Benefits of MSME Registration in India
Micro, small, and medium enterprises, also known as MSME, are the foundation of any developing economy. The MSMED Act, which the Indian government has implemented to support and promote MSMEs, benefits of MSME registration include several subsidies, programs, and incentives. Udyog Aadhar or MSME Registration is necessary to be eligible for benefits under the MSMED Act from the federal, state, or banking sectors. Other than the agriculture industry, this is the sector in which the majority of India has mostly been active. This industry has grown rapidly ever since Independence.
Registration for Micro Small Medium Enterprises (MSME)
Registration for MSMEs is not required by law. However, the MSME registration procedure in India has been designed to offer the greatest advantages to all types of businesses. Any business that registers is then eligible to take advantage of the MSMED Act’s benefits. Easy approval of bank loans (Priority sector lending), lower interest rates, an excise exemption program, an exemption from direct tax laws, and statutory support like reservations and the Interest on Delayed Payments Act are just a few advantages provided by the central government.
Incentives and facilities specifically designed for MSMEs have also been put together by state governments and union territories. The creation of specialized industrial estates, tax breaks, reduced power bills, financial assistance for capital investments, and other benefits of MSME registration are only a few of the advantages the State Government offers MSMEs. Whether required by law or not, the State and the Centre both normally target the units that have registered with them with their support and incentive programs.
The words “MSME” have been inserted into exemption notifications under the Banking Laws, Excise Law, and Direct Taxes Law. As such, the registration certificate issued by the registering body is considered evidence of being an MSME and is necessary to get the advantages approved for MSMEs.
Eligibility Criteria for the Registration of MSME
Only manufacturers, producers, and service providers are eligible to register as MSMEs and use the associated tags. Any manufacturer or service provider meeting the requirements may register themselves.
|SL Number||MSME Type||Investment in plant and equipment||Turnover Standards|
|1||Micro||₹ 1 Cr||₹ 5 Cr|
|2||Small||₹ 10 Cr||₹ 50 Cr|
|3||Medium||₹ 50 Cr||₹ 250 Cr|
The eligibility requirements for MSME registration in India are listed in the above table. The Finance Ministry has altered this turnover ratio several times. The additional conditions for starting an MSME in India were added to this modification in June 2020.
Benefits of MSME Registration
There are quite a few benefits of MSME registration in India. All entities are permitted to complete the registration process, whether they are a sole proprietorship or a private limited company.
- Growth Potential: The registration will increase the MSME’s potential for growth while also speeding up the loan application procedure. Additional advantages of becoming a registered MSME include obtaining government contracts, developing expansion strategies within India, and taking part in international and other export-focused fairs. MSMEs with registration also have a good reputation with the general population. MSMEs that are not registered are not eligible for these perks.
- Procuring Bank Loans: With the help of registered MSMEs, obtaining bank loans is simple. Any public sector organization will tell you how difficult it is to get a bank loan. Besides this, applying for a bank loan involves a lot of procedures and documentation. As a result, obtaining this type of loan might be done quickly by registering. It would be quicker and less problematic to process loans through a bank. Any type of institution may lend money to an MSME if it is registered.
- Tax Exclusions: Since this industry is a top priority in India, MSMEs would have access to greater exemptions. For instance, it can make it possible for the specific entity to apply for and receive tax credits and rebates. In addition, the Income Tax Act of 1961 provides some types of exemptions for MSME. Therefore, it would be advantageous for MSMEs to register in order to claim some type of tax exemption.
- Minimum Alternative Tax (MAT): A benefit that may be carried forward by a business is the minimum alternative tax. Most of the time, entities use this procedure to carry forward tax for a minimum of 10 years. Nevertheless, registered MSMEs are permitted to carry this tax forward for up to 15 years. Going through with MSME registration is advantageous because of this.
- Tenders: In order to support the growth of MSMEs, the government reserves certain tenders for them. A program known as the Credit Linked Subsidy scheme is in place for these establishments’ technology up-grading and utilization in order to assist these businesses in technological advancement.
- Costs Associated with ISO Certification: Any registered micro, small, or medium-sized business is entitled to compensation for costs incurred in obtaining an ISO certification. Entrepreneurs are encouraged by this to ISO-certify their companies, which enables them to export high-quality goods and conduct business abroad.
- Credit Facilities: An entity that has MSME registration is eligible for a variety of credit facilities. Any type of bank or public sector organization may offer credit facilities to a registered MSME. However, there are no advantages for an unregistered MSME in terms of available financial facilities.
- Reputation: A registered MSME would be more well-known. Aside from that, these MSMEs enjoy greater public respect. MSMEs are accepted for other purposes as well, not just for obtaining loans of any kind.
Read More: MSME business loans
Among the various benefits of MSME registration is the schemes, budget plans, credit-free loans, and more. This not only serves as a motivating factor but also raises the commercial turnover to an international and worldwide level. Union territories, state governments, and the federal government have all created special packages and programs that provide a range of benefits. specifically geared toward growth and increased economic output from these businesses. All types of businesses can make use of the government’s MSME incentives.
Many local and traditional art forms and community symbols are preserved today because of government encouragement and assistance. Traditional confectionery, sweetmeat, and savory industries Maila Coir Yojana Pottery activity under Gram Udyog Bee-keeping activity Agarbatti making project, Handweaving etc all comes under MSME.
The Ministry of Micro, Small, and Medium Enterprises has introduced a new approach for MSME/UDYOG AADHAAR Registration that will go into effect on July 1, 2020. According to a statement released on June 26, 2020, by the Ministry of Micro, Small, and Medium Enterprises, this will now be called Udyam (MSME).
- Diamond and gold jewelry.
- Women’s’ lingerie
- Farm goods and seafood (Centre for Skill Development in Cold Storage)
- Paper in A4 and A3 sizes.
- Acetaldehyde oxime or acetaldoxime
- Making of Jute Gunny Bags
- Carbon Crucible
Azhar Ansari is a company formation specialist with 8+ years of expertise in international business. Financial planning, risk management, and other related areas.