant & equipment.
For manufacturing entities, however, land and building cannot be counted toward the total investment. Also, the original cost of the equipment and plant and machinery is taken into account; depreciation cannot be factored in. Any business entity may apply, be it a partnership or a company. Sole proprietors may also apply.
BENEFITS OF AN MSME REGISTRATION
Ø BENEFITS FROM BANKS: All banks and other financial institutions recognise MSMEs and have created special schemes for them. This usually includes priority sector lending, which means that the likelihood of your business being sanctioned a loan is high, and lower bank interest rates. There may also be preferential treatment in case of delay in repayment.
Ø TAX BENEFITS: Depending on your business, you may enjoy an excise exemption scheme as well as exemption from certain direct taxes in the initial years of your business.
Ø BENEFITS FROM STATE GOVERNMENTS: Most states offer those who’ve registered under the MSMED Act subsidies on power, taxes and entry to state-run industrial estates. In particular, there is a sales tax exemption in most states and purchase preference on goods produced.
Ø BENEFITS FROM CENTRAL GOVERNMENT: The central government, from time to time, announces schemes to benefit MSMEs, such as the credit guarantee scheme:
Ø CREDIT GUARANTEE SCHEME (CGTMSE)One of the major struggles that the small scale industries face is credit and input of income from various sources to support them.The Credit Guarantee scheme, introduced to support MSME, comes with modifications to make it more beneficial for small traders.
THE SALIENT FEATURES OF THE SCHEME INCLUDE:
1. Enhancing the optimal eligibility loan from Rs. 25 lakh to Rs. 50 lakh.
2. Reducing the one-time guarantee for loans availed of by the MSME in North-Eastern region of India from 1.5% to 0.75%.
3. Increasing the extent of guarantee cover from 75% to 80%.
4. Women operated Medium and small scale enterprises
5. Micro enterprises, for loans upto 5 lakhs
6. Loans obtained in North Eastern region of the country
SUPPORT SERVICES PROVIDED BY STATE GOVERNMENTS:
v Extended credit facilities
v Industrial extension support and services
v Availability of developed sites for warehouse construction
v Provision of training facilities
v Hire-purchase of machineries for use in MSME
v Assistance in marketing, both within the country and outside (exports)
v Assistance for construction of industries in underdeveloped areas, Technical consultancy, assistance in capital, and so on, for enhancement of technology in MSME.