MSME – Micro, Small, and Medium Enterprises can apply for MSME registration in India. Proprietorships, Hindu Undivided Family, Partnership Firm, One Person Company, Limited Liability Partnership, Private Limited Company, Limited Company, Producer Company, any association of persons, co-operative societies or any other undertaking can obtain MSME registration.
Moreover, In accordance with the Micro, Small, and Medium Enterprises Development (MSMED) Act in 2006, the enterprises are classified into two divisions.
Manufacturing enterprises – engaged in the manufacturing or production of goods in any industry
Service enterprises – engaged in providing or rendering services
Further, the earlier definition of MSMEs was based on investments in plants and machinery or equipment. However, MSMEs will now be defined in a composite manner, taking both investments as well as turnover into account. Moreover, this new definition will bring about many benefits that will aid MSMEs to grow in size.
Definition of Micro, Small and Medium Enterprises has been altered with the aim of providing them greater support as well as various benefits as a part of the relief measures under Atmanirbhar Bharat Abhiyaan.
Earlier & Latest Classifications of MSME are mentioned in the tables below:
Previous MSME Classification
Criteria: Investment in Plant and Machinery/ Equipment
< Rs 25 lacs
< Rs.5 crore
< Rs.10 crore
< Rs.10 lacs
< Rs.2 crore
< Rs.5 crore
Revised MSME Classification
Criteria: Investment as well as Turnover
ForManufacturing enterprises as well as Service enterprises
< Rs.1 crore
< Rs.10 crore
< Rs.20 crore
< Rs.5 crore
< Rs.50 crore
< Rs.100 crore
Note: Enterprise has to fulfill both of the above criteria to become eligible as an MSME as per the revised MSME classification.
MSME Online Registration Process
Time needed: 15 minutes.
Follow the detailed process given below to complete the registration. Once the registration process is complete, the government will verify the information provided and you will receive an e-registration document on your e-mail ID.
Click on “For new Entrepreneurs who are not registered yet as MSME” option.
Enter required information
Enter the details of your Aadhaar and click on the option “Validate & Generate OTP”
Validate the details
Enter the OTP sent to the registered mobile number to verify the details of the Aadhaar.
Verify PAN details
Select the type of organization and enter your PAN number and click on validate.
Enter the required details
Enter the following details: 1. Mobile number and Email ID 2. Social Category and Gender 3. Name of Enterprise and Address of office 4. Date of Incorporation 5. Select whether in production or not 6. Date of commencement of business 7. Bank details of the entity 8. The major activity of the business unit i.e. Manufacturer or service unit 9. National Industry Classification (NIC) Code for Activities (One or more activities can be added) 10. The number of persons employed 11. Amount invested in plant or machinery 12. Check yes or no if you are interested to get registered on Government e-Market (GeM) Portal 13. Check yes or no if you are interested to get registered on TReDS Portal
Enter the OTP
After filing out the important details, select the checkbox “Agree Terms and Conditions” and finally submit the form and validate with OTP.
Points to be noted:
To do the registration the small and medium scale industry owner can file form in both manners, i.e, whether online or offline.
Secondly, there are no registration fees required to be paid for this process.
MSME Registration without Aadhaar Card
In case the applicant doesn’t have Aadhaar card then he/she must visit the nearest Aadhaar enrollment center for enrollment. Till the time Aadhaar is issued to the individual the below documents can be used to continue the registration process:
Further, a Copy of Aadhaar enrollment slip or copy of Aadhaar slip for Aadhaar enrollment can be used.
For Aadhaar enrollment process below documents are required:
Then, after completing the above process you can continue your business with MSME/SSI certificate.
Documents Required For MSME Registration
Aadhar cards of Proprietor / Partners/ Directors
Copy of PAN Card business
P&M as well as equipment investment details. (Amount of Investment)
Likewise, Turnover Details
Valid Mobile number as per Aadharcard as well as valid email address
Proof of date of commencement of business
Copy of Bank statement with IFSC code
Name of Business as well as address proof of business
Partnership deed or MOA/AOA
Sales as well as purchase bill copies
Copies of licenses as well as bills of purchased machinery
Benefits of MSME
The Finance Minister listed various benefits for MSMEs which included easier credit and equity infusion as well as various other benefits like redefining these units under Atmanirbhar Bharat Scheme.
New Benefits under “Atmanirbhar Bharat Scheme”
Collateral Free Automation loan will be given by banks and NBFCs for an amount up to 20% of the MSME’s entire outstanding credit as on 29th February 2020. Moreover, Borrowers with a turnover of up to rupees 100 crores and an outstanding credit of up to rupees 25 crores are eligible for obtaining credit under this scheme. Also, this Loan will be for a 4 year tenor with a Moratorium of 12 Months on principal repayment. Also, 100% credit guarantee cover to banks and NBFCs on principal and interest
Further, to meet liquidity requirements for such companies, the Government of India will facilitate the provision of Rs 20,000 crores Subordinate Debt for Functioning MSMEs which are NPA or are stressed. Also, this benefit is towards the loans which are standard having the timely repayments in the past. Moreover, the stimulus package has rightly considered credit facilities even for the borrowers where there were few delays or the loans were classified as NPAs.
Likewise, rupees 50,000 crores Equity infusion for MSMEs through Funds. Since Government has observed the inability of raising debt by MSMEs beyond a particular level. Also, the MSMEs which are having growth potential and viability will get the support of equity infusion from this corpus.
