Sandeep Ahuja & Co.

Established in the year 1986, we are a leading chartered accountancy firm based in Delhi & NCR rendering comprehensive professional services which include statutory audit, internal audit, direct tax, transfer pricing, GST, bank audit, propriety audit, cost accounting, internal financial controls and risk advisory.

Monday, December 12, 2016

Micro, Small and Medium Enterprises Registration, benefits and requirements

The definition of micro, small and medium enterprises as per Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 is as under:
Enterprises engaged in the manufacture or production, processing or preservation of goods as specified below:
          A micro enterprise  is where investment in plant and machinery is less than Rs. 25 lakh
          A small enterprise  is where the investment in plant and machinery is more than Rs. 25 lakh but less than Rs. 5 crore
          A medium enterprise is  where the investment in plant and machinery is more than Rs.5 crore but less than Rs.10 crore.
It has made very easy for enterprises that are having MSME Certificate to obtain Licenses, approvals and registrations on any field for their business from the respective authorities as they can produce the Certificate of MSME Registration while making application.
Information required for seeking registration and obtaining certificate of MSME:
          Personal Information: Name of the applicant, Aadhar Number,Social Category i.e SC/ST etc., Mobile Number, E Mail ID, Address with Pin code
          Business Information : Name of Enterprise,Type of organization, Address of Operation, Date of Commencement of Business, Main Business Activity with NIC 2 Digit Code, Number of  employees, Investment in Plant & Machinery
          Other Info: Bank Particulars, Name and Branch Address of Bank, Account Number, Type of Account, IFSC Code
Documentation and registration
-       Aadhar is mandatory of Individual/ owner/ partner/occupier
-       PAN Card
-       Address with Pin code ( Address Proof)
-       E Mail ID and Mobile
-       Statutory Fee Rs.1481/-
-       Registration facility is provided for online and offline
Benefits :
-       Support Available for Technology Upgradation
·         Ministry implements a scheme called Credit Linked Capital Subsidy Scheme (CLCSS) for technology upgradation of Micro and Small enterprises in the country. Under the scheme, 15 per cent capital subsidy, limited to maximum of Rs 15 is provided to the eligible MSEs for upgrading their technology with the well-established and improved technology as approved under the scheme. 48 products and sub-sectors have been approved under the CLCSS till date.
·         The rating fee payable to SMERA and ICRA by the micro and small enterprises is subsidized for the first year only and that is subject to maximum of 75% of the fee or Rs. 40000/-, whichever is less
-       Financing through banks available to MSME at Concessional rates
The banks have been advised by RBI for extension of credit facilities for the MSE sector - working capital limits to such units is computed on the basis of minimum 20% of their estimated turnover up to credit limit of Rs.5crores.
·         A composite loan limit of Rs.1crore ( term loan and working capital)  can be sanctioned by banks to enable the MSME though Single Window
·         Collateral free loans and advances by banks in the case of loans upto Rs 10 lakh extended to units in the MSE sector. Further banks may, on the basis of good track record and financial position of MSE units, increase the limit of dispensation of collateral requirement for loans up to Rs.25 lakh.
·         1 % interest exemption on Overdraft to MSME
·         The Credit Guarantee scheme (CGS) seeks to reassure the lender that, in the event of an MSE unit, which availed collateral- free credit facilities, fails to discharge its liabilities to the lender, the Guarantee Trust would make good the loss incurred by the lender up to 85 % of the outstanding amount in default.
-       Concessions in International Fairs  and ISO Registrations:
·         Financial assistance is provided on reimbursement basis to Govt and Non- Govt organizations associated with MSME for deputation of MSME business delegation to other countries for exploring new areas of MSMEs, participation by Indian MSMEs in international exhibitions, trade fairs, buyer seller meet and for holding international conference and seminars which are in the interest of MSME sectors.
·         Micro & Small Enterprises (MSEs) can get the reimbursement of certification expenses up to 75% of such expenses or Rs.75,000/- ( Whichever lower)  to each unit as one-time reimbursement only to those MSEs which have acquired Quality Management Systems (QMS)/ISO 9001 and /or Environment Management Systems (EMS)/ ISO14001and / or Food Safety Systems (HACCP) Certification.
-       Concession in interest rates and priority for payment :
·         Banks are advised to give interest subsidy of 1% on Overdraft to MSME
·         MSMED ACT 2006 Provides payments priority as under
ü  The buyer is to make payment on or before the date agreed on between him and the supplier in writing or otherwise within 45 days
ü  The agreement between seller and buyer shall not exceed more than 45 days
ü  In case of delay by buyer in making payment of the amount to the supplier, buyer is liable to pay compound interest with monthly rests to the supplier on the amount from the appointed day or, on the date agreed on, at three times of the Bank Rate notified by Reserve Bank.
-       Bar Code Registration Subsidy and Other Subsidies
·         Enterprises that have MSME Registration can avail Bar Code Registration subsidy.
·         Enterprises that have MSME Registration can avail Subsidy on NSIC Performance and Credit ratings
·         Enterprises that have MSME Registration can avail 50% subsidy for patent registration application
-       Government Tendering benefits
·         Issue of tender documents free of cost
·         Waiver of Security deposits
·         Exemption from withholding of earnest money from payments  
·         Enterprises having MSME Registration have preference in procuring govt tenders.
·         Enterprises having MSME Registration can avail price preference by 15% variation for L1 in procuring govt tenders.
-       Other benefits
·         Enterprises having MSME Registration can avail Discount in electricity bill payments by making an application with electricity department

·         Startup Enterprises having MSME Registration can avail Excise Exemption where as term depends on the business activity and nature of business.

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