REGISTRATION UNDER MICRO, SMALL & MEDIUM ENTERPRISES ACT (MSME)

The Micro, Small and Medium Enterprises definitely drive the economy of a country towards progress and development. The capital costs of employment potential in these enterprises are low whereas their labour strength is greater than larger enterprises. In order to ensure the growth, competitiveness and development of these enterprises an Act; the Micro, Small and Medium enterprises Act was enacted. This Act provide for Registration under Micro, Small & Medium Enterprises Act (MSME).

Filing of entrepreneur’s memorandum is optional for micro & small enterprises and medium service enterprises. But to avail the benefits like, reimbursement of ISO 9000 fees & participation in international trade fairs, right to receive interest for delayed payment etc., these enterprises need to file the Entrepreneurs Memorandum(EM). So to avail any benefits, the micro & small enterprises need to file the EM, which itself is MSME registration. Filing of EM is mandatory for medium manufacturing or production enterprises. An enterprise engaged both in manufacturing as well as service activity has to file 2 separate EMs, one for manufacturing activity and the other for service activity with same ownership and address.

Under MSME Act ; Enterprise means an industrial undertaking or a business concern or any other establishment engaged in the manufacture or production of goods, in any manner, pertaining to any industry or engaged in providing or rendering of any service or services. An enterprise which can be registered under Micro, Small & Medium Enterprises Act (MSME). may be; proprietorship, HUF, Association of persons, Co-operative Society, Partnership Firm, Company, undertaking and any other legal entity including LLP & OPC.

Enterprises are classified broadly into: Enterprises engaged in the manufacture/production of goods pertaining to any industry

Enterprises engaged in providing/rendering of services.	Investment in plant & Machinery/equipment (excluding land & building)
	Manufacturing Enterprises	Service Enterprises
Micro Enterprises	up to Rs.25 lakh	up to Rs.10 lakh
Small Enterprises	above Rs.25 lakh & up to Rs.5 Crore	above Rs.10 lakh & up to Rs.2 Crore
Medium Enterprises	Above Rs.5 Crore & up to Rs.10 Crore	above Rs.2 Crore & up to Rs.5 Crore

Benefits available to Micro & small Enterprises if they register under MSME Act:

• Protection against delayed payments by buyers of goods/services to a micro enterprise ,which has filed entrepreneur’s memorandum.
• Central governments measures for promotion & development,
• RBIs progressive credit policies for ensuring timely and smooth flow of credit.
• Preference to micro enterprises in respect of goods and services procured by Government departments / aided institutions notified by Central / state government.
• Reservation of items for manufacture & production of goods in any scheduled industry by Micro & small enterprises.
• Exemption upto Rs. 150 lakhs from excise duty, if total annual clearances or sales do not exceed Rs. 400 lakhs.
• 10% of all net bank credit by foreign banks to go to the Micro and small enterprises sector, & 40% of net bank credit by domestic banks to priority sectors as a whole.
• Subsidy of 15% of capital acquired for upgrading technology or techniques for sub sectors or products approved under the scheme up to a limit of Rs. 100 Lakhs.
• Reimbursement of expenses incurred in acquiring quality management system ISO 9000 certification / environment management ISO 14001 certification at 75% of the cost or Rs. 75,000 whichever is less
• Subsidy for renting space and partial reimbursement of air fare on participation in international fairs for export promotion.
• 21 products at present are reserved for exclusive manufacturing by micro and small enterprises.
• 358 items are currently reserved for exclusive purchase by Central Government and its purchase and price preference to micro & small enterprises. Tender documents are provided free of charge & exemption from earnest money/security deposits.
• Central Government grants assistance of up to Rs. 200 lakhs or 40% of the project cost, whichever is less, for setting up new industrial estates for micro & small enterprises. Up to 80% or Rs. 40 million for the north eastern region, including Sikkim, Himachal Pradesh, Jammu & Kashmir & Uttaranchal. And also available for improvements in existing estates.
• Assistance up to 90% of the cost of plant & machinery or Rs. 900 Lakh whichever is less for setting up new mini tool rooms (75% of the cost of plant & machinery or Rs. 750 lakh for upgrading existing tool rooms)
• Assistance up to 50% of the cost of testing equipment and machinery or Rs. 50 lakh, whichever is less, for setting up testing centers.
Benefits available to medium enterprises:

• Central Government’s measures for promotion and development.
• RBIs credit policies for ensuring timely and smooth flow of credit.
• Simplified exit scheme.

Documents required for MSME Registration:For Existing Companies:

1 Company Incorporation Certificate.
2 PAN card of the Company
3 VAT Certificate
4 Service tax Certificate
5 First invoice of the company
6 Rental Agreement
7 Fixed Assets Investment Details
8 Audited financials
9 MOA & AOA

For New Companies:
1 Company Incorporation Certificate.
2 MOA & AOA
3 PAN card of the Company
4 Fixed Assets Investment Details

For LLPs: Same as above, instead of MOA & AOA, they have to submit LLP Agreement.For Proprietorship:
1 VAT Certificate if available
2 PAN Card of the Proprietor
3 Address proof of the proprietor
4 Fixed Assets Investment Details
5 Copy of Balance sheet if available.

SunShine Corporate Solutions have assisted micro, small and large businesses with MSME registration Bangalore. Over the years, we have acquired legal and procedural expertise in these areas in order to ensure that entrepreneurs can start businesses in an efficient manner. Please contact us for more information on MSME registration Bangalore. We would be happy to help you out.