What is MSME registration?
Why should an entrepreneur register for MSME registration?
Key benefits of MSME Registration
- Access to Government Schemes and Subsidies: MSME registration unlocks a plethora of government schemes and subsidies specifically designed to support small businesses. These benefits can range from financial assistance and tax breaks to preferential access to government tenders and contracts.
- Easier Access to Credit: MSME registration enhances a business’s credibility, making it easier to secure loans and other forms of financing from banks and financial institutions. Registered MSMEs may qualify for preferential interest rates and relaxed loan terms.
- Legal Recognition and Protection: MSME registration provides a business with legal recognition and protection. It establishes the business as a distinct entity, safeguarding its assets and intellectual property.
Formalization of Business Operations: MSME registration encourages business owners to adopt formal business practices, such as maintaining proper accounting records and adhering to tax regulations. This enhances the business’s professionalism and credibility.
- Eligibility for Government Tenders: Registered MSMEs are eligible to participate in government tenders, opening up new avenues for business growth and expansion.
- Tax Benefits and Exemptions: MSMEs can avail themselves of various tax benefits and exemptions, such as lower corporate tax rates and tax holidays.
Access to Industry Networks and Associations: MSME registration facilitates access to industry networks and associations, providing opportunities for collaboration, knowledge sharing, and business development.
- Enhanced Brand Reputation: MSME registration signals to customers, partners, and investors that the business is established, credible, and committed to compliance.
- Protection against Delayed Payments: Registered MSMEs can seek government intervention in case of delayed payments from customers, ensuring timely receipt of dues.
- Eligibility for Priority Sector Lending: Registered MSMEs are classified as priority sector borrowers, entitling them to preferential treatment from banks in terms of interest rates and loan terms.
What Are MSMEs and Eligibility Criteria
- Micro Enterprises: If you’re operating a business with an investment in plant and machinery or equipment not exceeding Rs. 1 crore and a turnover not exceeding Rs. 5 crore, you fall under the micro enterprise category.
- Manufacturing: Investment in plant and machinery does not exceed Rs. 1 crore.
- Services: Turnover does not exceed Rs. 5 crore.
- Small Enterprises: If your business investment in plant and machinery or equipment ranges from more than Rs. 1 crore but not exceeding Rs. 10 crore, and the turnover is more than Rs. 5 crore but not exceeding Rs. 50 crore, you’re classified as a small enterprise.
- Manufacturing: Investment in plant and machinery does not exceed Rs. 10 crore.
- Services: Turnover does not exceed Rs. 50 crore.
- Medium Enterprises: For someone like you, running a business with an investment in plant and machinery or equipment above Rs. 10 crore but not exceeding Rs. 50 crore, and a turnover above Rs. 50 crore but not exceeding Rs. 250 crore, falls within the medium enterprise category.
- Manufacturing: Investment in plant and machinery does not exceed Rs. 50 crore.
- Services: Turnover does not exceed Rs. 250 crore.
- Micro Enterprises:
Investment in equipment should not exceed Rs. 10 lakh.
- Small Enterprises:
Investment in equipment should be more than Rs. 10 lakh but does not exceed Rs. 2 crore.
- Medium Enterprises:
Investment in equipment should be more than Rs. 2 crore but does not exceed Rs. 5 crore.
Other Common Criteria:
- The calculation of investment is based on the original cost of the equipment or plant and machinery, excluding goods such as land and building.
- Turnover criteria, which were introduced later, are applicable for enterprises opting for the composition scheme without any inspection of records.
In addition to the investment and turnover limits, there are a few other eligibility criteria that an enterprise must meet:
- The enterprise must be a proprietorship, partnership firm, company, trust, or society.
- The enterprise must be engaged in manufacturing or providing services in India.
- The enterprise must not be controlled by another enterprise.
If an enterprise meets all of the eligibility criteria, it can apply for MSME registration online through the Udyam Registration portal. The registration process is simple and straightforward, and it takes only a few minutes to complete.
