If you own a business that qualifies as a micro, small, or medium-sized enterprise but you have not registered under the MSME Act 2006, you are missing out on a lot of benefits you may be entitled.
How to check if your business qualifies as an MSME?
Both manufacturing and services industries can qualify as an MSME depending on the amount of investment in plant and machinery.
For enterprises in manufacturing to qualify as an MSME, their investment in plant, machinery and infrastructure must be:
- Less than Rs 25 lakh for micro-enterprises
- More than Rs 25 lakh but not exceeding Rs 5 crore for small enterprises
- More than Rs 5 crore but less than Rs 10 crore for medium-sized enterprises
For enterprises in the services to qualify as an MSME, their investment in plant, machinery, and infrastructure must be:
- Less than Rs 10 lakh to qualifies as a micro-enterprise
- More than Rs 10 lakh but does not exceed Rs 2 crore to qualify as a small enterprise
- More than Rs 2 crore but less than Rs 5 crore to qualify as a medium-sized enterprise
Here’s what the budget presented for MSMEs
- Government Incentives: Registering your business under the MSME Act will entitle you to receive government incentives, subsidies, tax exemptions, rebates and collateral-free loans.
- Monetary Advantages: Businesses registered under the MSME Act will also be entitled to benefits such as reimbursement of expenses incurred for infrastructure development, obtaining ISO certification, a reduction in the fee for IPR filings.
- Priority Lending: As directed by the RBI, banks are required to earmark a certain portion of funds that must be lent to MSMEs. Registered MSMEs can easily avail this capital to meet their long and short term financing needs.
- Access to International Fairs: Being categorized as an MSME will also make you eligible to receive non-monetary benefits such as market assistance, an opportunity to participate in and gain access to national and international fairs, trade-related events and exhibitions to showcase your product/services and expand your business.
- MSEFC: Another major benefit of registering under the MSME Act is that buyers of goods or services that are manufactured or provided by an MSME are liable to make payments for the same within the timeline specified in the agreement between the parties or within 45 days. In the event of delayed payments, the state government’s Micro and Small Enterprise Facilitation Council (MSEFC) is responsible for settlement of disputes relating to delayed payments. The Act also directs that every reference made to MSEFC has to be decided within ninety days.
In addition to the central government, MSMEs can also receive incentives from State governments. Those include tax and power tariff and capital investment subsidies, tax holidays, partial GST refunds, reduced stamp duty and more.
The government is now beginning to see how the growth of your micro, small or medium-sized business is contributing to the growth of the Indian economy. In order to help your business scale, the government has recognized and implemented multiple schemes you can benefit from if you register under the MSME Act. Whether you want to obtain working capital loans or gain access to international markets for expansion, registering your business under the MSME Act will be a step in the right direction. Registration is also made easy for you, you can visit the Online MSME portal and register your business online. The website offers detailed information on the documents required for registration and more.