21 June 2011
Can anybody explain me what is the definition of Small and medium enterprises (SME)? what are the conditions to be fulfilled to come under its preview?
22 June 2011
“Small and Medium Sized Company” (SMC) means, a company- (i) whose equity or debt securities are not listed or are not in the process of listing on any stock exchange, whether in India or outside India; (ii) which is not a bank, financial institution or an insurance company ; (iii) whose turnover ( excluding other income ) does not exceed rupees fifty crore in the immediately preceding accounting year; (iv) which does not have borrowings ( including public deposits) in excess of rupees ten crore at any time during the immediately preceding accounting year; and (v) which is not a holding or subsidiary company of a company which is not a small and medium - sized company.
Explanation:- For the purposes of the above clause , a company shall qualify as a Small and Medium Sized Company, if the conditions mentioned ther ein ar e satisfied as at the end of the relevant accounting period. (2) Words and expressions used herein and not defined in these rules but defined in the Act shall have the same meaning respectively assigned to them in the Act.
From where you got this definition / Explanation as because it is totally different from the definition given in "Micro, Small and Medium Enterprises Development Act, 2006"
22 June 2011
Can anybody suggest on the following under Micro, Small and Medium Enterprises Development Act, 2006 (SME)?
1. Is Stock Broking Company is eligible to become SME, if yes, then what should be considered will calculation of Turnover (vale of the shares purchased or sold should be taken or only brokerage is to be considered) 2. What is the definition of the term “Equipment” under the act and what all items to be included & excluded from the calculation of the “Investment in Equipments” 3. Procedure for the registration of the Company under SME 4. Merits & Demerits of SME
25 July 2025
Here’s a detailed explanation covering the **definition and conditions for Small and Medium Enterprises (SMEs)**, as per your query:
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### 1. **Definition of Small and Medium Enterprises (SMEs)**
There are two common definitions you might come across:
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#### (A) **Company Law / MCA (Ministry of Corporate Affairs) definition of Small and Medium-Sized Company (SMC)**
* **Equity or debt securities:** Not listed or in the process of listing on any stock exchange (India or abroad) * **Nature of company:** Not a bank, financial institution, or insurance company * **Turnover:** Does **not exceed Rs. 50 crore** (excluding other income) in the immediately preceding accounting year * **Borrowings:** Does **not exceed Rs. 10 crore** (including public deposits) at any time during the immediately preceding accounting year * **Group status:** Not a holding or subsidiary of a company which is not an SMC
#### (B) **Definition under Micro, Small and Medium Enterprises Development Act, 2006 (MSMED Act)**
The MSMED Act classifies enterprises into:
| Enterprise Type | Investment in Plant & Machinery / Equipment (Rs.) | Annual Turnover (Rs.) | | --------------- | ------------------------------------------------- | ---------------------------------- | | **Micro** | Up to 1 crore | Up to 5 crore | | **Small** | Above 1 crore and up to 10 crore | Above 5 crore and up to 50 crore | | **Medium** | Above 10 crore and up to 50 crore | Above 50 crore and up to 250 crore |
This Act specifically covers manufacturing and service enterprises (based on plant, machinery, and equipment investment).
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### 2. **Conditions to be fulfilled to be SME (under MSMED Act)**
* The enterprise must fall within the above investment limits for plant and machinery (for manufacturing) or equipment (for service sector). * The turnover limits are also considered. * Registration under MSMED Act is optional but benefits are available on registration.
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### 3. **Other points from your query**
* **Stock Broking Company:** For turnover calculation, only brokerage income (not the value of shares traded) is considered as turnover. * **Definition of Equipment:** Includes machinery and equipment used directly in the enterprise; excludes land, building, furniture, or vehicles. * **Registration Procedure:** Register online on the Udyog Aadhaar portal or submit Udyog Aadhaar Memorandum to get MSME registration. * **Merits & Demerits:**
* **Merits:** Access to subsidies, easier finance, government schemes, protection under MSMED Act * **Demerits:** Compliance requirements, possibility of scrutiny
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### Summary Table
| Aspect | MCA (Small and Medium-Sized Company) | MSMED Act (Micro, Small, Medium Enterprises) | | ---------------- | ------------------------------------ | ---------------------------------------------------------- | | Definition basis | Turnover, borrowings, listing status | Investment in plant/equipment and turnover | | Turnover limit | Rs. 50 crore | Up to Rs. 250 crore (Medium) | | Borrowings limit | Rs. 10 crore | Not specified | | Registration | Under Companies Act | Optional under MSMED Act via Udyog Aadhaar | | Applicability | Companies | All enterprises including proprietorships and partnerships |
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If you want, I can help you with **links for MSME registration** or **detailed procedure** for any of these definitions. Would you like that?
CAclubindia
