These days, there are several reasons as to why a number of small and medium enterprises (SMEs) are being formed in Karnataka as well as other parts of the country. You can be considered eligible for lower rates of interest on loans, you can get subsidies on power tariffs and tax subsidies, and you can become a part of capital exemption schemes and receive capital investment subsidies as well. You can also be granted exemptions from direct tax laws.
These days, all the states and union territories in India have their own special packages whereby they provide incentives and facilities for the small scale companies.
There are some other benefits of forming such a company as well. They need a very short period as far as conceptualization is concerned. They are mainly labor intensive, which is available abundantly and for cheap in India.
As far as decentralization of power is concerned they are great indeed. All the benefits that accrue to an SME come through the MSMED Act that has been passed by the Government of India. And its registration is free of cost, no need to pay any fees to Ministry of MSME department; but it is very important to be registered as an MSME in order to get the benefits provided to such companies in India.
What is MSME Enterprise?
MSME means the enterprises or industries that’s stands for Micro, Small and Medium Enterprises, as the name indicates that it includes with the enterprises which may be a medium level or below medium level or below to below medium level with respect to their terms of productions, services and investment towards the business goal.
According to the provision of Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 the MSME is classified into two classes such as
As stated by the Ministry of Micro, Small & Medium Enterprises department, manufacturing and service based industries are required to invest capital on plant & machinery and equipment head.
Because the manufacture industries are defined as in terms of investment in plant & machinery where as the service provider industries are defined as in terms of investment in equipment.
So, here take an overview on the conditions for investment in plant & machinery/ equipment for manufacture or service holder as below:
Enterprises Investment Limit on Manufacture Sector:
Enterprises of manufacturing or production sector can be invested the amount in plant and machinery field by the below limit
Enterprises Investment Limit on Service Sector:
Enterprises in the service sector can be invested the amount in equipment field on the basis of the below information
Here is the limitation chart for enterprises according to Ministry of Micro, Small & Medium Enterprises
Investment Ceiling Limit on Manufacture Sectors
Investment Ceiling Limit on Service Sectors
For Micro Enterprise
≤ 25 lakh
≤ 10 lakh
For Small Enterprise
> 25 lakh and ≤ 5 crore
> 10 lakh and ≤ 2 crore
For Medium Enterprise
> 5 croe and ≤ 10 crore
> 2 crore and ≤ 5 crore
The current classification is based on the investment in plant & machinery for products based companies and equipment for services based organization.
Here we want to inform one thing that recently the government is going revised the definition of MSME, the decision has taken at the Union Cabinet Meeting on classification of MSMEs on the basis of their annual turnover.
They don’t want to make distinction between manufacturing and service unit.
In this proposed amendment, they may want to do the threshold criteria for enterprises; means those enterprises having annual turnover upto Rs. 5 crore would be considered/ termed as Micro, Rs. 5 crore to Rs. 75 crore would be termed as Small and Rs. 75 crore to Rs. 250 crore would be termed as Medium enterprise.
The change would be effective when the proposed amendment to Micro, Small and Medium Enterprises Development Act, 2006 come into effect.
Importance of MSME in India
MSMEs have the pivotal role in nation like India for their growth and development, so that’s why state and central governments have conceptualized to provide the maximum benefits to the enterprises those who are falling under the MSME scheme.
MSME enterprises are the backbone of India which can trigger the economic growth of a developing country like India and also developed countries in the world.
So many of the economists in the world termed the MSMEs as “engine of growth” which plays a key role for development of any country; if I am not wrong, India is heading towards the engine of growth.
MSME is playing an equitable and prominent role for building the development of country’s growth by creating potential employment opportunities for young Indians at a low capital cost.
Why We Should Do MSME Registration?
Acquiring MSME registration certificate is not legally mandatory for a business or enterprise but we will be advised you always that registering your enterprise under MSME scheme will get a variety of several benefits from the government sectors including lower rates of interest, excise exemption scheme, tax subsidies, exemption under Direct Tax Laws, power tariff subsidies, capital investment subsidies, etc.
