Notification issued by the Ministry of Micro, Small and Medium Enterprises on 26th June, 2020 wherein it lays down certain criteria for classifying the Enterprises as Micro, Small or Medium Enterprises (MSME). This notification shall come into force w. e. f. 1st July, 2020.
Earlier the enterprises were classified into two divisions.
Manufacturing enterprises – engaged in the manufacturing or production of goods in any industry & Service enterprises – engaged in providing or rendering services
Now, the distinction between the manufacturing and the services sectors under the MSME definition has been removed.
The following is the revised MSME classification, where the investment and annual turnover, both are to be considered for deciding an MSME
Classification as a micro, small or medium enterprise
(i)a micro enterprise, where the investment in plant and machinery or equipment does not exceed one crore rupees and turnover does not exceed five crore rupees;
(ii)a small enterprise, where the investment in plant and machinery or equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees; and
(iii)a medium enterprise, where the investment in plant and machinery or equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees.
Benefits of registration under MSME:
- Collateral free loans from banks under Credit Guarantee Fund Scheme
- Interest rate Subsidy on Bank loans
- Protection against delay in receiving payments from customers,if delay is beyond 45 days, against material/services supplied
- Credit period for Minimum Alternate Tax (MAT) to be carried forward for up to 15 years instead of 10 years.
- Many government tenders are open only to the MSME Industries with concessions in cost of tenders, exemption from payment of Earnest Deposit, Waiver of Security Deposit etc.
- MSME Registered entity gets eligible for CLCSS (credit linked capital subsidy scheme); 15% Credit Linked CGSTI Subsidy Scheme (CLCSS)
- Eligible for Industrial Promotion Subsidy (IPS)
- Special consideration on international trade fairs
- ISO certification fees reimbursement
- Concession in electricity bills
- Enterprises that have MSME Registration are eligible for Counter Guarantee from Government of India through CGSTI
- Special beneficial reservation policies in the manufacturing/ production sector
- Ease of obtaining registrations, licenses, and approvals.
- Government security deposit (EMD) waiver (Useful while participating tenders)
- Stamp duty and registration fees waiver
- Direct tax laws rules exemption
- NSIC performance and credit rating fees subsidy
- Patent registration subsidy
- Barcode registration subsidy
Mandatory re-registration of existing Enterprises:
The notification makes it mandatory for all the existing Enterprises registered (up to 30th June, 2020) under EM Part-II or Udyog Aadhaar Memorandum (UAM) to re-register on or after 1st July, 2020. The existing registration of Enterprises shall be valid up to 31st March, 2021.
To read more on:
Calculation of investment in plant and machinery or equipment.
Calculation of turnover
Updation of information and transition period in classification, refer the notification here: