Introduction
Do you know that in India, small companies comprise 96% of industrial units? The importance of these industries cannot be undermined. They contribute 40% to the nation’s total industrial production and 42% to its exports. Moreover, they provide diverse opportunities across rural and urban regions of the country.
Suffice it to say, that this is the era of the rise of MSMEs and their advent is directly supported by the government of India, through the Union Ministry of Micro, Small and Medium Enterprises, falling under the MSMED Act, 2006.
Supported by a multitude of campaigns and benefits, every business, including yours, that falls under the banner of MSME would profit greatly from undergoing MSME registration in India. So, let’s delve into the process of MSME registration in India: Procedure, documents, and benefits.
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MSME industry classification
Before understanding the nitty gritty, let us understand which portion of the MSMEs your business falls into. Pre-2018, MSMEs were sorted by investment. Post-regulation change, they’re classified by annual turnover and sector (manufacturing or service). The updated criteria are as follows:
- Micro enterprise: Annual turnover up to ₹5 crores
- Small enterprise: Annual turnover between ₹5 crores and ₹75 crores
- Medium enterprise: Annual turnover between ₹75 crores and ₹250 crore
Documents required for MSME registration
The MSME registration process is completely online. Thus, all you need to do is keep the documents in front of you while you fill out the details on the website. The documents required for MSME registration are as follows:
- The entrepreneur’s PAN card number
- The entrepreneur’s Aadhaar card number
- The proprietor’s Aadhaar card number
- In case you have a managing partner, you need their Aadhaar card number as well
- In case you fall under the purview of the Hindu Undivided Family (HUF), you need the Aadhaar card number of the Karta
- Aadhaar card number of the authorized signatory of your Limited Liability Partnership (LLP), Company, Cooperative Society, or Trust
- The Goods and Services Tax identification number (GSTIN) of the enterprise
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How to register for MSME in India?
MSME registration online is also known as MSME Udyam Aadhaar registration. MSMEs must register for this to utilize the benefits of the special schemes launched by the Ministry of MSME and Priority Sector Lending from banks.
The registration is connected to the Central Board of Direct Taxes (CBDT) and Goods and Services Tax Network (GSTN) databases. This facilitates easier business operations for you.
The online registration process is the most convenient and is done through the Udyam portal (Udyamregistration.gov.in), launched on 1st July 2020.
Follow these steps for the MSME registration process.
- Step 1: Visit the Udyam registration portal.
- Step 2: Scroll down just a little and then click on ‘For new entrepreneurs who are not registered yet as MSME or those with EM-II.
- Step 3: A new page will open up. Here, you have to enter your Aadhaar Number and the Name of Entrepreneur. Once done with that, click the Validate & Generate OTP button.
- Step 4: You will receive an OTP on the phone number that is linked with the Aadhaar number you supplied. Type in the OTP and click on the Validate button.
- Step 5: Now, move on to the PAN verification webpage. The details you have to enter here include:
- Type of organization, micro, medium, or small
- Your PAN number
Once filled, click the Validate button. Do not forget to declare whether you have filed your previous year’s Income Tax Return (ITR) or not. Additionally, specify if you are in possession of a GST Identification Number (GSTIN).
- Step 6: You will now gain access to the Udyam registration application form. The required details that you must fill in here include:
- Name of the entrepreneur
- The mobile number of the entrepreneur
- Name of the organization
- The location where the plant/unit is/will be constructed
- The physical address of the enterprise HQ
- The status of the enterprise
- The entrepreneur’s or the enterprise’s bank details
- Unit activity
- NIC code
- Number of currently employed individuals
- Step 7: Click Submit. Another OPT will arrive.
- Step 8: Type it out and submit the form. The Udyam e-registration certificate will reach you through your email. You can then download it and get a printout.
The MSME registration fees is zero which means completely free of cost.
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Benefits of MSME registration
Registering to Udyan will give you you the following MSME registration benefits:
Collateral-free bank loans
It can be really hard for micro to mid-sized businesses to secure the necessary capital from bank loans. That’s because you don’t have the initial resources that you can mark as collateral. However, with the MSME registration, the government provides credit guarantee schemes to banks. This makes it much safer for them to lend to you. And you get your capital without having to pledge assets as security.
Lower interest rates
With an MSME-registered business, you can benefit from lower interest rates while retaining priority credit. The interest itself begins from 8.75% p.a., which is extremely low. Moreover, MSME loans entail minimal additional expenses, such as processing fees, without any hidden charges.
Tax benefits
The Income Tax Act provides MSMEs with income tax exemptions under Section 80J, applicable for a period of 7 years from incorporation. Additionally, MSMEs engaged in the production of items such as mineral oil, natural gas, and fertilizers can benefit from a tax holiday under Section 80-IB for 5 years from the commencement of production.
Furthermore, MSMEs with an annual turnover exceeding ₹50 Crores are eligible for a reduced tax rate of 25% under Section 115BA. There are many other advantages like GST benefits, Capital Gains exemption, and investment allowances.
Patent registration subsidiary
MSMEs are eligible to receive a 50% subsidy on the total expenses incurred for patent registration. This significantly reduces the financial burden associated with safeguarding your inventions and innovations.
Free ISO Certification
MSMEs can receive costly yet essential ISO certifications for free.
Conclusion
MSMEs are the lifeblood of India’s economy and the government is doing its utmost to promote them. Don’t fall behind others and secure consistent long-term growth for your business by availing of these benefits through MSME registration in India. For more useful information on everything financial, visit StockGro now!
