Why Incorporating a Company is Important in India: Key Benefits & Compliance Insights

 Starting a business is an exciting journey, but one of the most crucial steps in building a successful enterprise is incorporating your company. In India, company incorporation offers numerous advantages, including legal recognition, limited liability protection, tax benefits, and enhanced credibility. In this blog, we’ll explore why incorporating a company is important, the compliance requirements, and how it can benefit your business in the long run.

1. What Does Company Incorporation Mean?

Company incorporation is the legal process of registering a business with the Ministry of Corporate Affairs (MCA) in India. It provides the business with a distinct legal identity, separate from its owners. This means the company can enter into contracts, own assets, and take on liabilities independently.

There are various types of companies that can be incorporated in India, such as:

• Private Limited Company (Pvt. Ltd.)
• Public Limited Company
• One Person Company (OPC)
• Limited Liability Partnership (LLP)
• Section 8 Company (Non-Profit Organization)

Each structure has its own advantages, but the Private Limited Company (Pvt. Ltd.) is the most preferred option for startups and businesses due to its flexibility, scalability, and investor preference.

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2. Key Benefits of Incorporating a Company

✅ 1. Limited Liability Protection

One of the biggest advantages of incorporating a company is limited liability. This means that the personal assets of the directors or shareholders are protected in case of business losses or legal liabilities. Unlike sole proprietorships or partnerships, where personal assets are at risk, a private limited company ensures that liability is restricted to the extent of the company’s assets.

✅ 2. Enhanced Credibility & Business Recognition

A registered company enjoys greater credibility in the market. Whether you’re dealing with clients, investors, or banks, having an incorporated business enhances trust. Many large organizations prefer to work only with registered companies, which gives incorporated entities an edge over unregistered businesses.

✅ 3. Access to Funding & Investments

Incorporated companies, especially Private Limited Companies, can raise capital by issuing shares to investors, venture capitalists, or angel investors. Unlike proprietorships or partnerships, companies have better access to funding from banks, NBFCs, and equity markets.

✅ 4. Perpetual Succession & Legal Recognition

Once incorporated, a company enjoys perpetual succession, meaning its existence is not affected by the resignation, death, or incapacity of its directors or shareholders. The company continues to operate under its registered name until formally dissolved.

✅ 5. Tax Benefits & Exemptions

• Lower Corporate Tax Rates: Companies enjoy lower tax rates compared to individual income tax.
• Deductions & Exemptions: Startups registered under the Startup India Scheme get tax exemptions under Section 80-IAC of the Income Tax Act.
• GST Input Tax Credit: Companies can avail of input tax credit on GST paid for business expenses.

✅ 6. Easier Business Expansion & Global Recognition

Registered companies can expand operations internationally, open foreign bank accounts, and engage in cross-border trade with ease. Additionally, government contracts, tenders, and business partnerships often require a valid company incorporation certificate.

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3. Compliance Requirements for an Incorporated Company

While incorporation provides many benefits, it also comes with statutory compliance obligations. Here are the key compliance requirements for a Private Limited Company in India:

1. Annual Compliance Requirements

• Annual Return Filing (MGT-7): A company must file its annual return with the Ministry of Corporate Affairs (MCA) every year.
• Financial Statements (AOC-4): Filing of audited financial statements is mandatory for all registered companies.
• Director KYC (DIR-3 KYC): Every director must update their KYC details annually.

2. Income Tax Compliance

• Filing of Corporate Tax Return (ITR-6) before due dates.
• Tax Audit under Section 44AB if turnover exceeds specified limits.

3. GST Compliance

• Monthly, Quarterly, or Annual GST Returns (GSTR-1, GSTR-3B, GSTR-9).
• GST Registration if annual turnover exceeds ₹40 lakh (for goods) or ₹20 lakh (for services).

4. Other Compliance (Depending on Business Type)

• TDS Return Filing (if applicable).
• Labour Law Compliances (PF, ESI, Shops & Establishment).
• Secretarial Compliance for Companies with a large number of shareholders.

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4. How to Incorporate a Company in India? (Step-by-Step Process)

Here’s a simplified step-by-step guide to incorporating a Private Limited Company in India:

Step 1: Obtain Digital Signature Certificate (DSC) for directors.

Step 2: Apply for Director Identification Number (DIN) through the MCA portal.

Step 3: Reserve a unique Company Name via the RUN (Reserve Unique Name) service.

Step 4: Draft and file MOA (Memorandum of Association) & AOA (Articles of Association).

Step 5: File SPICe+ (Simplified Proforma for Incorporating a Company) for company registration.

Step 6: Get Certificate of Incorporation (COI) with PAN & TAN issued by the MCA.

Step 7: Open a Business Bank Account and register under GST, PF, ESI, etc. as required.

This entire process usually takes 7-10 working days, making it quicker and more efficient than ever.

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5. Why Choose BizLaunch360 for Company Incorporation?

At BizLaunch360, we simplify the process of incorporating your business while ensuring complete compliance with Indian laws. Our team of experts provides:

✔ End-to-End Company Registration Services

✔ GST, Tax, and Compliance Assistance

✔ Business Advisory & Strategy Support

✔ Quick & Hassle-Free Processing

🚀 Let us handle the legalities while you focus on growing your business!

📩 Need help with company registration? Contact us today!

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Final Thoughts

Incorporating a company in India is not just a legal requirement but a strategic move that offers long-term benefits. From liability protection and tax advantages to credibility and funding opportunities, a registered company enjoys multiple perks that contribute to its success.

If you’re an entrepreneur or business owner looking to start a new venture, company incorporation is the first and most crucial step. Ensure that you comply with the legal requirements and choose the right business structure to maximize your business potential.

💡 Ready to incorporate your company? Let BizLaunch360 help you every step of the way!

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Key Highlights of Finance Act 2017-Relevant to Income Tax

Income Tax Rates for Financial Year 2017-18

Plus: Surcharge: @ 10% of the Income Tax if taxable income exceeds ` 50 lacs or @ 15% of the Income Tax if taxable income exceeds ` 1 crore. Education Cess: 3% of the total of Income Tax and Surcharge.

Plus: Surcharge: 12% of the Income Tax if taxable income exceeds 1 crore. Education Cess: 3% of the total of Income Tax and Surcharge




Firm/Local Authority

Taxable @ 30% plus surcharge: 12% of the Income Tax if taxable income exceeds ` 1 crore. Education Cess: 3% of the total of Income Tax and Surcharge

Domestic Company

Tax rate: 30% (Tax Rate is 25% if turnover or gross receipt of the company in the previous year 2015-16 doesn’t exceed 50 crore)

Plus: Surcharge: 7% of the Income-tax if taxable income exceeds 1 crore or 12% of the income-tax if taxable income exceeds 10 crores. Education Cess: 3% of the total of Income Tax and Surcharge

Foreign Company

Tax rate: 40%

Plus: Surcharge: 2% of the Income-tax if taxable income exceeds 1 crore or 5% of the income-tax if taxable income exceeds 10 crores. Education Cess: 3% of the total of Income Tax and Surcharge

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Step-By-Step Guide to E-file IT Returns in Online

As per section 139(1) of the Income Tax Act, 1961 in the country, individuals whose total income during the previous year exceeds the maximum amount not chargeable to tax, should file their income tax returns (ITR).

The process of electronically filing income tax returns is known as e-filing. You can either seek professional help or file your returns yourself from the comfort of your home by registering on the income tax department website or other websites. The due date for filing tax returns (physical or online), is July 31st.

Who should e-file income tax returns?

Online filing of tax returns is easy and can be done by most assessees.

1. Assessee with a total income of Rs. 5 Lakhs and above.
2. Individual/HUF resident with assets located outside India.
3. An assessee required to furnish a report of audit specified under sections 10(23C) (IV), 10(23C) (v), 10(23C) (VI), 10(23C) (via), 10A, 12A (1) (b), 44AB, 80IA, 80IB, 80IC, 80ID, 80JJAA, 80LA, 92E or 115JB of the Act.
4. Assessee required to give a notice under Section 11(2) (a) to the assessing officer.
5. A firm (which does not come under the provisions of section 44AB), AOP, BOI, Artificial Juridical Person, Cooperative Society and Local Authority (ITR 5).
6. An assessee required to furnish returns U/S 139 (4B) (ITR 7).
7. A resident who has signing authority in any account located outside India.
8. A person who claims relief under sections 90 or 90A or deductions under section 91.
9. All companies.

Types of e-Filing:

• Use Digital Signature Certificate (DSC) to e-file. It is mandatory to file IT forms using Digital Signature Certificate (DSC) by a chartered accountant.
• If you e-file without DSC, ITR V form is generated, which should then be printed, signed and submitted to CPC, Bangalore by ordinary post or speed post within 120 days from the date of e-filing.
• You can file e-file IT returns through an E-return Intermediary (ERI) with or without DSC.

Checklist for e-Filing IT Returns

There are a few prerequisites to filing your tax returns smoothly and effectively. Major points have been highlighted below.

How to choose the right form to file your taxes electronically

It can be confusing deciding which form to submit when filing your tax returns online. The different categories of Income Tax Return (ITR) forms and who they are meant for are tabulated below.

Check your tax credit - Form 26AS vs. Form 16

You should check Form 26AS before filing your returns. It shows the amount of tax deducted from your salary and deposited with the IT department by your employer. You should ensure that the tax deducted from your income as per your Form 16 matches with the figures in Form 26AS. If you file your returns without clarity on errors, you will get a notice from the IT department.

Claim 80G, savings certificates and other deductions

You can claim extra deductions if you forgot to claim them. Similarly, you can also claim deductions under section 80G on donations made to charitable institutions.

Interest statement - Interest on savings accounts and fixed deposits

A deduction for up to Rs.10,000 is allowed on interest earned on savings accounts. However, interest earned on bank deposits, if any, forms a part of your taxable income and is taxable at applicable slab rates.

In addition to the above, have the following at hand.

• Last year’s tax returns
• Bank statements
• TDS (Tax Deducted at Source) certificates
• Profit and Loss (P&L) Account Statement, Balance Sheet and Audit Reports, if applicable

Ensure your system is equipped with the below.

• Java Runtime Environment Version 7 Update 6 or above

How do I file e-Returns?

Fill income tax returns offline and upload XML on the official website IncomeTaxIndiaeFiling.gov.in

Prepare and submit ITR 1 online:- Steps to follow to file Income Tax Returns:

Filing your income tax returns online doesn’t have to be a complicated process. Simply follow the below steps.

1. First, log on to IncomeTaxIndiaeFiling.gov.in and register on the website.Your Permanent Account Number (PAN) is your user ID.
2. View your tax credit statement or Form 26AS. The TDS as per your Form 16 must tally with the figures in Form 26AS.
3. Click on the income tax return forms and choose the financial year.
4. Download the ITR form applicable to you. If you’re exempt income exceeds Rs.5,000, the appropriate form will be ITR-2 (If the applicable form is ITR-1 or ITR 4S, you can complete the process on the portal itself, by using the 'Quick e-file ITR' link - this has been explained below).
5. Open Excel/JAVA utility (the downloaded return preparation software) and fill out the form by entering all details using your Form 16 and other documents mentioned above.
6. Check the tax payable amount by clicking the 'calculate tax' tab.
7. Pay tax (if applicable) and fill in the challan details.
8. Confirm all the data provided in the worksheet by clicking the 'validate' tab.
9. Generate an XML file and save it on your desktop.
10. Go to 'upload return' on the portal's panel and upload the saved XML file. Alternatively, in the JAVA utility, you can submit the Return by clicking 'Submit Return' button.
11. A pop-up will be displayed asking you to digitally sign the file. In case you have obtained a digital signature, select ‘Yes’. If you have not got digital signature, choose 'No'.
12. The acknowledgment form, ITR Verification (ITR-V) will be generated which can be downloaded by you.
13. Take a printout of the form ITR-V and sign it in blue ink
14. Send the form by ordinary or speed post to the Income-Tax Department-CPC , Post Bag No. 1 , Electronic City Post Office, Bangalore, 560 100, Karnataka within 120 days of filing your returns online.

