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MSMEs in India: A quick overview

Anjali Kumari Mishra

What is MSME Act?

The Micro, Small, and Medium Enterprises Development Act (MSMED) of 2006, also known as the MSME Act, aims to promote, develop, and improve the competitiveness of micro, small, and medium enterprises (MSMEs). The act has been in operation since October 2, 2006. 

Who is eligible for MSME registration?

All entities classified as Micro, Small and Medium enterprises as per the MSME classification are eligible to apply for MSME registration. An individual cannot apply for MSME registration. A proprietorship, partnership firm, company, trust or society with an investment below Rs.50 crore and annual turnover below Rs.250 crore are eligible for MSME registration.

Micro: Enterprises with investment in plant and machinery or equipment not more than INR 10 million and annual turnover not more than INR 50 million are defined as micro units.

Small: Enterprises with investment in plant and machinery or equipment not more than INR 100 million and annual turnover up to INR 500 million are defined as small units.

Medium: Enterprises with investment in plant and machinery or equipment not more than INR 500 million and annual turnover up to INR 2.5 billion are classified as medium-sized units.

How many days it takes for MSME Registration Certificate?

After completing the MSME registration, it usually takes 3-5 days to get the MSME Registration Certificate. The MSME Registration Certificate is sent to the mail of the entrepreneur.

Is the MSME registration online free?

Yes. There is no cost for MSME registration on the Udyam Registration

On registration, the enterprise (referred to as “Udyam” in the Udyam Registration portal) will be assigned a permanent identity number called the “Udyam Registration Number”.

An e-certificate, namely, the “Udyam Registration Certificate” will be issued on completion of the registration..

 

Understanding the Latest Tax Compliance Guidelines: Section 43B Explained

Starting from April 1, 2024, new tax laws in India require all types of businesses, like

companies, sole proprietorships, partnerships, or LLPs, to pay their suppliers registered as MSMEs within 15 days, or up to 45 days if they have an agreement.

Impact for non payment to MSME within stipulated time.

1. Interest payment on amount due.

2. Non deduction of amount due from income .

Is it applicable we buy service or product regarding regular uses?

Yes, except when the company is procuring from Traders and Medium enterprises.

 What will happen if the supplier is not registered in MSME?

If your supplier is not registered under MSME then above provisions will not be applicable at all for that

particular supplier.

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