MSME – Micro, Small and Medium Enterprise Development Act 2006

Definitions of Micro, Small & Medium Enterprises In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006 the Micro, Small and Medium Enterprises (MSME) are classified in two Classes:

  1. Manufacturing Enterprises – The Manufacturing Enterprise are defined in terms of investment in Plant & Machinery.
  2. Service Enterprises:-The enterprises engaged in providing or rendering of services and are defined in terms of investment in equipment

 

Eligibility :-

Micro Enterprises: These are the smallest entities, of course. Micro manufacturing enterprises have
investment of less than Rs.25 lakh in plant and machinery, while micro service enterprises have less than
Rs.10 lakh invested in equipment.

Small Enterprises: Small manufacturing enterprises may have between Rs.25 lakh and Rs.5 crore
invested in plant and machinery, while small service enterprises may have between Rs.10 lakh and but
less than Rs.2 crore invested in equipment.

Medium Enterprises: Medium manufacturing enterprises may have between Rs.5crore and Rs.10crore
invested in plant and machinery, while Medium service enterprises may have between Rs.2crore but
less than Rs.5crore invested in equipment.

For manufacturing entities, however, land and building cannot be counted toward the total investment.
Also, the original cost of the equipment and plant and machinery is taken into account; depreciation
cannot be factored in. Any business entity may apply, be it a partnership or a company. Sole proprietors
may also apply.

New Classification Criteria (based on turnover) –
Micro enterprise: It will be unit with annual turnover does not exceed Rs.5crore.
Small enterprise: It will be unit with annual turnover is more than Rs.5crore but does not exceed
Rs.75 crore.
Medium enterprise: It will be unit with annual turnover is more than Rs.75crore but does not exceed
Rs.250 crore.

Procedure to Obtain MSME –
1) Fill up the Application Form
2) Make online payment
3) Receive Certificate on E-Mail
Go to MSME website ( www.msme.gov.in ) and provide your Aadhaar number and Name of
Entrepreneur and get registered

Documents required for registration

The entity has to submit business address proof, copies of purchase and sale bill, and licenses
from regulatory bodies.

a. Business Address Proof
If the premise is self-owned– Allotment letter, possession letter, lease deed or property tax receipt. If there
is a municipal license in the business name or in the name of the proprietor, partner or director of the business, no
other possession document is required to be submitted.
If the premise is rented– Rent receipt and a no objection certificate from the landlord is required.
Also, any utility bill or document evidencing the landlord’s ownership is to be submitted.
b. Copies of Sale Bill and Purchase Bill
Business is required to submit copy of sale bill related to each end product that it will supply. Also, for
each raw material that it will purchase, a purchase bill has to be submitted.
c. Partnership Deed/ MoA and AoA
If the business is a partnership firm, it has to submit its partnership deed. If the partnership firm is
registered, it has to submit registration certificate also.
In case of a company, copy of Memorandum of Association and Articles of Association, and certificate of
incorporation has to be submitted. With it, copy of the resolution passed in general meeting, and a copy
of board resolution authorizing a director to sign the MSME application is also to be submitted.
d. Copy of Licenses and Bills of Machinery Purchased
In few cases, the applicant has to submit a copy of industrial license which is to be obtained by giving an
application to Govt. of India. Further, all bills and receipts related to purchase and installation of plant
and machinery have to be kept safe and required to be submitted on demand.

Note – Lifetime Valid Certificate for Both Manufacturing and Service sector

There are multiple benefits available to an organization registered under MSME and some of them are:
1. You can get cheaper bank loans
2. Tax Benefits
3. Tender preferences
4. Access to Mudra loan scheme

The Registration process of an MSME requires the filing of an Entrepreneurs Memorandum (“EM”) with
the District Industries Centre (“DIC“) of the concerned area, after which, DIC shall issue an
acknowledgment along with an EM number.

Comments (3)

    • Accstra

      Reply

      We are glad to hear that. Thanks Michel.

      Please feel free to contact us if you need any assistance in Finance and Compliance for your organization.

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