Who can register for MSME?
- Individuals, startups, business owners, and entrepreneurs
- Private and public limited companies
- Sole proprietorships
- Partnership firms
- Limited Liability Partnerships (LLPs)
- Self Help Groups (SHGs)
- Cooperative societies
How to register for MSME registration?
Step-by-step guide to MSME registration:
- Visit the Udyam Registration portal: https://udyamregistration.gov.in/
- Click on “New Registration” and select the appropriate enterprise category (micro, small, or medium).
- Enter the PAN (Permanent Account Number) of the proprietor or authorized person.
- Provide details such as enterprise name, legal entity (proprietorship, partnership, company), and address.
- Enter details of the enterprise’s activities, including the primary activity code and turnover.
- Review and submit the application form.
- Upon successful registration, download the Udyam Registration Certificate.
What Documents are Required for MSME Registration
- Aadhar card of the applicant.
- PAN card of the business entity.
Other Important Must Have Information
MSME Registration: No Fees or Document Proof Required
MSME Registration Certificate: A Digital Token of Recognition
Udyam Registration Number: A Unique Identifier for MSMEs
Verifying MSME Registration Status:
- Navigate to the Udyam registration portal.
- Locate and click on the “Print/Verify” option followed by “Verify Udyam Registration Number”.
- Enter the “Reference Number” and the captcha code, then click the “Verify” button.
Downloading the MSME Registration Certificate:
- Access the Udyam registration portal.
- Click on the “Print/Verify” option and select “Print Udyam Certificate”.
- Enter your “Udyam Registration Number” and “Mobile” number. Choose the OTP option and click on “Validate & Generate OTP”.
- Input the OTP received on your mobile phone or email address and click on “Validate OTP and Login”.
- Upon successful login, print out the Udyam registration certificate.
How Can Entrepreneurs Benefit from this Information?
- Financial gains: Access to government schemes and subsidies can provide MSMEs with much-needed financial support, reducing costs and boosting profitability.
- Operational efficiency: MSME registration reduces administrative burdens and unlocks government support, enhancing overall business efficiency by simplifying regulatory processes and facilitating access to government resources.
- Market expansion: Enhanced credibility and visibility can open up new market opportunities, enabling MSMEs to reach a broader customer base.
- Growth opportunities: Eligibility for tenders, contracts, and intellectual property protection can pave the way for MSMEs to expand their business and achieve sustainable growth.
MSME Registration Benefits
Below listed are the MSME registration benefits:
- Due to MSME Registration India, bank loans become cheaper as the interest rate is very low, around 1-1.5%, much lower than interest on regular loans
- It also allowed credit for minimum alternate tax (MAT) to be carried forward for up to 15 years instead of 10 years
- Once registered the cost of getting a patent done, or the cost of setting up the industry reduces as many rebates and concessions are available
MSME registration helps to acquire government tenders easily as Udyam Registration Portal is integrated with Government e-Marketplace and various other State Government portals which give easy access to their marketplace and e-tenders
- There is a One Time Settlement Fee for non-paid amounts of MSME
- The MSME registration will help the MSMEs in availing the benefits of government schemes such as the Credit Guarantee Scheme, Credit Linked Capital Subsidy Scheme, Public Procurement Policy, Protection against delayed payments, etc.
- MSMEs are eligible for priority sector lending from banks
MSMEs get the benefit of a government security deposit waiver that is helpful while participating in e-tenders
- Any number of activities, including service or manufacturing or both, may be added or specified in one MSME registration
- Barcode registration subsidy
- Exemption scheme from direct taxes
- ISO certification fees reimbursement
- Electricity bills concession
- Special consideration in International trade fairs
According to media reports, over 20% of MSMEs are owned by women entrepreneurs in India which amounts to 23.3% of the labor force. Also interesting is that 50% of India’s start-up ecosystem is empowered by women in some way
If you are an entrepreneur, We highly recommend registering your MSME. It is a simple and free process that can offer you a lot of benefits.