MSME

SCHEMES INITIATIVES COMPLIANCES

Presented By: CS Ravi Bhushan Kumar

IP, ID, FCS, LL.B, M.Com, B.Com(H)Practicing Company Secretary

9990339200, cs.ravibhushan@gmail.comwww.csravibhushan.com

What is MSME?: OLD CLASSIFICATION

CRITERIA : INVESTMENT IN PLANT AND MACHINARY

CLASSIFICATION MICRO SMALL MEDIUM

Manufacturing Investment < 25 L Investment < 5 Cr. Investment < 10 cr.

Service Investment < 10 L Investment < 2 Cr. Investment < 05 cr.

NEW CLASSIFICATION w.e.f 1st July 2020

COMPOSIT CRITERIA :COMPOSIT CRITERIA :Investment in Plant & Machinery or equipment and Annual Turnover

CLASSIFICATION MICRO SMALL MEDIUM

Manufacturing and Service Enterprises

Investment ≤ Rs.1 Crand

Annual Turnover ≤. 5Cr

MSME_gazette_of_india.pdf

Investment ≤ Rs.10 crand

Annual Turnover ≤. 50 cr

Investment ≤

Rs.50 crand

Annual Turnover ≤.

250 cr

Q. 1. ABC & SONS has invested Rs. 5, 00,0000/- in its business out of which land costis 3,25,00000/- Construction of building 85, 00,000 and used balance amount forpurchase of plant and machinery. ABC and SONs manufactured the goods costing2 crores which have been supplied to the dealers at Rs. 2.5 Crore with three-monthcredit.

Q. 2 ABC & SONS has invested Rs. 5, 00,0000/- in its business out of which land cost is3,25,00000/- Construction of building 85, 00,000 and used balance amount forpurchase of plant and machinery. ABC and SONs manufactured the goodscosting 3 crore which has been supplied to the dealers at Rs. 5.6 Crore. Its Indirectexpense for manufacturing and sales of goods was Rs. 75,00000/-expense for manufacturing and sales of goods was Rs. 75,00000/-

Q. 3 SHARP AND INTELLIGENT is a multidisciplinary partnership firm of CS, CA,Advocates established in the month of August 2021 with an investment of Rs.60,00000/- and sale of services was of Rs. 10, crore by end of the financial year2021-22.

FUNCTION OF

Facilitation and credit

flow to MSMEs Improvin

g competitiveness of MSMEs

MarketinPromotion of

ZED

Ministry of Micro, Small and Medium Enterprises

OF MINISTRY

Marketing support

Skill developme

nt

PMEGP

Upgradation of

technology

n of MSMEs

Importance of MSME: • MSME is backbone of Indian Economy• India has approximately 6.3 crore MSMEs• As on 31.12.2020 a total number of 5,37,677

enterprises have registered under Manufacturingcategory whereas 8,65,058 enterprises registeredunder Service sector.

• Around 6500 products/items get manufactured byMSME

• a total 30 per cent of the GDP in Indian economy iscontributed by the MSME.contributed by the MSME.

• Out of our total exports, 48 per cent is also fromMSMEs.

• At the same time up till now MSME created 11 crorejobs.

• MSMEs plays vital role during Covid-19, almost200000 PPE KIT, N-95 Mask, Rapid testing Kit, Glovesetc being manufacturing by Indian MSMEs (earlierimported from China)

• Important role in making India a manufacturing huband “Make in India” campaign a success.

FOR NEW REGISTRATIONAn enterprise for the purpose of this registration will be known as Udyam and itsRegistration Process will be known as 'Udyam Registration‘ A permanent registration number will be given after registration. After completion of the process of registration, a certificate will be issued online. After completion of the process of registration, a certificate will be issued online.This certificate will have a dynamic QR Code from which the web page on our Portal anddetails about the enterprise can be accessed. There will be no need for renewal of Registration.Registration Process is totally free and paperless. No documents are require to upload.

FOR EXISTING ENTERPRISES:All existing enterprises registered under EM–Part-II or UAM shall register again on theUdyam Registration portal on or after the 1st day of July, 2020.The existing enterprises registered prior to 30th June,2020, shall continue to be valid onlyfor a period up to the 31st day of December, 2021.An enterprise registered with any other organisation under the Ministry of Micro, Smalland Medium Enterprises shall register itself under Udyam Registration.

DOCUMENTS & INFORMATION REQUIRED FOR REGISTRATION :

No documents or proof are required to be uploaded forregistering an MSME.

MSME registration process is fully online, paperless and basedon self-declaration.

Aadhaar number shall be required for Udyam Registration.• The Aadhaar number shall be of the proprietor in the case of a

proprietorship firm, of the managing partner in the case of apartnership firm and of a karta in the case of a Hindu UndividedFamily (HUF).

