MSME Registration and its Benefits

Posted by Register GST on September 13th, 2018

Micro, Small and Medium enterprises in India need to register themselves as MSME with the Ministry of Micro, Small and Medium Enterprises. The MSME registration also called the Udyog Aadhaar registration is not mandatory by law but the additional benefits that come with the registration are encouraging enough for the owners and promoters of these enterprises to get the unit registered.

This industry offers the highest employment opportunities to the general public. The sector employs 69% of the total employed crowd in India, contributes 45% to the manufacturing sector and 45% to exports and is expected to contribute 50% to India’s GDP by 2024.

The business entities that can benefit under the MSMED Act are:

• Proprietorship firms
• Partnership firms
• LLPs
• Private Limited Companies
• Public Limited Companies

The benefits of MSME registration are:-

1. Central Government Benefits:

• Under Priority sector lending, easy sanction of loans from banks
• Loans at subsidized rate of interest from banks
• Indirect Tax exemption scheme
• Exemption under Direct Tax Laws
• Protection against delay in payment of loans as per the Delayed Payments Act.

1. State Government/ Union Territory incentives for MSMEs:

• Development of specialized industrial estates
• Tax subsidies
• Power tariff subsidies
• capital investment subsidies

1. Other Benefits:

• Bank loans to MSME’s are cheaper by at least 1-1.5% compared to other businesses
• Under the Mudhra Loan Scheme MSME get easy credit with collaterals.
• Easier approvals for government agencies for registrations and licenses
• Eligible for government subsidies
• Hassle-free opening of current account for the business
• For Trademark registration, only 50% of the applicable fee needs to be paid by the MSME
• Sponsorship or financial support is received from the Government to participate in foreign expos and exhibitions to showcase products.
• Disputes are resolved faster
• Preference during awarding of government tenders

The UdyogAadhaar came into effect from September 2015. The MSME Registration is a simple process and can be applied online or by submitting the application form at the nearest zonal/branch office of NSIC (National Small Industries Corporation). It is a 12-digit number issued by the Ministry and remains the same throughout the lifetime of the business.

The following documents need to be submitted along with EM--II for UdyogAadhaar registration:-

1. Clearances from the Pollution control Board, Drug Control Board.
2. Proof of ownership of the premises or rent receipt/ NOC from owner in case of rented property

3.    Partnership Deed or Memorandum of Association and Articles of Association and Certificate of Incorporation along with an authorization of one of the directors to sign the application form

4. Industrial license copy
5. Purchase bill of machines installed
6. Personal Aadhaar number of the directors, name of the Industry, Address of the business unit, bank details of the business

Once uploaded, the registration number is received via email on the email id provided.

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