Decoding the Benefits and Procedure of MSME Registration

Micro, small and medium enterprises (MSME), or small and medium-sized enterprises, play a vital role in the economic growth of developing countries. In the past five decades, MSMEs have helped India reduce economic inequality, the rural-urban gap, and regional imbalances. India's SME sector produces more than 6,000 different products, accounting for 45% of total industrial jobs, 50% of total exports, and 95% of the country's industrial units.

To further promote the growth and development of MSMEs, the Ministry of MSMEs offers a plethora of rewards-based benefits, schemes, programs and competitions that provide global exposure to registered MSMEs. Additionally, MSME registration opens doors to these opportunities, enabling businesses to leverage these initiatives for their advancement.

Online MSME registration

You can register your small or medium-sized enterprise by filling out the MSME registration form online or offline. However, the online Udyog Aadhaar method is convenient and reduces the chances of error.

Below is a list of MSME registration steps that must be followed.

• Access the official website for MSME registration

• Enter your Aadhaar number and name in the fields marked 'Aadhaar Number' and 'Entrepreneur's Name'

• Click on "Validate and create one-time password" and enter the one-time password you received on the registered phone number

• After verifying the details, you will be redirected to the form you need to fill

• Fill in all the appropriate fields. Be very careful when filling in the "Principal Activity" and "National Industry Classification Code" fields

• After entering the details, double check your entries to make sure there are no mistakes

• Navigate to the bottom of the page and select the "Submit" option

• You will receive a one-time password (OTP) on your registered mobile number

• Log in and click the final "Submit" button to complete your application

Documents required for MSME registration

Make sure you have these documents ready before starting the MSME registration process to minimize delays. Below is a list of documents you may need.

Now that you are familiar with the MSME registration procedures and required documents, look at the advantages you have.

Partnership deed: Essential for organizations that are partnerships. For a company, it is necessary to submit both copies of the articles of association and the memorandum of association.

Proof of business address: If you own your business location, you will need to provide the possession letter, allotment letter, or property tax receipt. For rented properties, you'll need a rent receipt, utility bills, and an NOC from the landlord.

Purchase bill and sale bill: A bill of sale is created for each final product supplied, while a bill of sale is obtained for the purchase of raw materials. These documents provide proof of your business transaction.

Licences and machinery bills: A business license from the Indian government will be provided along with invoices or receipts for machine purchases based on your business type.

What benefits does MSME Registration offer?

Once your organization is registered on Udyam, you can avail tax benefits, subsidies, SME loans and much more. Here are some of the advantages of MSME registration in India:

Attractive rates of interest offered on loans for MSMEs  – Bank loans for registered MSMEs are available at an attractive interest rate. There are some lending programs for small businesses and MSMEs that do not require collateral to obtain an MSME loan. IndusInd Bank offers a wide range of financial assistance to SMEs with customized offers. MSME registration enhances the eligibility criteria for such loans and financial assistance programs.

50% discount on patent filing fees – To patent their business ideas and processes, registered MSMEs are eligible for an incentive of up to 50%. To use this government program, a registered SME registration certificate is required.

Waiver of overdraft interest fees for MSMEs – Registered MSMEs can get a discount of up to 1% on the interest they pay at any bank or financial institution.

Eligibility for Industrial Promotion Subsidy – Under many government programmes, registered MSMEs can obtain industrial promotion subsidies to spread awareness of their company around the world. This may include receiving compensation for attending trade shows, marketing campaigns and other events.

Take action against deferred payments – When one registered MSME provides goods or services to another company and payment is not made within 45 days, the government gives the MSME the ability to charge compound interest on the unpaid balance each month. The interest to be paid is three times the rate authorized by the Reserve Bank of India.

Electricity bill support – In the case of manufacturing facilities, registered MSMEs are also eligible for discounts on electricity bills in certain circumstances.

ISO Certification at No Cost - The Indian government is committed to covering all ISO registration fees in case registered MSMEs obtain ISO certification. Unregistered MSMEs are not eligible for this refund.

Long-Term Tax Benefits – Only registered MSMEs are eligible for the maximum 15-year term of the Minimum Alternative Tax Credit (MAT), versus the standard 10-year extension for all other businesses.

Access to Government Tenders - Since the Udyam registration portal is directly connected to a number of government e-marketplaces and state government portals for issuing tenders, registered MSMEs can get additional assistance and enhanced access to government contracts.

The MSME sector in India is filled with huge potential. To enhance its capabilities and resilience, the Government of India has launched several programs to provide support to existing enterprises and encourage the creation of new enterprises. MSME registration plays a crucial role in availing benefits from these programs and initiatives. Micro, small and medium enterprises are, and will continue to be, engines of sustainable economic growth, equitable creation of opportunities, and elimination of the rural-urban gap.

FAQs

Q. Why is MSME important?

A. In India, MSMEs are among the most important pillars of our economy. At present, there are more than 6 crore MSMEs functional in the country, providing more than 11 crore jobs to the people. The sector contributes approximately 30% to India's GDP and has a share of approximately 50% of India's exports.

Q. What is MSME and its features?

A. The Micro, Small and Medium Enterprises (MSMEs) support industries as ancillary units, thereby contributing enormously to the overall industrial development of the country. These enterprises are engaged in the production, manufacturing and processing of goods and commodities.

Q. Is MSME registration mandatory?

A. MSMEs are classified in terms of their investments and annual turnovers (refer to the table below). The government of India has made MSME registration mandatory to bring more businesses into the formal sector

Q. Is GST mandatory for MSME?

A. The GST number is not mandatory for the MSME registration process for businesses or entities that do not require GST registration. However, enterprises or businesses whose annual turnover is above INR 40 lakhs are taxable entities. So, they need to have a GST registration number.

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