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All about MSME registration

[ecis2016.org] Mentioned is all about MSME registration- documents required and its importance

The micro, small, and medium-sized enterprise (MSME) sector is seen as a driving force for emerging economies like India. When these sectors experience expansion, the national economy as a whole experiences development and prosperity. These businesses are often referred to as SSIs, which stand for “small-scale industries.”

According to the website msme.gov.in, micro, small, and medium-sized enterprises (MSMEs) are the only ones responsible for 45 per cent of the industrial employment in the nation. The total amount of goods exported from India has increased by 45% thanks to the efforts of these indigenous manufacturing organisations.

What are micro, small and medium enterprises?

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MSME was designed to promote, assist and increase the competitiveness of micro, small and medium enterprises. Businesses are placed into one of two categories either in the manufacturing line or the service line under the Micro, Small and Medium Enterprises Development (MSMED) Act, which was passed in 2006. 

Manufacturing sector

Any firm engaged in the manufacture or production of items listed in the First Schedule of the Industries (Development and Regulation) Act, 1951, or installing equipment in the process of adding value to a final product with a distinguishing name, character or use.

Service sector

Any enterprise engaging in providing services such as restaurants and hotels, real estate, financing, insurance, transport etc. 

Existing classification for MSMEs 

Sector Criteria Micro  Small  Medium 
Manufacturing Investment  < Rs 25 lakh < Rs 5 crore < Rs 10 crore
Service  Investment  < Rs 10 lakh < Rs 2 crore < Rs 5 crore

As you can see from the table,  business owners were less inclined to grow their activities because financial restraints were capped. These lower boundaries hindered entrepreneurs’ desire to expand since they could not scale their companies further. In addition, there was a long-standing desire for the adjustment of MSME categorisation so that they may continue to grow their operations while still receiving MSME advantages.

Now, under the Aatmanirbhar Bharat Abhiyan (ABA), the government has altered the categorization of MSMEs by including composite investment and annual revenue requirements. In addition, the difference between the manufacturing and services industries was eliminated from the definition of MSME. The following is the current amended MSME categorisation, which takes investment and yearly revenue into account when determining MSME status.

Revised MSME classification 

Criteria  Micro Small  Medium 
Investment & Annual Turnover < Rs.1 crore & < Rs.5 crore < Rs.10 crore & < Rs.50 crore < Rs.50 crore & < Rs.250 crore

Historically, the MSME registration only included industrial and service firms. However, in July 2021, the government declared that wholesale and retail commerce will be classified as MSME, allowing wholesale and retail businesses to apply for MSME registration, except for motor vehicles and motorcycles. Thus, manufacturing and service businesses, as well as wholesale and retail trade, are eligible for MSME registration and may apply.

MSME: Features

The following are some of the most important features of MSMEs:

  • MSME serves the interests of labourers and craftsmen. They assist them by offering jobs, loans, and other services.
  • By establishing specialised training facilities, they support the growth of entrepreneurship and the upgrading of skills.
  • They promote the upgrading of developmental technologies, the expansion of infrastructure, and the overall modernisation of the industry.
  • It is commonly recognised that small and medium-sized enterprises (SMEs) give appropriate support for increased access to local and international markets.
  • In addition, they provide contemporary testing facilities and quality certification services.
  • MSMEs currently assist product development, design innovation, intervention, and packaging, in line with current trends.

Highlights of updated SME

The Self-Reliant India Scheme of 2020, also known as “Atma Nirbhar Bharat Abhiyan,” has provided a new definition for MSMEs. The following are some distinguishing characteristics of new MSMEs:

  • Provision of collateral-free loans to small and medium-sized businesses
  • A 3 lakh billion rupee arrangement of loans to small and medium-sized enterprises.
  • An offer for SMBs to get a 12-month moratorium period.
  • Consideration of Manufacturing MSMEs and Service MSMEs as one and the same entity.
  • MSM is awarded a 48-month payback period.
  • There is a 100 percent credit guarantee for SMBs.
  • The reclassification of MSMEs will benefit almost 45 million units.