Steps to file ITR 1 Online: Prepare and Submit ITR1/ITR 4S Online

You have the option to submit ITR 1/ITR 4S forms by uploading XML or by online submission

1. Login to e- Filing application
2. Go to 'e File' 'Prepare and Submit ITR Online'
3. Select the Income Tax Return Form ITR 1/ITR 4S and the assessment year.
4. Fill in the details and then click the submit button
5. After submission, acknowledgement detail is displayed.
6. Click on the link to view or generate a printout of acknowledgement/ITR V form

Private portals:

You could also make use of several websites to file your income tax returns online. The portals typically charge fees (Rs. 250 to 300) depending on the kinds of service they offer.

Things to watch out for while e-filing:

• If the same mobile number or email address is used for more than four taxpayers, you cannot file returns on the website, unless the required change is done. For instance, in some cases, more than five returns may be filed— yours, wife, mother, mother-in-law and the Hindu undivided family (HUF) of which you are the karta, the executor of a will.
• If your name mentioned in your bank documents or official statements is even slightly different from the one given in the PAN card, the portal will consider you a different individual. In certain instances, some individuals give their father's name as their 'middle' name in their PAN card, but do not use it for their bank accounts.
• If a non-resident Indian has to file income tax returns, he will need both an India number and a foreign number.

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Now Use SIngle Challan to Deposit TDS under Different Sections

For Deductor's convenience, CPC(TDS) has established processing logic in the system that can accept a Single Challan for reporting of Tax Deposited in following circumstances:

A) Payment of Tax Deducted under different sections of the Income Tax Act, 1961:

The CPC(TDS) system gives credit of TDS against different sections of the Act, even though a specific section has been quoted in the challan.

Example: The challan used for payment of TDS relevant to Section 192 of the Act can also be used for the purpose of reporting tax deposited under Section 194 of the Act also.

1. Situation prior to Financial Year 2012-13
   Consumption of Challan in TDS Statement on the basis of Section quoted in the Challan. 
2. Situation after Financial Year 2012-13
   Section quoted in Challan, at the time of depositing Tax deducted/ collected is irrelevant for the purpose of consumption in TDS Statement. 

B) Payment of Tax Deducted for different Assessment Years:

In case tax has been deposited more than the required tax deducted at source for a particular Assessment Year, the excess amount of tax can be claimed in the following quarters of the relevant year. The balance amount if any, can be carried forward to the next year for claim in the TDS statement.

Example: If excess payment of Tax has been made in Quarter 1 of financial year 2015-16, the same can be used for Quarter 2,3&4 of F.Y. 2015-16 as well as for Q1 to Q4 of F.Y.2016-17. The excess amount of tax paid in Q1 of F.Y.2015-16 can also be used for payment of tax default of Q1 to Q4 of F.Y.2014-15. 

C) Different challans used for the purpose of reporting multiple Deductees associated with different branches with same TAN:

The deductor may have used multiple challans for reporting multiple deductees associated with different branches, in the TDS Statement.
A single challan can be used for the purpose of reporting Tax Deducted for such deductees.

Example: If a Bank has multiple branches with same TAN, payment of Tax Deducted can be made by a single challan and all the deductees can be tagged using the same.

