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Benefits of MSME Registration in India

MSME refers to Micro, Small, and Medium Enterprises and is an essential part of the economy in a developing country like India. These industries are also called SSIs or small-scale industries. MSME registration makes it easier for these businesses to avail benefits that the government gives to MSMEs.

As per the MSME Act, a company can acquire MSME registration irrespective of whether it is in the manufacturing or service industry. The Government of India has not made MSME registration mandatory yet. However, getting your business registered under this gives a lot of benefits in terms of taxes, setting up your business, loans, credit facilities, and more.

The MSME Act became operational in the year 2006. Its goal is to help, promote and enhance the competitiveness of India’s micro, small, and medium-sized businesses.

MSME registration process

The entire procedure for MSME registration is online. Udyam registration is the official government website used to register MSME online. Small and medium-sized businesses (MSMEs) can register in the portal under the following two categories.

For new and upcoming entrepreneurs not registered as MSME or those with Entrepreneurs Memorandum-II (EM-II)

For MSME registration, new entrepreneurs and entrepreneurs with EM-II registration must click the “For New Entrepreneurs who are not Registered yet as MSME or those with EM-II” button on the home page. To sign up for a new account, you need to enter the number on your Aadhaar card and your PAN number.

Once you click the “For New Entrepreneurs not Registered as MSME or those with EM-II” button on the home page, the registration page asks for the entrepreneur’s Aadhaar number and name. Once you have put in these details, you must click the “Validate and Generate OTP Button.” You will now receive an OTP, which, once entered, the PAN Verification page will open.

The business owner must enter the “Type of Organization” and the PAN Number, then click the “Validate PAN” button. The portal gets the entrepreneur’s PAN number from government databases and checks that it is correct.

After the PAN is verified, the Udyam Registration form will show up. The entrepreneurs need to fill in their information and information about their business.

After completing the MSME registration form, click “Submit and Get Final OTP.” The MSME online registration process is completed, a message will appear giving a reference number. Make a note of the reference number for future reference. Once verified, the Udyam Registration Certificate is issued.

Registration for entrepreneurs already having Udyog Aadhaar Memorandum (UAM)

Those who already have registration as UAM must click the button “For those having registration as UAM” or “For those already having registration as UAM through Assisted filing,” which will be on the homepage of the government portal. Upon clicking this, a page will open where you must enter the Udyog Aadhaar Number, and you must select an OTP option.

The options are to get the OTP on the phone number or the email address. After selecting the OTP options, click “Validate and Generate OTP.” After entering the OTP, complete the MSME registration form with registration information and complete the Udyam registration.

Documents required for MSME registration

MSME registration includes the Aadhaar Card and PAN Card. It requires no proof of documents. The details linking PAN and GST on investment and turnover of enterprises will be taken automatically from the Government databases. GSTIN and Income Tax Systems get integrated with the Portal.

According to the GST law, paying GST for enterprises not requiring a GST registration is not compulsory. However, the enterprises that need to obtain GST registration under the GST act will have to register for Udyam Registration.

By clicking on the “For New Entrepreneurs not registered as MSME or those with EM-II”, enterprises with UAM registrations or any other registrations issued by any of the authorities under the Ministry of MSME will have to re-register on the Udyam Registration Portal.

By 30/06/2022, enterprises with UAM registrations must migrate to Udyam Registration. If entrepreneurs with UAM registration do not migrate to Udyam Registration by the date above, then the UAM registration will be invalid, and they will not be eligible for the benefits usually provided to MSMEs.

Eligibility Criteria for applying for MSME Registration

An MSME registration or Udyog Aadhaar is only available to entities classified as micro, small or medium enterprises under the following criteria:

In the case of entities that are engaged in manufacturing or production of goods:

Microenterprise:

Any entity where the investment in plant and machinery is less than Rs. 25 lakhs

Small enterprise:

Any entity where the investment in plant and machinery is less than five crores but more than 25 lakhs

Medium enterprise:

Any entity in which the investment in plant and machinery is less than Rs. 10 crores but more than Rs. 5 crores

In the case of entities that are engaged in providing or rendering services:

Microenterprise:

Any entity with equipment investment is less than Rs. 10 lakhs.

Small enterprise:

Any entity where the investment in equipment is less than Rs. 2 crores but more than Rs. 10 lakhs

Medium enterprise:

Any entity where the investment in equipment is less than Rs. 5 crores but more than Rs. 2 crores

Benefits of MSME registration

The benefits of MSME registration are as follows:

  • The MSME Registration makes bank loans cheaper because the interest rates are meagre, between 1% and 1.5%. Interest on regular loans is a lot lower than that.
  • The Minimum Alternative Tax (MAT) credit can be carried forward for up to 15 years instead of 10.
  • Registration reduces the cost of getting a patent or setting up a business since rebates and discounts are available.
  • The Udyam Registration Portal is linked to the Government e-Marketplace and several other State Government portals, making accessing their markets and e-tendering easier.
  • MSME on-paid amounts are subject to a one-time settlement fee.
  • As a result of the Udyam Registration, MSMEs will be able to take advantage of government programmes such as the Credit Guarantee Scheme, the Credit-Linked Capital Subsidy Scheme, the Public Procurement Policy, and protection against late payments.
  • Small and medium-sized businesses can get loans from banks in the priority sector.
  • MSMEs can participate in e-tenders with a government security deposit waiver.
  • Several activities can be listed on one registration, whether service-oriented or manufacturing-oriented.
  • Payment for barcode registration
  • Plan to get out of paying direct taxes
  • ISO certification fees reimbursement
  • Bills for electricity go down
  • Special consideration is given to international fairs.

Conclusion

The economy is dependent on micro, small, and medium enterprises, which are known to be growth engines for all developing countries. They provide employment opportunities to the weakest and poorest strata of society, enabling them to escape perpetual poverty. MSMEs provide large-scale employment with low investments and hold a prominent position in the economy as the second largest employer after agriculture. MSMEs contribute industrialisation of rural and backward areas, reducing regional imbalances and ensuring an equitable distribution of national income and wealth.

FAQs

Is Udyam Registration the same as MSME Registration?

Yes, Udyam Registration has taken the place of MSME Registration, also known as Udyog Aadhaar Registration.

Do you need an Aadhar card?

Yes, you must have an Aadhaar card to sign up for Udyam. If the applicant is not the owner, the Partner and the Director's Aadhaar cards are needed.

Does the MSME registration certificate have an expiry?

The Udyam Registration Certificate does not have an end date, and the certificate is valid till the entity is ethical and financially stable.

Can you register for a second MSME after already done so?

The Proprietor can apply for MSME registration when the businesses are separate, with different names and individual registrations or incorporations. But an entity cannot fill out more than one Udyam Registration form. All activities, like manufacturing or providing services, should be listed or added to one Udyam Registration.

About Author

My name is Aangi Sanghvi. I am a budding lawyer, currently in my 4th year. I will be graduating from Pravin Gandhi College of Law in the year 2024. I have interned at law firms and enjoy researching and content writing. My interests include IPR, Real Estate, and Corporate law. I am a curious person by nature and make a conscious effort to gain as much knowledge as I can. In other aspects, I enjoy travelling and music.