In case of a Company or a Limited Liability Partnership or a In case of a Company or a Limited Liability Partnership or aCooperative Society or a Society or a Trust, the organisation orits authorised signatory shall provide its GSTIN(As perapplicability of CGST Act 2017 and as notified by the ministry ofMSME vide S.O. 1055(E) dated 05th March 2021) and PAN alongwith its Aadhaar number. 225669.pdf

PAN & GST linked details on investment and turnover ofenterprises will be taken automatically from Government databases.

Online system will be fully integrated with Income Tax andGSTIN systems.

Registration portal https://udyamregistration.gov.in

BENEFIT OF REGISTRATION AS MSME:1. Penal rate of Interest on delayed payment 2. Dispute resolution through SAMADHAN Portal3. G-eM (Government e-Market place, a portal for G to B)4. TReDS Platform (the invoices of receivables are traded on this platform)5. Collateral Free loans from banks6. Subsidy on IPR Registration7. Overdraft Interest Rate Exemption8. Industrial Promotion Subsidy Eligibility9. Fewer Electricity Bills10. ISO Certification Charges Reimbursement11. Special consideration on international trade fairs11. Special consideration on international trade fairs12. Waiver of Stamp Duty and Registration Fees13. Exemption under Direct Tax Laws14. Bar Code registration subsidy15. Subsidy on NSIC Performance and Credit ratings16. Eligible for IPS subsidy17. Access to Tenders18. The Reservation Policy has two objectives19. 2% exemption on the interest rate on OD20. 15% CLCSS subsidy to purchase fully21. Reservation policies to manufacturing / production sector, etc.

1. Penal rate of Interest:• The buyer is liable to pay compound interest with the

monthly rests to the supplier on the amount at the threetimes of the bank rate notified by RBI in case he does notmake payment to the supplier for his supplies of goods orservices within 45 days of the acceptance of thegoods/service rendered. (Section 16)

• Ministry of MSME has taken an initiative for filing onlineapplication by the supplier MSE unit against the buyer ofgoods/services before the concerned MSEFC ( Micro andSmall Enterprise Facilitation Council) of his/her State/UT.

Monthly compound Interest

Small Enterprise Facilitation Council) of his/her State/UT.These will be viewed by MSEFC for their actions. These willalso visible to Concerned Central Ministries, StateGovernment, etc for pro-active actions.

• Every reference made to MSEFC shall be decided within aperiod of ninety days from the date of making such areference as per provisions laid in the Act.

• If the Appellant (not being the supplier) wants to file anappeal, no application for setting aside any decree or awardby the MSEFC shall be entertained by any court unless theappellant (not being supplier) has deposited with it, the 75%of the award amount. (Section 19)

• The GeM portal introduced the Udyog Aadhar self-facilitated registration to promote MSMEs Sector in India and help MSMEs to get better business opportunities in just few clicks with minimal marketing and advertisement expenses.

• GeM portal provide paperless and contactless business opportunity to Indian Sellers under ease of doing business in India in admist COVID-19.

2

Sellers under ease of doing business in India in admist COVID-19.• Benefits to GeM Registered Businesses:• 1. Contactless, paperless and cashless registration.• 2. Direct access to over 43000 buyers organizations.• 3. No middlemen i.e. sell directly to the Indian government.• 4. Timely payments• 5. Timely delivery acceptance.• 6. No more searching of tender notices in magazines and newspapers• 7. Minimal marketing efforts and expenses• 8. Dynamic pricing allows MSEs to change price based on market conditions• 9. Freedom from product registration

TReDS (Trade Receivables Discounting System)

All Companies which have turnover of Rs. 500 crore or more and all CPSEs to getthemselves on boarded on TReDS Platform (MoMSME notification dated November 02,2018)• How will MSMEs benefit on TReDS Platform?Quicker Payment: MSME sellers will receive funds against the approved invoices withinQuicker Payment: MSME sellers will receive funds against the approved invoices within

48 hoursMultiple Financiers: MSMEs are not restricted to a single bank. With the help of TReDS

platform, they will have the option to choose the lowest bids among the multiplefinanciers.

Without Recourse Borrowing: There will not be any obligation on the seller to repay thefinancier. The buyer's account will be dedicated automatically through a pre-approved NACH mandate.

Lower cost of Funds: Sellers will be able to access financing at competitive terms as it isbased on the credit rating of the buyer. The transparent bidding process will help todiscover the most suitable price.

Process of TReDs:

To encourage first generationentrepreneurs to venture into self-employment opportunities by facilitatingcredit guarantee support for collateral free/ third-party guarantee-free loans to theMicro and Small enterprises MSEs),especially in the absence of collateral.