MSME: Eligibility

The following categories of micro, small, and medium-sized businesses are eligible to register and get MSME benefits: 

  • Private limited company
  • Public limited company
  • Self-help groups
  • Co-operative society
  • Business trusts
  • Proprietorships
  • Others

These firms must meet the investment and yearly revenue requirements for micro, small, and medium-sized enterprises. Multiple documentation must either be submitted or provided at the time of MSME filing as part of the MSME registration requirements.

 These documents are: 

  • Personal aadhar card
  • Name of the establishment
  • Address of the establishment
  • Complete bank details
  • Rent agreement
  • Property papers
  • Business activity of an enterprise
  • NIC code of the primary activity
  • Number of employees
  • Investment amount in plant and machinery (if there is no investment in plant and machinery, entrepreneurs can fill  it as zero)
  • Turnover (if there is no turnover, entrepreneurs can fill it as zero)

 In addition to these documents, registration as an MSME also requires a few more documents.

Purchase or sale bill

As evidence, the firm must present invoices for the bought raw materials used in the production of the items. Alternately, invoices issued during the product’s sale may also serve as legitimate documentation.

Partnership deed

If the MSME is a partnership, the partnership deed must be submitted. If the project belongs to a corporation, the certificate of formation, a copy of the memorandum of association, and the articles of organisation must be supplied. Additionally, the director must produce signed copies of the resolution papers voted at one of the prior sessions.

Machinery licence

In certain instances, the firm owner must give the licence for the production unit’s equipment. It must be an Industrial Licence granted by the government. Additionally, you may submit invoices for acquired machinery and equipment.

Address proof of the company

If the facility is owned by the owner, they must produce documentation such as a property tax receipt, lease deed, and letter of possession. If the property is rented, documentation such as a receipt for rent and a landlord-issued no objection certificate are sufficient.

Types of MSME loans entrepreneurs can obtain 

A broad range of free loans is available to MSMEs. They include the following:

  • Merchant cash advance

Entrepreneurs that wish to pay big sums to their suppliers using a debit card or future credit transaction may benefit from obtaining a Merchant cash advance. The money from these loans is distributed more quickly than money from other loans.

  • Working capital loans

These loans are often used for the purpose of managing day-to-day company expenditures including rent, operating charges, and salary obligations. The sanctioning of these loans does not need the provision of any security. However, the business owner is required to supply facts about their KYC as well as current account statements for the preceding six months.

  • Line of credit

You may borrow up to this amount as many times as you want without worrying about going over your predetermined credit limit. It provides businesses with a consistent supply of capital. Any time a firm requires money, entrepreneurs can access this financing. Only until the loan is received does the interest begin to accrue. With a payback term of one year, loan amounts might go up to Rs 1 crore.

  • Invoice financing

A loan is made available to MSMEs based on outstanding bills. These loans assist in ensuring that there is a steady flow of money to meet the requirements of the firm. This loan is open to any business with yearly revenue of more than Rs.24 Lakhs, and any such organisation can submit an application for it.

MSME registration: Benefits

  • The MSME registration reduces the cost of bank loans since the interest rate is now between 1 and 1.5 per cent. Much cheaper than conventional lending rates. In addition, it permits the credit for minimum alternative tax (MAT) to be carried forward for up to 15 years, as opposed to 10 years.
  • Once registered, the cost of obtaining a patent or the cost of establishing an enterprise decreases due to the availability of several rebates and discounts.
  • The Udyam Registration would aid MSMEs in accessing government programmes such as Credit Guarantee Scheme, Credit Linked Capital Subsidy Scheme, Public Procurement Policy, Protection against delayed payments, etc.
  • MSME registration facilitates the acquisition of government contracts since the Udyam Registration Portal is connected with the Government e-Marketplace and several State Government websites that provide simple access to their own marketplaces and e-tenders.
  • The government waives the security deposit for small and medium-sized businesses that participate in e-tenders.
  • Any number of operations, whether manufacturing, service or both, may be added to or described in a single Registration.
  • Small and medium-sized enterprises are eligible for priority sector loans from banks.
  • There is a One-Time Settlement Fee for all unpaid MSME balances.
  • Subsidy for barcode registration.
  • Program for exemption from Direct taxes.
  • ISO certification fees reimbursed.
  • Electricity bill reductions

MSME registration fees

Registration for MSME is completely free of charge. The deadline for businesses that now have UAM registration to switch over to Udyam registration is June 30, 2022. If the business owners who were previously registered under UAM do not switch over to Udyam Registration by June 30, 2022, their UAM registration will be deemed invalid, and they will no longer be eligible to access the advantages that are made available to MSMEs. They will need to re-register with Udyam in order to be considered for the perks available to MSME businesses.

MSME online registration process 

MSME online registration process 

Through the government web udyamregistration.gov.in, MSME registration in India is conducted. The platform provides two registration options for MSME. 

  • New business entrepreneurs who have not yet registered with MSME.
  • Entrepreneurs who have previously registered as EM-II or UAM via aided or direct filing.

For MSME registration, only Aadhaar Card and PAN Card are needed. Registration for MSME is entirely online. The Udyam Registration Portal would automatically retrieve from government databases investment and revenue information associated with PAN and GST for businesses. Income Tax and GSTIN systems are completely connected with the Udyam Registration Portal.

The Goods and Services Tax (GST) is optional for businesses that are exempt from GST registration under the GST statute. However, businesses that need to get GST registration under the GST system are required to do so in order to receive Udyam Registration.

Those having UAM registration or any other registration granted by any authority under the Ministry of MSME must re-register on the Udyam Registration Portal by clicking “For New Entrepreneurs who are not yet Registered as MSME or those with EM-II.”

 

Registration procedure without PAN

On the homepage, click “For new enterprises who have not yet registered under MSME.”

  • After the registration page has loaded, enter the Aadhar number and business name
  • After entering the required information, click the “Validate and Generate OTP” button. A
  • A One-Time Password is produced and sent to the business owner.
  • The PAN verification gateway will open simultaneously on the screen. If the entrepreneur does not have a PAN number, choose “NO” for the “Do you have PAN?” question shown on the screen. Click the Next button then.
  • It will then direct you to the registration page, where you must carefully enter your personal information and the company’s information.

After entering all the essential information, click “Final Submit.” You will get a thank you message along with a registration number.

Registration for entrepreneurs already having UAM

Registration for entrepreneurs already having UAM

Those who are already registered as UAM must click the “For those already registered as UAM” or “For those previously registered as UAM via assisted filing” button on the homepage of the government site

Step 1 

Registration for entrepreneurs already having UAM

This will open a screen in which the Udyog Aadhaar Number and an OTP option must be input. The choices available are to get the OTP through mobile phone or email, based on the UAM entered. After selecting the OTP Options, click “Validate and Generate OTP.” 

Step 2

After inputting the OTP, the MSME registration form must be completed with registration information, and Udyam registration will be complete.

Application for new entrepreneurs who have not yet registered as MSME or EM-II

To get started with the application process visit the MSME Website 

Step 1 

Application for new entrepreneurs who have not yet registered as MSME or EM-II

New entrepreneurs and those with EM-II registration must click the “For New Entrepreneurs Who have Not Yet Registered as MSME or Those With EM-II” tab on the MSME registration homepage. 

Step 2

Application for new entrepreneurs who have not yet registered as MSME or EM-II

When the “For New Entrepreneurs who are not yet Registered as MSME or those with EM-II” button on the homepage of the government site is clicked, the registration page appears and requests the entrepreneur’s Aadhaar number and name.  Click the “Validate and Generate OTP Button” after providing this data. 

Step 3

Application for new entrepreneurs who have not yet registered as MSME or EM-II

After clicking this button and entering the OTP, the PAN Verification screen will load. Once the PAN number is supplied, the website automatically populates all other information from the government database, leaving just the ITR details for the registrant to fill out.

Step 4  

Application for new entrepreneurs who have not yet registered as MSME or EM-II

Upon completion of MSME registration, the “Submit and Get Final OTP” button must be pressed. After completing the MSME online registration, a notice of successful registration and reference number will display. For future reference, write down the reference number. 

Step 5 

Verification of the MSME-registered application takes a few days. Entrepreneurs can get the MSME Registration Certificate after the registration procedure is complete.

Instructions for printing the MSME certificate online

  • Once the MSME registration is complete, the MSME registered certificate can be downloaded online.
  • Login here to download or print the certificate. so as to complete the details
  • You must enter the 12-digit UAM number in the designated field.
  • Enter the same cell phone number shown on the Udyog Aadhar certificate in the following field.
  • After these steps have been completed, the page is routed to the homepage, where the certificate may be downloaded.

MSME helpline number 

General queries related to MSME  – 011-23063288

Udyam Registration or Udyam Registration Certificate – 011-23063800

Technical queries about Udyam Registration or Udyam Registration Certificate – 011-23062354

Address details: Ministry of Micro, Small and Medium Enterprises, Udyog Bhawan, Rafi Marg, New Delhi – 110011. 

Web information manager address:  Ministry of Micro, Small and 

Medium Enterprises, Room No 468 C, Udyog Bhawan, Rafi Marg, New Delhi – 110011. 

Email: mayapandey.dgca@gov.in

FAQs

Is it necessary to register as an MSME?

MSME registration is not required for businesses that fall within the MSMEs umbrella. Nonetheless, obtaining MSME/Udyam registration is preferable since the government gives a wide range of advantages, including cheap interest rates, easy access to finance, and eligibility for a wide range of government programmes, to businesses with MSME registration.

Is the Aadhar card mandatory for registration?

Yes. A valid Aadhaar card is required for acquiring Udyam registration. In the event that the applicant is not the owner, the partner’s and director’s Aadhaar cards would be requested.

When filling out the MSME registration form, whose Aadhaar number needs to be entered?

When registering a micro, small, or medium-sized enterprise (MSME), the authorised signatory for the organisation has to supply both the PAN and the Aadhaar number.

In the event that an application for MSME registration is submitted by a partnership entity, whose Aadhaar number should be entered?

In the case of a proprietorship company, both the Aadhaar number and the PAN number of the owner are required to be submitted. PAN and Aadhaar numbers need to be provided by the managing partner of a partnership business if the business is taxed under that structure. In the instance of a partnership firm, the information pertaining to the business will be the information pertaining to the partnership firm, and the information pertaining to the entrepreneur will be the information pertaining to the managing partner of the partnership company.

Existing and new companies may both apply, right?

Yes, both existing and new businesses are eligible to apply for MSME/Udyam Registration, so long as the current unit is operational and satisfies the minimum requirements for registration. To get the advantages granted for MSMEs, enterprises with a UAM Registration must re-register for Udyam Registration.

How long does the MSME registration certificate last?

The Udyam Registration Certificate does not expire. The certificate will remain valid as long as the organisation continues to operate in a moral and financially sound manner.

Can trading businesses register with MSME?

Yes. Previously, the MSME registration only applied to businesses engaged in manufacturing or providing services. Not all businesses that trade are included in the plan. However, the government declared in July 2021 that wholesale and retail businesses would be classified as MSMEs and therefore be able to apply for MSME registration. In order to make retail and wholesale trade eligible for priority sector loans, the Ministry of Micro, Small, and Medium Enterprises decided to put these businesses in the MSMEs category.

What if I have manufacturing facilities in more than one city?

No multiple registrations are required if you have manufacturing facilities in more than one city. The MSME/Udyam Registration Certificate is only valid for a single company, not for a group of companies. However, it is necessary to provide information on a number of different branches or plants.

Can I register a second MSME after I’ve already done so with the first one?

The owner of a business is eligible to submit an application for MSME registration when the enterprise in question is distinct from the others in the sense that it was founded under a different name and was independently registered or incorporated. On the other hand, a business cannot submit more than one application for Udyam Registration. In a single Udyam Registration, each and every one of your operations, whether they be manufacturing or service, should be identified or added. By using the ‘Update Details’ option that is located on the site, a business owner has the ability to include more activities in their Udyam Registration.

Does an MSME registration apply to a builder with a project of more than Rs.500 crore and a business value of more than Rs.250 crore?

No, the requirements for Udyam registration are based on the yearly revenue generated by the services offered, not the other way around. The builder cannot apply for MSME registration since a firm’s yearly revenue must be less than Rs.250 crore in order to qualify for medium enterprise registration.

Source: https://ecis2016.org/.
Copyright belongs to: ecis2016.org

Debora Berti

Università degli Studi di Firenze, IT

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