Source: TDS (CPC)

For any doubts or queries reach us at hardeep.sandhu05@gmail.com or visit Contact Us Section

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Taxability of Prepaid Food Coupons (like Sodexo Coupons)

As it is not possible to discuss all the perquisites in one article, let us discuss the taxability of a perquisite which is always in question – taxability of prepaid coupons say for example Sodexo coupons which are very famous. 

These days many employers are giving sodexo coupons to the employees. The value of the coupons varies from employer to employer. It is observed that many of such employers as well as their employees are under the impression that sodexo coupons are fully exempt and are not taxable as perquisites irrespective of the amount. This is not correct interpretation of law. Rule (3)(7)(iii) dealing with such perquisites is reproduced here under for discussion. The value of free food and non-alcoholic beverages provided by the employer to an employee shall be the amount of expenditure incurred by such employer. The amount so determined shall be reduced by the amount, if any, paid or recovered from the employee for such benefit or amenity: Provided that nothing contained in this clause shall apply to free food and non-alcoholic beverages provided by such employer during working hours at office or business premises or through paid vouchers which are not transferable and usable only at eating joints, to the extent the value thereof in either case does not exceed fifty rupees per meal or to tea or snacks provided during working hours or to free food and non-alcoholic beverages during working hours provided in a remote area or an off-shore installation.’ 

As mentioned in the rule, the valuation of this perquisite is done taking the gross cost to the employer as reduced by an amount collected from the employee in this regards, i.e. at the net cost to employer. This perquisite is tax free only to the extent of Rs. 50 (max) per meal during the working hours. It is very important to understand that one has to consider the working hours of the organization to calculate the tax-free amount of this perquisite. Sodexo coupons are actually paid vouchers referred in the proviso. However, most of employers don’t consider the words highlighted in the proviso reproduced above. The paid vouchers must be non-transferable and USABLE ONLY AT EATING JOINTS. 

The problem occurs here as sodexo coupons can be used not only at eating joints but also at other places like super/hypermarkets (eg. big bazaar). This means it can also be used for buying groceries or any other thing sold by such hypermarkets. Hence, strictly going through the rule dealing with paid coupons, the intention of the legislature behind the said rule, sodexo (or any other such prepaid coupon which is usable at places other than eating joints also) are not tax free perquisite, in other-words are taxable perquisites. However, if it is given as gift by employer to the employees and is not the part of the salary as perquisite, it can be considered as tax free provided its value is less than Rs. 5,000/-, under another rule.

So to sum up, here are some points about it:-

1. Tea or snacks provided by the employer during office hours is exempt from tax.
2. Meal or lunch allowance or refreshment allowance is a perquisite, taxable under Income Tax Act. However, if free meal (i.e., food and non-alcoholic beverages) voucher such as Sodexo Pass, is provided by the employer during office hours at office or business premises, up to Rs.50 per meal given to the employee is exempt from tax.
3. These meal vouchers (non-transferable) provided by employers’ should be encashed only at an eatery, a restaurant or a cafe.
4. Can the employer give 2 meal vouchers per person per day for 30 days a month? It depends upon the number of days of work by the employee. If the employee is taking two meals during office hours and works for 22 days, then he will be eligible for Rs.2200 worth of vouchers (i.e., 22 days * 2 * Rs.50). Any voucher/allowance given over and above this amount is taxable in the hands of the employee as taxable perquisite.
5. Can meal vouchers be used at department stores or super bazaars to buy household items? As per the provisions, the meal coupons are to be used/exchanged only at eating joints. However, the departmental stores or super bazaars accept the coupons and there is no mechanism for the employer to check whether the employee has used it at eating joint or at stores. So, practically, even if the coupons are used at stores, it is acceptable.
6. Should meal vouchers to be given on monthly basis? No. there is no rule as such. The employer can issue coupons on monthly or quarterly or whenever they wish.
7. Should this perquisite be shown in payslip? Not necessarily. It is a non-cash perq, it needn’t figure in payslip

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7 Income Tax Saving Options for Salaried individuals

At the end of every financial year, many tax payers frantically make investments to minimize taxes, without adequate knowledge of the various available options. The Income Tax Act offers many more incentives and allowances, apart from the popular 80C, which could reduce tax liability substantially for the salaried individuals. 

