AdminCentral Government has issued MSME Notification on 26-Jun-2020 laying down new criteria for classifying enterprises as micro, small and medium enterprises. Following are the composite criteria of investment and turnover for classification:
- Micro Enterprise: where the investment in plant and machinery or equipment does not exceed Rs.1 Cr and turnover does not exceed Rs.5 Cr.
- Small Enterprise: where the investment in plant and machinery or equipment does not exceed Rs.10 Cr and turnover does not exceed Rs.50 Cr; and
- Medium Enterprise: where the investment in plant and machinery or equipment does not exceed Rs.50 Cr and turnover does not exceed Rs.250 Cr.
Few benefits of MSME registration are*:
Loans without collaterals:
The Government has introduced various initiatives for MSME/SSI that allow them to avail credit without collateral. One of the best MSME registration benefits, the initiative to provide collateral-free loan is undertaken by GOI (Government of India), SIDBI (Small Industries Development Bank of India) and the Ministry of Micro, Small and Medium Enterprise under the name The Credit Guarantee Trust Fund Scheme. This is by far the best MSME registration benefits for small business owners.
Subsidy on Patent Registration & Industrial Promotion:
Business enterprises registered under the MSME Act are given a hefty subsidy of 50 per cent for patent registration. This can be availed by sending an application to the respective ministry. In addition to this, one of the great MSME registration benefits is to get subsidy for industrial promotion suggested by the Government.
Overdraft facility along with Interest Rate Exemption:
Businesses or enterprises registered as MSME/SSI under the MSME Act are eligible to avail a benefit of 1% on the overdraft as part of the Credit Guarantee Trust Fund Scheme. Although this can vary from bank to bank.
Concession on Electricity:
One of the simplest MSME registration benefits, businesses registered under the MSME Act can avail a concession on electricity bills. All they have to do is submit the bills along with an application and a copy of the registered certificate by MSME.
Protection against Delayed Payments:
Understanding the ambiguity lying with business revenues, the Government has extended a helping hand by providing a layer of protection against payments. As of now, the Ministry of Micro, Small and Medium Enterprise has given business owners and enterprises to collect interest on payments delayed by the buyer.
Under the MSME registration benefits, a buyer is expected to make a payment for the goods/services within 15 days of the purchase. If the buyer delays, the payment for more than 45 days, the enterprise is eligible to charge compound interest which is 3 times the rate notified by RBI.
ISO Certification Charges Reimbursement:
A registered small or medium enterprise can claim the expenses for reimbursement that were spent on ISO certification.
[*www.adityabirlacapital.com]
