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Accounting, Business, Finance, Taxes

MSME – BENEFITS

Finance Ministry latest press conference on 13th May 2020 proposed to change the definition of MSME ( Micro, Small and Medium Enterprise) in order to bring both service & manufacturing sector MSMEs under the same bracket of  composite criteria of investment and turnover.

Revised MSME Classification

Classification  Micro  Small  Medium
Manufacturing & Services Investment less than Rs. 1 crore and Turnover less than Rs.5 cr. Investment less than Rs . 10 crore and Turnover less than Rs.50 cr. Investment less than Rs.20 crore and Turnover less than Rs.100 cr.

Few Benefits of getting registered your business under MSME-

  1. Bank Loans (Collateral Free) – The Government of India has made collateral-free credit available to all small and micro business sectors.
  2. Subsidy on Patent Registration- A hefty 50% subsidy is given to the Enterprise that has the certificate of registration granted by MSME.
  3. Overdraft Interest Rate Exemption- Businesses or enterprises registered under MSME can avail a benefit of 1% on the Over Draft as mentioned in a scheme that differs from bank to bank. Rate of Interests are lower for the registered ones as compared to other enterprises for other business loans as well.
  4. Industrial Promotion Subsidy Eligibility- Enterprises registered under MSME are also eligible for a subsidy for Industrial Promotion as suggested by the Government.
  5. Protection against Payments (Delayed Payments) for the services rendered/ goods sold by MSMEs.
  6.  Fewer Electricity Bills- This concession is available to all the Enterprises that have the MSME Registration Certificate by providing an application to the department of the electricity along with the certificate of registration by MSME.
  7. ISO Certification Charges Reimbursement-The registered MSME enterprises can claim the reimbursement of the expenses that were spent for the ISO certification.
  8. Lower Income Tax rate for MSMEs like 22%/ 15% on its taxable income subject to certain conditions.
  9. Capital subsidy is given to the businesses which upgrade from the use of obsolete technology.
  10. It’s a boon for the women entrepreneurs to start their own businesses with the Govt providing them with requisite capital, counseling and training.
  11. E Market linkage for MSMEs to be promoted to act as a replacement for trade fairs and exhibitions.
  12. MSME receivables from Gov and CPSEs to be released in 45 days

Activities excluded from the MSME Act 2006:

  • Wholesale, retail trade and repair of motor vehicle and motorcycles
  • Wholesale trade except for motor vehicles and motorcycles.
  • Retail Trade Except of Motor Vehicles and motor cycles
  • Undifferentiated goods and services producing activities of private households for own

Thus in order to fully benefit from the recent benefits announced for the MSMEs and in order to recoup the business from the currently worsening pandemic situation any business falling under the above stated investment and turnover limits should think of get registering themselves as MSME.  

For more information/ clarification and to know the registration process, write us back with your queries, if any.

email- enquiry@rsmsandassociates.com