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MSME

As I work in finance industry, I thought of sharing and increase my knowledge in various sectors of Finance and its related fields. Hence to start with I come up with the idea to explore about MSME like what is MSME, what does it mean, what is the process of registering as an MSME, its benefit etc. So to begin with, let’s first understand, what is MSME?

Full form of MSME is Micro, Small and Medium Enterprise which is governed by MSME Act, 2006. MSME units are regulated by the Ministry of Micro, Small and Medium Enterprises, which is a branch of Government of India whose job is to formulate and administrate rules, regulations and laws related to MSME enterprises in India. Currently i.e. as on September’20, Mr Nitin Gadkari is the minister of MSME.

In which category a business unit is as per revised definition which came into effect from July 1, 2020 depends upon two factors, one is Investment in plant and Machinery and another is turnover achieved by the entity in previous year

 

Micro

Small

Medium

Manufacturing and Service Industry (Same for Both)

Investment in plant and machinery < INR 1 Cr and turnover is < INR 5 Cr.

Investment in plant and machinery < INR 10 Cr and turnover is < INR 50 Cr.

Investment in plant and machinery < INR 20 Cr and turnover is < INR 100 Cr.

 Now the next question is, what are the major benefits of registering as an MSME Units:

·         Priority lending: As per RBI guidelines, banks have to give first priority to MSME for        lending. So MSME registered unit is preferential when it comes to lending

·         Lower Interest rate: MSME units have added advantage of getting lower interest rates when compared with Non MSME units

·         Income tax Exemptions: Government has given relief under Sec 44 AD to MSME unit to file their returns under presumptive taxation scheme.

·         CGTMSE: Government has set up a separate nodal agency which gives guarantee on behalf   of borrowers to the bank under which borrower gets unsecured loans and banks gets assurance from Govt for repayment of loan

How to get register as an MSME Units and what is the process will be discussed in next blog, till then Stay Tuned for Sharing Knowledge.

Comments

Kavinesh said…
Presumptive taxation scheme (PTS) allows you to calculate your tax on an estimated income or profit. The scheme can be used by businesses having a total turnover of less than Rs2 crore and eligible professionals with gross receipts of less than Rs50 lakh in a financial year.
Presumptive Taxation under section 44AD
25 June 2021 at 06:51
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