Here are 7 smart income tax saving options to help you save more and reduce taxes.

1. Salary Restructuring

Restructuring your salary may not always be possible. But if your company permits, or if you are on good terms with your HR department, restructuring a few components could reduce your tax liability

Opt for food coupons instead of lunch allowances, as they are exempt from tax up to Rs 60,000 p.a.

Include medical allowance, transport allowance, education allowance, uniform expenses (if any), and telephone expenses as part of salary. Produce bills of actual expenses incurred for these allowances to reduce tax.

Opt for the company car instead of using your own car, to reduce high perquisite taxation.

2. Utilizing Section 80C

Section 80C offers a maximum deduction of up to Rs. 1, 00,000. Utilize this section to the fullest by investing in any of the available investment options. A few of the options are as follows.

 -Public Provident Fund

 -Life Insurance Premium

 -National Savings Certificate

 -Equity Linked Savings Scheme

 -5 year FD (Fixed Deposit) with banks and post office.

 -Tuition fees paid for children’s education, up to a maximum of 2 children.

3. Options beyond 80C

If you have exhausted your limit of one lakh under section 80C, here are a few more options.

• Section 80D– Deduction of Rs. 15,000 for medical insurance of self, spouse and dependent children and Rs. 20,000 for medical insurance of parents above 65 years.
• Section 80CCF - Deduction of Rs 20,000, in addition to the Rs 1 lakh under 80C, for investments in notified infrastructure bonds.
• Section 80G- Donations to specified funds or charitable institutions.
• Section 80 CCG - Section 80 CCG of the Income Tax Act permits a maximum deduction of Rs 25,000 per year, with specified individual residents eligible for this deduction. Investments in equity savings schemes notified by the government are permitted for deductions, subject to the limit being 50% of the amount invested.

4. House Rent Allowance

Are you paying rent, yet not receiving any HRA from your company? The least of the following could be claimed under Section 80GG.

• 25% of the total income or,
• Rs 2,000 per month or,
• Excess of rent paid over 10% of total income

This deduction will however not be allowed, if you, your spouse or minor child owns a residential accommodation in the location where you reside or perform office duties.

If HRA forms part of your salary, then the minimum of the following three is available as exemption.

• The actual HRA received from your employer
• The actual rent paid by you for the house, minus 10% of your salary (this includes basic + dearness allowance, if any)
• 50% of your basic salary (for a metro) or 40% of your basic salary (for non-metro).

5. Tax Saving from Home Loans

Use your home loan efficiently to save more tax. The principal component of your loan, is included under Section 80c, offering a deduction up to Rs. 1, 00,000. The interest portion offers a deduction up to Rs. 1, 50,000 separately under Section 24.

6. Leave Travel Allowance

Use your Leave Travel Allowance for your holidays, which is available twice in a block of four years. In case you have been unable to claim the benefit in a particular 4 year block, you could now carry forward one journey to the succeeding block and claim it in the first calendar year of that block. Thus, you may be eligible for three exemptions in that block.

7. Tax on Bonus

A bonus from your employer is fully taxable in the year in which you receive it. However request your employer for the following.

• If you anticipate tax rates to be reduced or slabs to be modified in the subsequent year, see if you could push the bonus payment to the subsequent year.
• Produce your tax investment details well before, to prevent your employer from deducting tax on bonus before handing it over.

A Final Word

Keep in mind the below points, to avoid the hassles of last minute tax planning.

• Give your employer details loans and tax saving investments before hand, to prevent any excess deduction.
• Check the Form 16 received at the end of each year from your employer thoroughly.
• It is important to start your tax planning well before 31st March, and to file your returns before the 31st of July each year.

