Brief Procedure of MSME Registration in India with Benefits

The MSME registration procedure in India has now become easier for businesses. To add to this, the Government of India also offers a wide range of benefits and schemes to the MSMEs, which they can avail easily.

Latest Update

• “The MCA department has issued the notification stating an order namely “Specified Companies (Furnishing of information about payment to micro and small enterprise suppliers) Amendment Order, 2024” whereby a new format of Form MSME has been launched on the MCA V3 portal.” Read Notification
• “The MCA department has issued the notification related to extending the due date of existing MSMEs registration till 31st March 2022.” Read Notification

What are Micro, Small and Medium Enterprise?

The Micro, Smal, and Medium Enterprise (MSME) sector plays a prominent role in the economic growth of a developing country like India. This sector has been established with an underlying aim of nurturing the micro, small, and medium enterprises in India. The MSME sector in India also provides a significant contribution towards manufacturing, exports, employment, and industrial units in India. In short, the economic growth of India also relies on MSME sector development. The MSME sector is also popularly known as the Small Scale Industry (SSI) in India.

MCA by notification dated 1st June 2020 has given a new definition for Micro, small and medium enterprises which is as follows and shall be applicable from 1st July 2020:

Small Company Definition Changes

The Ministry of Corporate Affairs stated that the small company definition is bound to change with the proposal by Finance Minister Nirmala Sitharaman as per the union budget 2021. In the proposal, there was a paid-up capital increase of 2Cr while there was a turnover increase of 20Cr. It is going to come into effect from 1st April 2021

Further, MCA amended the definition of a small company on 15 September 2022 by the notification namely Companies (Specification of Definitions Details) Amendment Rules, 2022.

To this notification, the new limits of Small Companies are as follows:

• A Private company having paid-up share capital equal to or less than Rs.4 crore or such a higher amount but not exceeding Rs.10 crore.
• A Private company having turnover equal to or less than Rs. 40 crore or such a higher amount but not exceeding Rs.100 crore.

Key Benefits of MSME Registration for Businesses in India

• Businesses can avail cheaper bank loans with lower interest rates (around 1 to 1.5 per cent) in comparison to regular loans
• Tax rebate availability
• Unlike the regular Minimum Alternate Tax (MAT) duration of 10 years for credit, MSMEs are allowed to carry forward this limit to 15 years for credit against MAT
• Special government tenders catering for MSMEs mainly
• Easy credit accessibility Low-cost for industry set-up, patents, and so no due to special tax rebates and other concessions
• High preference from the government  in terms of licencing and certification
• One-time settlement option for the unpaid amount
• Timely payment from the buyers as filing is mandatory if payment is outstanding for more than 45 days.

Necessary Documents Required for MSME Registration in India

The important documents that are mandatory for MSME registration are given below:

• Address Proof (of Business)
• Rented Property: NOC from the landlord, Rent receipt, and a utility bill or its equivalent are mandatory as proof of the landlord’s ownership
• Self-owned Office: For self-owned offices, one must have an allotment letter, possession letter, property tax receipt, or lease deed. If a municipal license exists against the business name or its proprietor, director or partner, then no need for a possession document
• Receipts/copies of every sale and purchase bill
• Bills of machinery purchased and copies of important licences
• Articles of Association (AoA) and Memorandum of Association (MoA)/Partnership Deed along with the copy of board resolution and incorporation certificate

Brief Registration Procedure for MSME in India

It is highly recommended to take the help of an expert while registering for an MSME. However, one should take note of the below-mentioned details while registering as an MSME under the MSME Act.

• The business owners must fill out the MSME form online or offline while registering for the same
• Any individual can file their registration for more than one industry for MSME
• The business owners must accurately fill the personal details like name, Aadhar, the name of the industry, PAN, mobile number, and bank account details during MSME registration
• Business owners are not required to pay any registration fee for MSME registration
• The individuals can also provide Self-attested certificates for the same
• One of the required details and documents are uploaded properly by the MSME application; they will receive the registration number for the business.

Read Also: All About MSME Form 1 (MCA) with Filing Procedure & Due Dates

Indian Government Schemes Catering MSMEs

A variety of MSME schemes have been launched by the Indian government for MSME businesses, such as:

Zero Defect Scheme

• MSMEs are required to manufacture the export category goods as per the prescribed standards to be a part of this scheme. Compliance with such standards ensures export goods acceptance in foreign nations. The entities, who are a part of this scheme are also given varied tax rebates and concessions for the export goods.

Udyog Aadhaar Memorandum Scheme

• To be a part of this scheme, having an Aadhaar number is mandatory for the MSMEs to enjoy easily available loans, credit, and government subsidies offered under the scheme.

Incubation Scheme

• Under this scheme, the government promotes and encourages innovative MSMEs to come up with new ideas, designs, and products as well as launch them in the market. The government manages approximately 75% to 80% of the costs of innovative projects developed by MSMEs.

Quality Management Standards and Quality Technology Tools

• Enrollment under this scheme allows the MSMEs to maintain the required quality standards along with the new technology. Under this scheme, the government conduct a number of seminars and expert sessions with the new MSMEs to increase awareness among them about new technology available in the market.

Grievance Monitoring System Scheme

• MSMEs registered under this scheme can make complaints about their business to the government as well as check the status of their complaints, and keep them open if they feel the outcomes are not praiseworthy.

Women Entrepreneurship Scheme

• Women entrepreneurs are encouraged and supported by the government under this scheme by offering capital, training, counselling, and teaching of delivery techniques to women. This makes women capable of running their own MSMEs. It also aims to encourage women to expand and manage their businesses successfully.

Credit-linked Capital Subsidy Scheme

• MSMEs are offered the latest technology as a replacement for their old and obsolete technology by the government under this scheme. To achieve this capability, the MSMEs are also offered the capital subsidy in order to upgrade their business. MSMEs enrolled under this scheme can knock on the bank doors directly to avail of such services.

The Indian government has also launched a variety of other schemes to provide support to these MSMEs. However, MSME registration is not yet mandatory in India. Despite this, it is beneficial for emerging MSMEs to get registered as it helps them enjoy tax rebates, credit facilities, loans, business set-ups, and so on.