What is MSMEs?

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:

• The investment in plant and machinery for those engaged in manufacturing or production, processing or preservation of goods and
• 2. The investment in equipment for enterprises engaged in providing or rendering of services.

Who is eligible get MSME registration?

• 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 

What is the revised definition of MSME? What are the criteria for MSMEs eligibility?

As per the new definition of MSMEs announced in May 2020, the investment limit has been revised upwards and an additional criterion of turnover introduced.

What are the Benefits of MSME Registration?

Easy to get Bank Loans:One can easily get bank loan if registered under the MSME ActGet 50% Discount on Trademark Registration:In case of apply company Trademark then Government Fees is 9000/- but you can reduce your government fees 50% using MSME/SSI/Udyogaadhaar Registration Certificate.Easy to open current account:One can open current account easily.Very easy to get approvals, Licenses and registration: It is easy for the enterprises to get the approvals, licenses and registrations if one has MSME certificate.Get recognition from the customer:Customer recognizes the enterprise easily if one is registered under the MSME Act1% exemption on interest rate on overdraft:There will be exemption for the 1% deduction on the overdraft charges.Concession on electricity bills:One can get concession on electricity bills if one is registered on MSMED ActRecognized under Government of India:MSME Scheme is recognized under the Government of India, which is easy for the business to use.Exemptions under Direct Tax Laws:Under MSME Act, one is eligible for the Industrial Promotion SubsidyEligible for Industrial Promotion Subsidy:Under MSME Act, one is eligible for the Industrial Promotion SubsidyProtection against delayed payments:The enterprises will be given protection if any payment is delayed from the buyers and they can take help under the arbitration and conciliation.

Decision: Emergency Credit Line to Businesses/MSMEs from Banks and NBFCs up to 20% of entire outstanding credit as on 29.2.2020Borrowers with up to Rs. 25 crore outstanding and Rs. 100 croreturnover eligibleLoans to have 4 year tenor with moratorium of 12 months onPrincipal repayment Interest to be capped100% credit guarantee cover to Banks and NBFCs on principal and interestScheme can be availed till 31st Oct 2020No guarantee fee, no fresh collateral45 lakh units can resume business activity & safeguard jobs

2) Rs 20,000 crores Subordinate Debt for Stressed MSMEs

Stressed MSMEs need equity supportGoI will facilitate provision of Rs. 20,000 cr as subordinate debtTwo lakh MSMEs are likely to benefitFunctioning MSMEs which are NPA or are stressed will be eligibleGovt. will provide a support of Rs. 4,000 Cr. to CGTMSECGTMSE will provide partial Credit Guarantee support to BanksPromoters of the MSME will be given debt by banks, which will then be infused by promoter as equity in the Unit.

Pointer and Section of MSME benefits from MSMED Act, 2006

Section 15.   Liability of buyer to make payment.

Where any supplier supplies any goods or renders any services to any buyer, the buyer shall make payment therefor on or before the date agreed upon between him and the supplier in writing or, where there is no agreement in this behalf, before the appointed day:

Provided that in no case the period agreed upon between the supplier and the buyer in writing shall exceed forty-five days from the day of acceptance or the day of deemed acceptance.

Section 16.   Date from which and rate at which interest is payable.

Where any buyer fails to make payment of the amount to the supplier, as required under section 15, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay compound interest with monthly rests to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at three times of the bank rate notified by the Reserve Bank.

Section 17.   Recovery of amount due.

For any goods supplied or services rendered by the supplier, the buyer shall be liable to pay the amount with interest thereon as provided under section 16.

Section 23.   Interest not to be allowed as deduction from income.

Notwithstanding anything contained in the Income-tax Act, 1961 (43 of 1961), the amount of interest payable or paid by any buyer, under or in accordance with the provisions of this Act, shall not, for the purposes of computation of income under the Income-tax Act, 1961, be allowed as deduction.

Section 23.   Interest not to be allowed as deduction from income.

Notwithstanding anything contained in the Income-tax Act, 1961 (43 of 1961), the amount of interest payable or paid by any buyer, under or in accordance with the provisions of this Act, shall not, for the purposes of computation of income under the Income-tax Act, 1961, be allowed as deduction.