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Withdrawal from PF account

Procedure for Applying

1. Visit to the human resource department of the employer with a copy of the crossed blank cheque.
2. The HR department will give you the form 19 and 10 C. You can have it beforehand by downloading it from  Form 19 & Form 10C
3. You can ask information about your joining and leaving date from the HR
4. Submit both the forms with HR
5. HR will attest the form and send it to the regional PF office
6. The regional PF office takes about one month to process your application
7. EPFO deposits PF amount directly to the employee’s account
8. You can track your application status through this link. You can also know the PF balance in your account.

Common Problems in Withdrawal

1. Signature can mismatch. After a long stint your signature can change. If this is the situation, then you have to make an affidavit. This Affidavit should be also verified by the employer.
2. There may be errors in spelling of your or your father’s name. Again, your employer will rectify if first, and then you can apply for withdrawal.
3. You may have closed your earlier account. An affidavit and employer attestation would work in this case as well.
4. The employer did not submit your recent PF contribution. If it happens, you can complain to regional EPFO. Else, you can wait for some days.
5. You have not served your notice period and the employer is not supporting. Don’t worry; you can withdraw EPF without the employer’s signature as well. If you have universal account number, don’t worry for this highhandedness.
6. Your employer doesn’t have a record of the EPF account number. To get the PF number search your old Pay Slip. Generally it has the PF account number. Still, you can’t get the PF number, write letter to the regional PF commissioner with all the details (name, father’s name, DOB, Name of establishment, Location, date of joining date of leaving) and ask for PF number. Use register your grievance facility of EPFO.
7. The Company is no more. In this case you should follow the procedure of PF withdrawal without employer’s signature.

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Registration under MSME Development Act, 2006 and its benefits

An act to facilitate the promotion and development and enhancing the competitiveness of micro, small and medium enterprises and for matters connected therewith or incidental thereto.

Requirement of filling memorandum (i.e. obtaining registration under this Act)

Under this act, SSI registration has been dispensed with and replaced with filling of memorandum U/s 8.

Filling of memorandum is optional for all Micro and Small Enterprises

Filling of memorandum is optional for service sector medium enterprises

Filling of memorandum is mandatory for manufacturing sector medium enterprises

For online registration visit www.em.msme.gov.in > Click Entrepreneur Registration> Select the State> Read the instructions > Click Go to Registration> Fill the Form and Submit> Again visit www.em.msme.gov.in> Click Entrepreneur Login> Fill the form and submit> Print out the Memorandum certificate.

Note: There is no fee for processing the memorandum

Classification of the Enterprises 

Classification	Manufacturing Concern	Service Provider
Micro	Investment in P&M does not Exceed 25 lakhs	Investment in equipment does not exceed 10 lakh rupees
Small	Investment in P&M is more than 25 lakhs  but does not exceed 5 crores	Investment in equipment is more than 10 lakh rupees but does not exceed 2 crore rupees
Medium	If investment in P&M is more than 5 crores but does not exceed 10 crores	Investment in equipment is more than 2 crore rupees but does not exceed 5 crore rupees

As per the RBI directives, classification of the Micro and Small (Now Medium Enterprises also covered via N/N {RBI/2014-15/573 FIDD.CO.Plan.BC.54/04.09.01/2014-15}) Enterprises (manufacturing and service) shall be under Priority Sector. [See Benefits for Priority Sector below]

Note: “For the purpose of calculating the ceiling limit, the cost of pollution control, research and development, industrial safety devices and such other items as may be specified, by notification, shall be excluded” for more on details exclusions click here

Documents required for obtaining registration

For registration purpose the entrepreneur must be ready with the following:

1. Scanned copy of Identity Proof: Voter Id / Pan card /Adhar Card / Bank Passbook(first page with photo) / Driving License
2. Scanned Copy of full signature of the entrepreneur filing this Memorandum
3. Valid E-mail Id and Mobile number

Documents list which may be required during online filing for EM-II:

1. