Why MSME registration is important?

Before coming to the MSME registration, let’s first understand the basic criteria of MSME. Depending upon whether an entity is a manufacturing unit or a service provider, MSME are categorized as:-

Micro enterprises – those business entities that have invested less than INR 25 lakh in plant and machinery or INR 10 lakh invested in equipments for those in the service sector.
Small enterprises – enterprises that have invested between INR 25 lakh – INR 5 crore in plant and machinery or between INR 10 lakh – INR 2 crore in equipments for service sector enterprises.
Medium enterprises – those enterprises that invest between INR 5 crore – INR 10 crore in plant and machines and between INR 2 crore – INR 5 crore in equipments for enterprises involved in the service sector.

What is the process of MSME registration?

Application for MSME registration can be done online as well as offline.
In case the business has not started its operations yet, it is given a provisional MSME registration with validity of five years. As soon the entity is operational, it can apply for the permanent registration certificate with lifetime validity.
The application for can be downloaded from https://udyogaadhaar.gov.in/UA/UAM_Registration.aspx. The form called the Udyog Aadhar Memorandum can be filled in either English or Hindi. Details pertaining to the business like the type of Organization; date of commencement; previous registration details of SSI, EM-1 and EM-2; Bank details; Major Activity – either as Manufacturing or Service; National Industry Classification Code; details of persons employed; investment details related to Plant & Machinery or Equipments and District Industry Centre are required to be filled in.
The form needs to filled up for MSME Registration and uploaded along with some mandatory documents. The documents include:-

Ownership documents like possession letter, lease deed etc. In case of self-owned office premises. The premise needs to be the registered office address of the company. In case the office address is rented, then the rent receipt along with a No objection certificate from the owner is required. To prove the landlord’s ownership, utility bills or any other official document needs to be submitted.
The sale bill copy for each individual end product needs to be submitted. The purchase bill of each and every raw material procured is also required to be submitted.
Documental evidence of registration or incorporation of the business entity needs to be submitted. Partnership Deed and registration certificate in case of a partnership firm and Memorandum of Association, Articles of Association, Certificate of Incorporation, copy of Board Resolution that grants authorization to a particular Director to sign all forms and documents has also to be filed.
Copy of Industrial License as well as receipts and bills may also be required to submit – especially the ones that pertain to purchase and installation of plant and machinery and equipments.

What are the Advantages of MSME registration?

Easy sanctions of bank loans under the Priority sector lending.
The interest rates on bank loans is very nominal when compared with rates on regular loans
The credit for Minimum Alternate Tax (MAT) has been increased to a period of 15 years.
MSME Registration are preferred for many government tenders.
MSMEs are offered readily available credit facilities.
Patent related expenditures are reduced to nominal amount.
MSME are given the preferential treatment for procuring all kinds of government licenses and certifications.
State governments have developed specialized industrial zones and estates for MSMEs.
State governments also provide for tax subsidies, power tariff subsidies, capital investment subsidies and provision of raw materials at subsidized rates in the initial years of start-up.
The central government also provides for excise exemption to MSMEs.
Provision of Mudhra Loan without any collateral.