Further, apart from liquidity enhancement measures, the government has taken a step towards increasing the market for MSME in India. Moreover, Indian MSMEs and other companies have often faced unfair competition from foreign companies. Therefore, Global tenders will be disallowed in Government procurement tenders up to rupees 200 crores
There are various other benefits of MSME Registration and some of them are listed below:
A discount of 50% will be available on Trademark Registrations.
MSME Registration helps to open the current account easily.
Concession one electricity bill can be enjoyed by making an application to the electricity department along with MSME Registration Certificate.
An enterprise can avail protection if payment is delayed from the buyer’s side and also it can seek help under the arbitration and reconciliation.
It can take credit for minimum alternate tax (MAT) to be carry forward for up to 15 years instead of 10 years
There are many government tenders that are only open to MSME Industries.
MSME certificate allows 1% exemption on the interest rate on overdraft.
The enterprises can easily get the approvals, licenses, as well as registrations once they acquire the MSME certificate.
Customers can recognize an enterprise easily due to the MSME registration.
Enterprises that have MSME registration can enjoy Direct Tax Exemption in the initial year of business, as mention in the scheme by Government and depending on business activity.
Activities specifically Excluded from Coverage under MSME
Ministry of Micro, Small, and Medium Enterprises (MSME) has clarified via notifications that the following activities would be specifically not included in the manufacturing or production of commodities or rendering of services as per Section 7 of the said Act.
Forest and Logging
Fishing and aquaculture
Wholesale, retail trade as well as repair of motor vehicle and motorcycles
Wholesale trade except for motor vehicles as well as motorcycles.
Retail Trade Except for Motor Vehicles as well as motorcycles
Activities of households as employees for domestic personnel
Undifferentiated goods as well as services-producing activities of private households for own
Activities of extraterritorial organizations and bodies
Changes in Effect from 01-07-2020 – Atmanirbhar Scheme
Due to the Atmanirbhar Scheme and to ease the process of doing business, the union of MSME has introduced the new definition of MSME and also the new registration process to be known as the “Udyam Registration.” The new portal takes effect from 01-07-2020.
Difference Between New and Old Registration Process
Basis of Difference
Udyog Aadhar Memorandum
Earlier we can take multiple registrations while using one Aadhar
Now one Aadhar one Udyam registration
One enterprise shall only have on Udyam registration.
No PAN validation
Now PAN validation is mandatory and all the enterprises registering with portal must have PAN and GSTIN.
Number of Employees
Earlier only the number of employees is to be entered.
Now segregation must be given as per Gender.
Linkage with Income Tax, PAN and GST department
Earlier all figures are to be entered manually on a self-declaration basis.
Now, the Udyam portal is lined up with other departments and all the details should be as per ITR (last year filed) and GST.
Composite criteria for the classification of MSMEs
Earlier enterprises were classified into two sectors manufacturing and service sector, and there are separate limits for both the sectors for classification of the same.
Now there are the composite criteria for both the manufacturing and service sector. There is the same limit of Investment and annual turnover for both the sectors for classification.
Amounts of investment had been manually entered.
Investment gets auto-filled based on last year’s filed ITR and in case of the new enterprise, must be filled on a self-declaration basis and this relaxation is available till 31st March after that update is required, else certificate gets suspended.
Udyog Aadhar Memorandum (UAM) is issued instantly at the time of registration only.
After applying for an Udyam Registration Number is issued and Udyam Registration Certificate shall be issued only after verification.
Important Points Related to Udyam Registration
Udyam Registration Certificate
It will have a dynamic QR code from which the web page of the portal and details about the enterprise can be accessed.
Income tax, GST and PAN department
Information verification process takes place due to the association of above departments.
Criteria of the classification
Investment and turnover of enterprises are now composite for both the manufacturing and service sector.
Existing registered enterprises have to re-register with the new portal before 31.03.2021.
PAN and GSTIN are mandatory for registration
In the case of a Company, LLP, Cooperative Society, Trust, Society, GSTIN, and PAN along with its Aadhaar number are mandatory.
In the case of the proprietor, you can continue with Aadhar only on a self-disclosure basis but before 03-2021 you must apply for PAN & GST number and must update the same on the portal.
The registration of the following two portals are also integrated with Udyam Registration Portal for the facilitation of MSME and ease of doing business –
Government e-Market (GeM) portal, and
Reclassification of existing registered enterprises following the new definition
For ascertaining an enterprise as micro, small or medium, an enterprise must fulfill both the criteria i.e., investment and turnover. If the enterprise crosses the ceiling limit of even one criterion, then it will cease to exist in that category and be placed in the next higher category.
But the enterprise cannot be placed in the lower category unless it goes below the ceiling limits specified for its present category in both the criteria of investment as well as turnover.
In case of an upward change (from a lower to a higher category i.e. Micro to small), an enterprise will maintain its prevailing status till the expiry of one year from the close of the year of registration.
In case of reverse-graduation (sliding down to lower category i.e. Small to Micro) of an enterprise, the enterprise will continue in its present category till the closure of the financial year and it will be given the benefit of the changed status only with effect from 1st April of the financial year following the year in which such change took place.
What is the validity of the MSME registration certificate?
There is no expiry of the MSME registration certificate. As long as the entity is ethical and financially healthy there will be no expiry of the certificate.
Can trading companies register under MSME?
No. MSME covers only manufacturing and service industries.
Moreover, the purpose of MSME is to support startups with subsidies and benefits, However, trading companies are like middlemen i.e a link between manufacturer and customer. Hence not covered under the scheme.
Do I need multiple registrations for manufacturing plants in different cities?
No. The MSME registration certificate is for a single entity irrespective of multiple branches or plants. However, information about multiple branches or plants must be furnished.