5

Key Benefits:Key Benefits:•The guarantee cover available under the scheme is to the extent of 50%/ 75% / 80% & 85%of the sanctioned amount of the credit facility.•Guarantee cover is 85% for micro enterprises for credit up to 5 Lakh.•Guarantee cover is 50% of the sanctioned amount 10 lakh to 100 Lakh per MSE borrower forretail trade activity.• Guarantee cover is 80% for (i) Micro and Small Enterprises operated and/or owned bywomen; and (ii) all credits/loans in the North East Region (NER) for credit facilities up to 50Lakh.In case of default, the trust settles the claim up to 75% of the amount in default of the

credit facility extended by the lending institution for credit facilities up to 200 Lakh.

• ObjectiveThe objective is to facilitate technology up-gradation in MSEs with state-of-the-arttechnology, with or without expansion and also for new MSEs which have set uptheir facilities by providing an upfront capital subsidy of 15 per cent (on institutionalfinance of upto Rs 1 crore availed by them.In order to ensure fair inclusion of SC/ST category, women entrepreneurs andentrepreneurs from NER, Hill States (Jammu & Kashmir, Himachal Pradesh &entrepreneurs from NER, Hill States (Jammu & Kashmir, Himachal Pradesh &Uttarakhand) Island Territories (Andaman & Nicobar and Lakshadweep) and theidentifies Aspirational Districts/ LWE (Left Wing Extremism) Districts, the subsidy hasalso been proposed to be admissible also for investment in acquisition/ replacementof plant & machinery/equipment & technology up-gradation of any kind.Release & Disbursement of Subsidy: The beneficiary unit will have to remain incommercial production for a period of three years after installation & commissioningof the plant & machinery, on which subsidy under the CLCS-TUS has been availed. Toensure this, the subsidy released by the Government under CLCS-TUS will be kept inthe form of a Term Deposit of equivalent amount for a period of three years witheffect from the date of approval of the subsidy by the concerned PLI.

Subsidy on IPR Registration:• A hefty 50%

subsidy is given tothe Enterprise thathas the certificateof registrationof registrationgranted by MSME.This subsidy canbe availed forpatent, trademarkregistration.

Interest Subvention Scheme for MSMEs 2018:

On November 2nd, 2018, as part of access to credit, PrimeMinister announced 2% interest subvention for all GSTregistered MSMEs, on fresh or incremental loans.registered MSMEs, on fresh or incremental loans.• Eligibility:All MSMEs who meet the following criteria shall be eligibleas beneficiaries under the Scheme:a. Valid Udyog Aadhar Number [UAN]b. Valid GSTN Number

Assistance and support to traditional industry artisans to provide them sustainableemployment through Hard Intervention in setting up physical infrastructure with CFCs,raw material banks, latest machines, and Soft Intervention in skill development, marketpromotion initiatives, etc. in clusters.• Financial assistance of up to 90% (95% in NER, J&K and Hill Areas) of Hard

Intervention cost and entire cost of Soft Intervention.How to applyApply on https://sfurti.msme.gov.in/SFURTI/Home.aspx

Scheme of Fund for Regeneration of Traditional Industries

Apply on https://sfurti.msme.gov.in/SFURTI/Home.aspx

The below mentioned entities can apply for SFURTI scheme:• Corporates and Corporate Responsibility (CSR) Foundations• Field functionaries of State and Central Governments• Institutions of the Central and State Governments• Non-Government organizations (NGOs)• Panchayati Raj institutions (PRIs)• Private sector by forming cluster specific SPVs• Semi-Government Institutions

ISO Certification Charges Reimbursement:

The scheme envisages reimbursement of charges for acquiringISO-9000/ISO- 14001/HACCP certification to the extent of 75%of expenditure subject to a maximum of Rs.75,000 in each case.

Who Can Apply:Permanent registered micro and small enterprises (MSEs) areeligible to avail the incentive scheme.

Where to apply:MSEs with their EM No. are requiredto submit their application, dulycompleted, to their local Director,MSME-DI addresses given in thefollowing website:www.dcmsme.gov.in

Benefit under income tax: • Start-up MSME having turnover up to Rs 100

crore is allowed deduction of 100 per cent of itsprofits for three consecutive assessment yearsout of seven years. (Section 80-IAC of Income TaxAct)

• MSME up to five crore of turnover is out of thepreview of TAX Audit.preview of TAX Audit.

• Apart from above many other benefits are undersection 115BA, special tax rate of 22% undersection 115BAA, Special tax rate of 15% u/s115BAB, Presumptive Taxation Scheme u/s 44AD(8/6 %)

And many more scheme and benefit FlipbookEnglishSchemeBooklet_0.pdf

CS Ravi Bhushan KumarIP, ID, FCS, LL.B, M.Com, B.Com(H)

Practicing Company Secretarycs.ravibhushan@gmail.com , 9990339200

www.csravibhushan.com