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Overview of MSME Registration
A total of 4.5 crore MSMEs are registered in India, according to the latest data. MSMEs play an essential role in the growth of the economy due to their capital-output ratio, meaning that small investments result in a significant growth rate. MSMEs, which consist of micro, small, and medium enterprises, are involved in the manufacturing, processing, production, and preservation of goods and services. MSME registration provides businesses with various benefits, such as tax exemptions, loan options, and better access to government contracts/tenders and schemes.
The process of registering an enterprise as an MSME involves several steps. However, online Udyam Registration simplifies this process by allowing businesses to enter personal and company details, bank information, and select their district. MSMEs not only contribute to the country's growth but also play a key role in generating employment and alleviating poverty by providing opportunities to economically disadvantaged groups.
After registration, MSMEs must comply with several mandatory requirements, such as adhering to the provisions of the MSMED Act, 2006, GST registration, shop registration, and other regulatory practices to ensure smooth operation.
By understanding and leveraging the schemes provided by the government, businesses can reach new heights and contribute to national growth after registering with MSME.
What is MSME?
MSME stands for Micro, Small, and Medium Enterprises. These businesses are vital for economic growth and operate in various sectors, including manufacturing, service, and trading. The Aatma Nirbhar Bharat Abhiyan in 2020 categorized MSMEs based on their investments:
- Micro Enterprise: Investment in Plant and Machinery or Equipment up to Rs. 1 crore with a turnover up to Rs. 5 crores.
- Small Enterprise: Investment in Plant and Machinery or Equipment up to Rs. 10 crores with a turnover up to Rs. 50 crores.
- Medium Enterprise: Investment in Plant and Machinery or Equipment up to Rs. 50 crores with a turnover up to Rs. 250 crores.
Benefits of MSME Registration in India
- Easier Access to Loans: MSME-registered businesses are eligible for collateral-free loans under the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), which helps invest in technology and expand operations.
- Access to Government Schemes: MSME registration provides access to government programs such as CGTMSE, Prime Minister's Employment Generation Programme (PMEGP), and Micro and Small Enterprises - Cluster Development Programme (MSE-CDP).
- Preference in Government Tenders: MSME-registered businesses are prioritized in public procurement, and are exempt from Earnest Money Deposits (EMD) in most government tenders.
- Reduced ROI from Banks: MSMEs enjoy lower interest rates on loans from banks, often 2-3% lower than the standard rates.
- Subsidies on Business Costs: Registered MSMEs can avail subsidies for machinery upgrades, technology adoption, and discounts on patent registration costs.
- Protection Against Late Payments: The MSMED Act, 2006 protects MSMEs by ensuring timely payments from buyers within 15 days of acceptance, and allows charging three times the bank interest if payment is delayed beyond 45 days.
- ISO Certification Reimbursement: MSMEs are exempt from paying fees for ISO certifications, allowing them to improve efficiency and market reputation.
- Growth Opportunities: MSMEs can participate in international trade fairs, exhibitions, and government-backed programs to promote and upgrade their business activities.
Requirements for MSME Registration in India
- Business Entity: The business must fall under the micro, small, or medium category, based on the investment in plant and machinery or annual turnover.
- Indian Citizenship: The owner must be an Indian citizen.
- Aadhaar Number: The business owner must have an Aadhaar number, which serves as proof of identity for the registration process.
Eligibility Criteria for MSME Registration
- Micro Enterprises: Investment in plant and machinery or equipment should not exceed Rs. 1 crore, and turnover should not exceed Rs. 5 crores.
- Small Enterprises: Investment should not exceed Rs. 10 crores, and turnover should not exceed Rs. 50 crores.
- Medium Enterprises: Investment should not exceed Rs. 50 crores, and turnover should not exceed Rs. 250 crores.
The business can be a Private Limited Company, Public Limited Company, Sole Proprietorship, Partnership Firm, Limited Liability Partnership (LLP), Startup, Self-Help Group (SHG), Co-operative Society, Trust, or any business owner or entrepreneur.
These criteria apply to both business and service enterprises. Since the eligibility criteria may change, it is advisable to check the latest standards before proceeding with the registration.
Documents Required for MSME Registration in India
MSME registration requires the filing of several important documents that are necessary for completing the registration process. Below is a list of required documents for MSME registration:
1. Aadhaar Number
- Aadhaar Number: The Aadhaar number of the owner/proprietor of the business. It serves as proof of identity and address for the business owner.
2. PAN Card
- PAN Card: The PAN card of the business owner and the business itself is required for tax details and to establish the legitimate presence of the company.
3. Bank Account Details
- Bank Account Details: Information about the bank account, including the IFSC Code of either the enterprise or the owner of the enterprise.
4. Business Address Proof
- Business Address Proof: Documents such as rent agreements, sale deeds, or utility bills (e.g., electricity bill) to prove the business's address.
5. Photograph
- Photograph: A passport-size photograph of the enterprise owner, required for identification during the filing process.
6. Business Activity Details
- Business Activity Details: A detailed document describing the nature of the business and the activities carried out by the MSME.
7. Turnover Details
- Turnover Details: Documents showing the business's turnover details must be provided as part of the MSME registration process.
8. NIC 2-Digit Code
- NIC 2-Digit Code: This code is required to categorize the business activity for MSME registration. It helps in identifying the type of business activity being carried out.
By submitting these documents, businesses can ensure a smooth MSME registration process and gain access to various government schemes and benefits available for MSMEs in India.
Process of MSME Registration in India
MSME registration is free, paperless, and based on self-declaration, making it an approachable and simple process for businesses in India. By getting Udyam registration, MSMEs become qualified for various government benefits and schemes. The registration process is simple and can be finished online through the Udyam Registration Portal.
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Visit the Udyam Registration Portal
Access the official Udyam Registration Portal. New entrepreneurs and entrepreneurs that have EM-II registration have to click on ‘For New Entrepreneurs who are not Registered yet as MSME or those with EM-II.’
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Enter the Aadhaar Number
The next step is to enter the Aadhaar number of the proprietor/owner of the business and click on the ‘Validate and Generate OTP’ button.
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Enter the PAN Number
Enter the PAN number of the business.
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Enter the Business Information
Fill out the information of the enterprise, which includes the name, area, and type of enterprise.
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Enter the Investment and Turnover Records
Disclose the funding and turnover details of the enterprise. The funding in plant and equipment or machinery and annual turnover are important factors in determining the suitability of the enterprise for MSME registration.
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Upload the Papers
Submit the required documents, which include the Aadhaar card, PAN card, and financial information. The Udyam Registration Portal does not require the posting of any files, papers, certificates, or proofs, as the registration procedure is based totally on self-declaration. After filling in the details, click on ‘Submit and Get Final OTP,’ enter the OTP, and submit the form.
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Submit the Application
After submitting the application, it will be checked. If accepted, the enterprise/organization shall be given a unique identification number referred to as the “Udyam Registration Number.”
MSME Compliance
Registration is not an end; once a business is registered as an MSME, it has to adhere to certain compliances to maintain its registration and continue to enjoy the benefits. Compliance measures ensure that the registered enterprise operates legally, files mandatory returns, and avails different benefits.
- MSME Act, 2006: MSMEs must comply with the terms and provisions of the MSME Act, 2006 that offers protection against late payments and other perks. Section 9 of the MSMED Act explains specific businesses for which MSME Form 1 is a vital legal requirement, and MSME registered companies must send MSME Form 1 twice a year to the Ministry of Corporate Affairs (MCA) and show unpaid payments to MSMEs in their yearly financial records.
- Update Udyam Registration: MSMEs must update their Udyam Registration details if there is a change in any of the following:
- The business has transitioned from one category to another.
- Change in business name, address, or ownership.
- Annual turnover of the business.
- Income Tax Compliance: Filing an Income Tax Return is mandatory for all businesses and individuals in India. MSMEs must file ITRs annually and ensure tax deductions under Section 80C, 80G of the Income Tax Act, 1961.
- Annual Returns: Registered MSMEs are required to file annual returns that outline details of the financial performance of the business in a financial year.
- Shops and Establishment Act: MSMEs must comply with the rules and regulations of the Shops and Establishment Act, which sets out working hours, breaks, and other hiring conditions.
- Professional Tax Registration: MSMEs are required to register for professional tax in the state where they operate their business.
- GST Registration: MSMEs with an annual turnover of more than Rs. 40 lakhs (for goods), Rs. 20 lakhs (for services), Rs. 10 lakh for goods and services in special areas, are required to apply for GST.
- Maintain Financial Records: Post registration, MSMEs are required to maintain and update accurate records of:
- Balance sheets and profit and loss accounts.
- Record of investments in plants and machinery or equipment.
- Invoices and bank statements.
- Compliance Importance: Compliance is crucial for MSMEs to ensure their long-term success and growth. Failure to meet these rules can result in fines, legal penalties, and social damage. Compliance helps MSMEs build their reputation, win the trust of customers, investors, and other partners, and create a level playing field for all market players.
Why Choose Kanakkupillai for MSME Registration?
Kanakkupillai is a top provider of MSME registration services in India, providing a range of services post-registration, making it a great choice for businesses looking to register their businesses as MSME. With over 50,000+ clients, our team of experts supports you throughout the filing process to ensure that you don’t miss out on anything.
- Tailored Solutions: We offer tailored solutions designed to meet the unique requirements of each client.
- Affordable Services: We provide our services at a very affordable rate, keeping your budget in mind.
- 24/7 Support: Our 24/7 support ensures that your doubts are cleared quickly and the registration process is smooth and efficient.
Frequently Asked Questions
What is MSME Registration?
MSME Registration, also known as Udyog Aadhar Registration, is a process of registering micro, small, and medium companies in India.Who is ready for MSME Registration?
Micro, small, and medium companies with an investment in plant and tools and yearly sales as per the necessary standards are qualified for MSME Registration.What are the perks of MSME Registration?
MSME Registration offers perks such as tax refunds, easy access to bank loans, government contracts, safety against late payments, and collateral-free loans.What papers are needed for MSME Registration?
The papers needed for MSME Registration include Aadhaar number, PAN card, bank account details, business address proof, business owners name proof, and business owners address proof.How can I join for MSME?
You can apply for MSME by visiting the Udyam Registration Portal and adding the required details and papers.Is MSME Registration mandatory?
MSME Registration is not mandatory, but it offers several perks, including tax breaks, easy access to bank loans, and government contracts.How long is MSME Registration valid?
MSME Registration is valid for a lifetime, and there is no need for renewal.Can I apply for MSME online?
Yes, you can register for MSME online through the Udyam Registration Portal.What is the capital cap for micro enterprises?
The spending cap for micro businesses is up to Rs. 1 crore in plant and tools.What is the annual sales cap for micro enterprises?
The yearly sales cap for micro businesses is up to Rs. 5 crore.We Provide Best Quality
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