The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is as under: Enterprises engaged in the manufacture or production, processing or preservation of goods.
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1. Preparation of Udyam (MSME Registration Application)
2. Submission of Application
3. Obtaining of Udyam Registration
The micro, small, and medium-sized enterprises (MSMEs) contribute heavily to India's Gross Domestic Product (GDP). In fact, over 110 million people are employed by MSMEs. Yet, these enterprises face several challenges and issues while growing or expanding their footprints.
To identify and help these MSMEs, the Indian government took the initiative on May 13, 2020 to announce a new metric for classifying MSMEs in India. As per this classification metric, all MSMEs in India would be known as ‘Udyam’ and will have to go through a registration process known as ‘Udyam Registration’. The Union Cabinet approved this classification, and the Udyam registration process became mandatory for all MSMEs from July 1, 2020.
MSME stands for Micro, Small, and Medium Enterprises. MSME registration is a government initiative aimed at providing benefits and support to small and medium-sized businesses in India. The registration is voluntary and enables businesses to avail various incentives and assistance offered by the government.
The primary purpose of MSME registration is to promote the growth and development of micro, small, and medium enterprises by facilitating access to credit, subsidies, and other government schemes. It also helps in creating a database of MSMEs for statistical and policy purposes.
To qualify for MSME registration, a business must meet the eligibility criteria based on its investment in plant and machinery or equipment for manufacturing enterprises, or investment in equipment for service enterprises. The specific criteria vary for micro, small, and medium enterprises.
Benefits of MSME registration include easier access to bank loans at lower interest rates, subsidies on patents and trademark registrations, exemption under certain direct tax laws, protection against delayed payments, priority sector lending, and access to various government schemes and programs.
The process of obtaining MSME registration typically involves filling out an application form with the required details and supporting documents. The registration can be done online through the Udyam Registration portal, which replaced the earlier Udyog Aadhaar registration system.
MSME registration is an important step for small and medium-sized businesses to gain recognition and access government support for their growth and development
As an MSME business owner, there are several benefits of registering your business under the Udyam classification. These include:
• It will help you in getting government tender
• You can get business loans from banks and non-banking financial corporations (NBFCs) at lower interest rates.
• You can avail of various tax rebates available exclusively for Udyam.
• It will become easy for you to get government approvals, licenses, and registrations for your business.
• You will get tariff subsidies and capital tax subsidies.
• You can avail of rebates and concessions for setting up your industry.
Other Benefits in Brief:
1. Access to Financial Assistance: Udyam Registration enables MSMEs to avail easier access to bank loans, credit facilities, and financial assistance at preferential interest rates.
2. Subsidies and Incentives: Registered MSMEs can benefit from various subsidies, incentives, and schemes offered by the government, including subsidies on patents and trademarks, reimbursement of ISO certification expenses, and more.
3. Tax Benefits: Udyam Registration provides MSMEs with tax exemptions, benefits, and deductions under certain direct and indirect tax laws, relieving the financial burden and promoting business growth.
4. Protection against Delayed Payments: Registered MSMEs have the right to seek compensation for delayed payments from buyers, helping to ensure timely cash flow and improving the overall financial stability of the business.
5. Priority Sector Lending: Udyam Registration enables MSMEs to access priority sector lending, meaning they are given preference in obtaining loans from financial institutions, further easing their financial requirements.
6. Government Support and Programs: Udyam Registration facilitates MSMEs' participation in various government programs, policies, and initiatives aimed at their development, skill enhancement, market access, and technological upgradation.
All entities classified as Micro, Small and Medium enterprises as per the MSME classification are eligible to apply for MSME registration. An individual cannot apply for MSME registration. A proprietorship, partnership firm, company, trust or society with an investment below Rs.50 crore and annual turnover below Rs.250 crore are eligible for MSME registration.
< Rs. 1 Crore
Upto Rs. 5 Crores
< Rs. 10 Crore
Upto Rs. 50 Crores
< Rs. 50 Crore
Upto Rs. 250 Crores
1. Aadhar Card (Applicant)
2. PAN of Proprietor/Firm/LLP/Company
3. GST Certificate
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It is not mandatory to have a GST number for registering your MSME.
Once the application form is submitted, it can take 2-3 days for the approval and registration to complete.
The Turnover limit of MSME is Rs. 250 Crore.
Yes, details such as PAN card, Aadhaar card and latest bank account details of business or proprietorship are mandatory in udyam registration.
Udyam registration is the new process for registering MSME launched by the Ministry of Micro, Small & Medium Enterprises on July 1, 2020. The government of India initiated Udyam registration as a substitute to the earlier method of Udyog Aadhar to make it easier for MSMEs to register with the government portal.