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Benefits of MSME Registration in India

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Benefits of MSME Registration in India

Benefits of MSME Registration in India

MSME is frequently referred to as the cornerstone of our economy and makes a substantial contribution to the socio-economic growth of the nation. Small-scale businesses and the unorganized business sector have consistently received support from the Indian government. The Indian government has consistently supported incentives for Micro, Small, and Medium-Enterprises (MSMEs). There are numerous benefits to have an MSME Registration in India, but they can only be accessed if the company has registered as an MSME under the MSME Act. In this article, we will discuss about the Benefits of MSME Registration.  

What is MSME?  

The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 under which MSME definition is given as  

  1. “Enterprises that have been engaged in the manufacture and service sector whose investment is maximum Rs 25 lakhs or Rs. 10 lakhs respectively is called micro business industries as per the definition given in MSMED, Act 2006.”  
  1. “Enterprises that have been engaged in the manufacturing sector and Service sector whose investment is maximum Rs 5 Crores or Rs. 2 Crores respectively are called small business industries as per MSMED, Act 2006.”   
  1. “Enterprises that has been engaged in the manufacture and service sector whose investment maximum Rs. 10 Crores or Rs. 5 Crores respectively is called medium business enterprises as per the MSMED, Act 2006.” 

But now the maximum and minimum limit has been changed by the government for the MSME. As per the change definition also got changed and the changed definitions are given below-  

  1. “Enterprises whose investment or annual turnover is from Rs. 1 Crore to Rs. 5 Crore are called micro-businesses.” 
  1. Enterprises whose investment or annual turnover is from Rs. 10 Crores to Rs. 50 Crores are called small business enterprises.” 
  1. Enterprises whose investment or annual turnover is from Rs. 50 Crores to Rs. 250 Crores are called medium business industries.” 

Benefits of MSME Registration  

Following are the benefits of MSME Registration-  

Loans from Banks (Collateral Free) 

All small and microbusiness sectors now have access to collateral-free finance, thanks to the Indian government. Funds for micro and small sector businesses are guaranteed under this project. Both new and old businesses are eligible to benefit from this program. The GOI (Government of India), SIDBI (Small Industries Development Bank of India), and the Ministry of Micro, Small, and Medium Enterprise introduced a trust called the Credit Guarantee Fund Trust.  

Grant on Patent Registration 

The enterprise that has the MSME[1] issued certificate of registration is offered a sizable 50% subsidy. By submitting an application to the appropriate ministry, you can receive this subsidy for filing a patent. 

Exemption from Overdraft Interest Rates 

Businesses or enterprises that are MSME Registration may benefit from a scheme that varies from bank to bank by receiving a 1 percent discount on the overdraft. 

Eligibility for Industrial Promotion Subsidy 

Businesses that are MSME registered are also eligible for a government recommended incentive for industrial promotion. 

Prevention of Payments (Delayed Payments) 

The purchasers of goods or services from SSIs or MSMEs occasionally have a tendency to put off making payments. By granting them the ability to charge interest on payments that are delayed from the buyer’s side, the Ministry of Micro, Small, and Medium Enterprise supports these businesses. Such conflicts must be arbitrated and/or mediated within a reasonable amount of time. The buyer is obligated to make the payment on or before the agreed-upon date of payment or within 15 days of the day they accepted the goods and services from an MSME registered firm if any MSME registered enterprise provides any goods or services to the buyer. The buyer must pay compound interest in addition to interest (charged monthly) on the agreed-upon sum if the payment is delayed for more than 45 days after accepting the goods or services. The interest rate is three times what the Reserve Bank of India has announced. 

Less Money Spent on Electricity 

By submitting an application to the department of electricity and the MSME Registration Certificate, all businesses having the MSME Registration Certificate are eligible for this discount. 

Reimbursement of ISO Certification Fees 

The costs incurred for the ISO certification may be claimed back by registered MSME businesses. 

Bar Code Registration Assistance 

MSME registered businesses are eligible for bar code registration incentives. Barcodes are presented as parallel lines and numbers that can be read by machines. In the entire supply and chain management process, barcodes are crucial for tracking products. 

Direct Income Tax Exemptions 

According to the government program, based on their operations, businesses registered under MSME are directly exempt from paying income tax for the first year of operation. It provides significant respite for businesses from meticulous bookkeeping practices and challenging auditing procedures. 

Reservation Policies for the Manufacturing Sector 

The Development and Regulation Act of 1951, which establishes reservation guidelines for the exclusive manufacture of goods, is regarded as an important law in support of SSI (Small Scale Industries). 

CLCSS Scheme of Subsidy  

The Ministry of Micro, Small, and Medium Enterprises (MSME) has a programme called the Credit Linked Capital Subsidy Scheme (CLCSS) to help firms upgrade their technology. The programme, which was introduced by the Indian government in October 2000, offers a 15% subsidy that is capped at Rs. 15 lakhs. The scheme’s maximum loan amount for purposes of calculating subsidies is one hundred lakhs. 

Conclusion

The MSME Udyam Registration Portal propagated the idea of paperless registration and offers a variety of useful services to company owners. On July 1, 2020, the Union MSME Ministry established the MSME Udyam Registration Portal through which MSME Registration is happening nowadays. The site has shown its worth in terms of flexibility and features so that it will be convenient for the MSME owners to take registration as MSME. Currently, the platform has almost 11 lakh registered MSMEs who have completed the self-declaration registration procedure through the same Udyam Portal of the government. This registration process was created by the Finance Minister as part of the Prime Minister’s assistance package in the wake of the Covid 19 epidemic where almost everything went virtual and people got friendly with the online works. The process of MSME Registration is not that tough but in case you need any help, you can visit BizAdvisers. 

Read our article:All You Need to Know about MSME Udyam Registration Portal

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