If you need our assistance, then we can help you to get your MSME registration in Bangalore Karnataka or any other cities in India within a limited time frame.
Benefits of MSME Registration in India
Why should an enterprise register under the Udyog Aadhaar and what are the facilities it will get from MSMED?
Therefore, we explained below briefly some of the important advantages on MSMEs
To encourage the growth of MSME both State and Central Govt. are immensely targeting their incentives, subsidies, and schemes and support packages to the registered MSMEs through MSMED Act, 2006. After registration, any enterprise can be qualified to gather or avail the benefits offered under the MSMED Act.
So the advantages or benefits offered to the MSMEs according to their classification of Micro, Small & Medium sized enterprises.
Here look at some key benefits of MSME registration under the Act of government to the enterprises.
1. Easy Availability of Loans from Banks: All banks are ready to lend the business sectors according to their setup and apart from this, MSMEs are recognized by banks, they offer financial support with lower interest rate as compared to typical business rate.
2. Tax Rebates under the MSMED Act, 2006: MSME registered business may enjoy multiple tax exemption scheme and capital gain tax subsidies from the government.
3. Easy Access to Credit: Mudra Yojana Scheme has introduced by PM Modi which provides loans to MSMEs without security. And enterprises can take the advantage from this scheme to raise their business.
4. Get Benefits from State Governments: Those enterprises that have registered under MSMED Act for them most of the states and union territories offers subsidies on power, taxes, entry to state-run industrials, capital investment subsidies and also exempted from sales tax.
5. Get Benefits from Central Governments: Enterprises can get easy sanction of bank loans on priority sector lending, excise exemption scheme, exemption under direct tax law, lower the rates of interest and support such as reservation, etc. Apart from this central government announces various schemes from time to time for MSMEs where they can get benefit from it and creates an environment for opportunities.
6. 50% Discount on IP Protection: Government will financially support to technology startups for International Patent Protection in Electronics and IT (SIP-EIT) by reimbursement up to 50% of total patent cost, with Rs. 15 lakh limit.
7. Credit Guarantee Fund Scheme: This credit will be eligible to micro and small enterprises covering the credit limit per borrower from Rs. 100 lakh to Rs. 200 lakh as in recent update on 20th February, 2018 by Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE).
8. Capital Subsidy for Technological Upgradation: This scheme is operating for modernization of technological upgradation of Small Scale Industries (SSI) through the Credit Linked Capital Subsidy Scheme (CLCSS). An enterprise can get ceiling loans under this scheme from Rs. 40 lakh to Rs. 1 crore and the rate of subsidy from 12% to 15%.
9. Market Development Assistance for Micro, Small & Medium Enterprises: This scheme helps funding for participating international fair, trade delegations, publicity, etc. The Government will repay 75% of air fare in economic class and 50% of space rental charge for general category and 100% of air fare in economic class and space rent for Women/ SC/ ST entrepreneur.
Documents/ Information Required for MSME Registration in Bangalore Karnataka
How to get the MSME certificate in Bangalore?
We want to clear here one thing that applying for MSME and getting the certificate in Bangalore Karnataka or any other cities in India will be the same process for every state; you have to follow the Udyog Aadhaar registration process to get the UAM (Udyog Aadhaar Memorandum) number in India.
You don’t need to be confused, where to apply and how to apply.
Because all the application process for MSME registration in India would be done completely on online through the help of Udyog Aadhaar portal only i.e. https://udyogaadhaar.gov.in/ which is the official website for MSMEs and startup; is maintained by the government of Ministry of Micro, Small and Medium Enterprises.
You would be happy to know that there are plenty of companies in Bangalore as well as the rest of Karnataka that can help you get an MSME (ministry of micro, small and medium enterprises) certificate and that too within a span of 2 to 5 working days.
