WHAT IS MSME ?
MSME stands for Micro, Small, and Medium Enterprises. In accordance with the Micro, Small, and Medium Enterprises Development (MSMED) Act in 2006, the enterprises are classified into two divisions.
Manufacturing enterprises – engaged in the manufacturing or production of goods in any industry
Service enterprises – engaged in providing or rendering services
MSME NEW LIMITS
However, on 1st June,2020 , the Union Cabinet headed by Prime Minister Narendra Modi officially revised the MSME definition. The recent changes in the definition of micro, small, and medium-sized enterprises made as a part of the Atmanirbhar Bharat Abhiyaan relief package were approved.
As per this amendment, the investment limit of MSMEs has been revised and an additional criteria of “turnover” has also been added to its definition.
As per these guidelines, the revised investment & turnover limits are listed as below :
|Classification||Investment Limit||Turnover Limit|
|Micro||Less than INR 1 Crore||Less than INR 5 Crore|
|Small||INR 1 to 10 Crore||INR 1 to 25 Crore|
|Medium||INR 10 to 50 Crore||INR 25 to 250 Crore|
MSME LATEST AMENDMENTS
As per the revised guidelines, the government has removed the distinction between the manufacturing and services sector.
The following amendments are made by the government regarding Micro, Small & Medium Enterprises to be effective from July 01, 2020 :-
- For the purpose of investment limit, the investment in Plant and Machinery and Equipment as per previous year Income Tax Return are to be considered.
- In case of new enterprise, where no ITR is available, the Investment will be on self-declaration
- Information as regard turnover or export turnover are to be linked to Income Tax Act or GSTN.
- For the purpose of turnover limit, EXPORT of sale is to be excluded.
- The turnover related figures of such enterprise which do not have PAN will be considered on self-declaration
- Registration process has been made easy; no document is required to be uploaded now.
- MSME Registration shall be called Udyam and permanent identity number to be known as“Udyam Registration Number”.
- All existing registered enterprises shall require registering again. The existing enterprises registered prior to June 30, 2020, shall continue to be valid only for a period up to the March 31, 2021.