Benefits of MSME Registration in India

Micro, small and medium enterprises, more popularly known as MSME, are an important sector globally and is considered as an engine of economic growth, promoting equitable development for all. To have more understanding about MSME, first let us understand its classification.

MSME can be classified in the following manner:

Composite Criteria 

Investment in Plant & Machinery/equipment and Annual Turnover

The MSME ministry has made it mandatory for every manufacturing and service-providing enterprise to register under the Udyam portal. To support and promote MSMEs, the Government of India, through various subsidies, schemes, and incentives, promote MSMEs through the MSMED Act. Some of them are described below:

1. Bank Loans (Collateral Free)

The Government of India has made collateral-free credit available to all small and micro-business sectors. A trust named The Credit Guarantee Trust Fund Scheme was introduced by the Government Of India, SIDBI(Small Industries Development Bank Of India) and the Ministry of Micro, Small and Medium Enterprise under which collateral-free loan eligibility is awarded.

2. Subsidy on Patent Registration

MSME-registered enterprises can avail the benefit of 50% subsidy on their patent registration fees by making an application to the respective authority.

3. Overdraft Interest Rate Exemption

Businesses and enterprises registered as MSMEs can avail a benefit of 1% exemption on the Interest Rate on OverDraft in a scheme that differs from bank to bank and on the basis of reported turnover.

4. Industrial Promotion Subsidy Eligibility

Businesses that have been registered as MSMEs are eligible for subsidies for Industrial Promotion as provided by the Government.

5. Protection against Payments (Delayed Payments)

Any buyer of goods or services from any registered MSME are required to make the payment on or before the agreed date of payment or within 15 days from the day they had accepted the goods or services. If the buyer delays the payment for more than 45 days after accepting the products or services then the buyer has to pay interest on the amount that was agreed to be paid. The interest rate is three times the rate that is notified by the Reserve Bank of India.

6. Fewer Electricity Bills

All companies that have the MSME Registration Certificate are entitled to concessions on their electricity bill.

7. ISO Certification Charges Reimbursement

Any registered micro, small and medium enterprise can claim reimbursement of the expenses that were made in order to obtain an ISO certification. This motivates entrepreneurs to get their respective businesses ISO certified which helps them to do business abroad in terms of high-quality exports.

8. Access to International Trade Fairs

Business delegates from the registered MSMEs are funded by the government of India to participate in international exhibition trade fairs and trades meets or for knowledge exchange in the seminars and conferences held across the globe.

9. Waiver of Stamp Duty & registration fees and Exemption on Direct Tax Laws

Mainly from Stamp Duty and Registration and processing fee for the new industrial units as well as Direct Tax exemption in the initial years of establishment of the unit until profit generation.

10. Tenders

The Government reserves tenders particularly to the MSMEs in order to promote their growth. In order to help these industries advance technologically, a scheme called the Credit Linked Subsidy scheme is in force for the up-gradation and utilization of technology by these establishments.

11. Relief to startups in carrying forward and setting off losses

The Budget 2023 provided relief to startups by giving the MSME benefit of carry forward of losses on a change of shareholding of startups from seven years to ten years. The condition of continuity of a minimum of 51% shareholding to set off of carried-forward losses is relaxed for eligible startups if all company shareholders continue to hold those shares. Certain startups are eligible for tax benefits if they are incorporated before 01/04/2023. The period of incorporation of such eligible startups for receiving tax benefits is extended by one more year, i.e. 01/04/2024.

12. Champions

Creation and Harmonious Application of Modern Processes for Increasing the Output and National Strength

This is a new, unified, integrated, technology-driven portal of the MSME. It has been developed as a single-window portal for any issues or inquiries related to MSMEs. It is just like an encyclopedia containing all the information and news which is concerned with the MSMEs. It is constantly upgraded with frequent changes happening in the schemes, laws, rules, and regulations. It also acts as a nodal portal to manage and provide updated information regarding the other important flagship schemes of the MSME ministry (SAMPARK, SAMBANDH, SAMADHAN, AND TReDS) 

It has a list of FAQs on various current and relevant topics which will answer most of your doubts like:

• General Questions
• Atma Nirbhar Bharat 3.0 Stimulus package
• Economic Package for MSME Sector Announced by the prime minister
• Government E-Marketplace
• Income Tax
• Goods and Services Tax
• Labour and Employment
• Transport and Movement of Essential Goods
• Industrial Regulations
• MSME Schemes
• Finance    and so on

Three basic objectives of the CHAMPIONS

• To provide assistance to the MSMEs in any hardships and bottlenecks faced by them in terms of finance, raw materials, labor, permissions, etc.
• To enable and expedite the process of capturing new opportunities in the manufacturing and services sectors by the MSMEs.
• To identify and nurture the sparks, i.e., the bright MSMEs who can withstand the external pressures at present and become national and international champions.
• The author is a practicing Chartered Accountant and can be reached at cashubhikhandelwal@gmail.com