This certificate is valid for the lifetime of your organization and both service and manufacturing sector companies can avail the same. There is no limit on the number of companies that can be registered by a single entity. It also helps that these services are rather economical.
MSME Registration Process through Udyog Aadhaar
Here’s look at the 20 key steps to register your business or MSME in Government portal that will have to follow
1. Just visit https://udyogaadhaar.gov.in/UA/UAM_Registration.aspx for new MSME or SSI registration under MSMED Act.
2. Enter Aadhaar Number and Entrepreneur Name as per Aadhaar card and then click on Validate & Generate OTP button, a one time password will be come to your aadhaar registered mobile number. You have to just verify the OTP.
After verifying the OTP, a form will come on same window and you have to fill and select the different fields of that form below the following way
3. In Social Category field, you have to choose one option (General, Scheduled Caste, Scheduled Tribe or Other Backward Class) from the dropdown.
4. In Gender field, the applicant has to select the gender of entrepreneur.
5. In Physically Handicapped field, you have to select the physically handicapped status (Yes or No) of entrepreneur.
6. In Name of Enterprises field, the applicant must have to fill the enterprise name which is known by your customer.
7. In Type of Organization field, the applicant has to choose one of his/her organization name from the radio buttons like Proprietor, Partnership, Company, etc.
8. In PAN Number field, PAN number is required for Co-operative, Private Limited, Public Limited or Limited Liability Partnership. But it is optional for other business type.
9. In Location of Plant Details field, if your organization has multiple plant location, you can add it in one registration by clicking Add Plant button.
10. In Official Address of Enterprise field, the applicant should fill the details appropriate field with complete postal address of the enterprise including State, District, PIN Code, Mobile No and Email.
11. In Date of Commencement field, enter the operation date of your business from which day you’ve started it.
12. In Previous Registration Details (in any) field, if you have already applied Udyog Aadhaar registration for an enterprise and issued a valid EM-I/II by the concerned GM (DIC) as per the MSMED Act 2006, such number have to mention in appropriate place.
13. In Bank Details field, you must provide your bank account number that is used for running the enterprise and also mention the IFS Code of the bank’s branch office.
14. In Major Activity field, here you have to choose what your enterprise is doing for, either “Manufacturing” or “Service” under Udyog Aadhaar. If your business involves in both type of activities and major portion of work covers in Manufacturing sector and small portion of work covers in Service sector; then select you major activity type as “Manufacturing” and if major portion of work covers in Services and small portion of activity covers in Manufacturing; then select your major activity as “Services”.
15. In National Industry Classification Code (NIC Code) field, you have to choose multiple National Industrial Classification (NIC) Codes for your all business activities relating to “Manufacturing” or “Service” sector. And here these activities are classified into 3 categories; you should choose it one by one through NIC Code just typing two or more characters of activity in search box.
16. In Person Employed field, here you have to give information on how many employees are working with you and who have been directly paid their salary/ wages by the enterprise.
17. In Investment in Plant & Machinery/ Equipment field, so here you have to enter the total investment (purchase value of items) cost for enterprise.
18. In DIC (District Industry Centre) field, according to the location of enterprise; you have to fill the location of DIC. While filled the DIC location, the column will be active and show options, if is there any DIC is available for that district or not. If there is only one DIC in the district system, it is automatically register your enterprise in the same DIC.
19. In Submit field, the applicant should click on Submit button; where it creates an OTP which will be sent to your Aadhaar linked Mobile Number for registration purpose. You need to enter the OTP on specified field and verify it for application submission purpose.
20. In Final Submit button field, you need to verify the captcha code and then click on Final Submit button. And here your application process for MSME registration is finished now.
And you will get an applied application form of Udyog Aadhaar Memorandum (UAM) bearing with UAN (Udyog Aadhaar Number). Click below on Print button to get it as pdf format for future purpose.
At the same time; just below the Print button, a registration certificate option will be there; by clicking on that, you will get a system generated Udyog Aadhaar Registration Certificate from this.
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