MSME is required for Small enterprises to access the benefits like Tax Exemptions. Get your Business registered as MSME with Trade Approvals professionals.
What is the MSME
Union Ministry of Micro, Small and Medium Enterprises (M/o MSMEs) has issued Gazette notification to pave way for implementation of the upward revision in the definition and criteria of MSMEs in the country. The new definition and criterion will come into effect from 1st July, 2020.
The existing criterion of definition of MSMEs is based on the MSMED Act, 2006. It was different for manufacturing and services units. It was also very low in terms of financial limits. Since then, the economy has undergone significant changes. After the package announced on 13th May, 2020, there were several representations saying that the announced revision is still not in line with market and price conditions and hence it should be further revised upwardly. Keeping in mind these representations, Prime Minister decided to further increase the limit for medium Units. This has been done in order to be realistic with time and to establish an objective system of classification and to provide ease of doing business.
Eligibility to Obtained MSME
The eligible categories for MSME registration are proprietorships, Hindu undivided family, partnership firm, one-person company, limited liability partnership, private limited company, limited company, producer company, any association of persons, co-operative societies, or any other undertaking.
Benefits of MSME
- Due to the MSME Registration, the bank loans become cheaper as the interest rate is very low around ~ 1 to 1.5%. Much lower than interest on regular loans.
- It also allowed credit for minimum alternate tax (MAT) to be carried forward for up to 15 years instead of 10 years
- Once registered the cost of getting a patent done, or the cost of setting up the industry reduces as many rebates and concessions are available.
- MSME registration helps to acquire government tenders easily as Udyam Registration Portal is integrated with Government e-Marketplace and various other State Government portals which give easy access to their marketplace and e-tenders.
- There is a One Time Settlement Fee for non-paid amounts of MSME.
- The Udyam Registration will help the MSMEs in availing the benefits of government schemes such as Credit Guarantee Scheme, Credit Linked Capital Subsidy Scheme, Public Procurement Policy, Protection against delayed payments, etc.
- MSMEs are eligible for priority sector lending from banks.
- MSMEs get the benefit of a government security deposit waiver that is helpful while participating in e-tenders.
- Any number of activities including service or manufacturing or both may be added or specified in one Registration.
- Barcode registration subsidy.
- Exemption scheme from Direct taxes.
- ISO certification fees reimbursement.
- Electricity bills concession.
- Special consideration in International trade fairs.
Documents required to register as MSME
- Aadhar number
- PAN number
- Address of the business
- Bank account number
- The basic business activity
- NIC 2 digit code
- Investment details (Plant/equipment details)
- Turnover details (as per new MSME definition)
- Partnership deed
- Sales and purchase bill copies
- Copies of licenses and bills of purchased machinery
| Form of Business | PRIVATE LIMITED COMPANY | ONE PERSON COMPANY | LLP | PARTNERSHIP FIRM | PROPRIETORSHIP FIRM |
|---|---|---|---|---|---|
| Recommended For | Startups & Growing Companies | Sole Promoters | Professional Services Companies | Small Businesses Firms | Small Traders, Agents & Manufactures |
| Prevailing laws | Companies Act | Companies Act | LLP Act | Partnership Act | NA |
| Charter Documents | MOA & AOA | MOA & AOA | LLP Agreement | Partnership Deed | NA |
| Limit of Members | 2-200 | 1 | 2-Unlimited | 2-20 | NA |
| Separate legal identity | Yes | Yes | Yes | NO | NO |
| Limited Liability | Yes | Yes | Yes | NO | NO |
| Tax Advantage | High | High | Low | Low | Low |
| Annual Statutory Compliances | High | High | Low | Low | Low |
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FAQs
Simplified Performa for Incorporating Company Electronically, also known as SPICe, was introduced in the year 2016 for the purpose of incorporation of the companies. Under the Ease of Doing Business (EODB) initiative, the MCA released the new form SPICe+ to further ease the company incorporation process. The new SPICe+ form encompasses more features than the earlier SPICe form. Name approval is integrated as part of the SPICe+ form. The AGILE form has been converted to AGILE Pro to provide GSTIN / ESIC / EPFO / Bank account as well along with company incorporation. Apart from that, even after affixing DSC in the form, information can be modified in the SPICe+ form.
After the introduction of the SPICe+ form, the name approval has been integrated with SPICe+. Part-A of SPICe+ is for name approval. Therefore, from 15th February 2020, the RUN form can only be used for a change of name.
Company Limited by Shares: The liability of the shareholders is limited only to the amount that is unpaid on the shares held by them. Company Limited by Guarantee: A company having no share capital where the liability of the shareholders is limited up to the amount undertaken to be contributed by them in the event of liquidation of the company.
Yes. private limited companies are eligible for attracting foreign direct investments in compliance with the relevant laws and regulations.
DIN, also known as Director Identification Number, is an identification number of a person intending or has become a director in a company. DPIN, also known as Designated Partner Identification Number, is an identification number for a designated partner in LLP. It is similar to DIN in the case of companies. DIN and DPIN are issued by the Ministry of Corporate Affairs.
Yes. Even a foreign national can become a director in a private limited company.
As per the Companies Act, 2013, only an individual natural person can become a director in a company. Therefore, neither a company, firm, or association can become a director in any company. This is to ensure the fixation of duties and responsibilities that would be difficult in the case of companies and firms becoming directors.
The private limited company registration cost depends upon various factors like authorized capital, number of directors, etc. Initiate your Pvt. Ltd. Company Registration with eAuditor Office as your partner in corporate compliance! Reach out to us for any professional assistance.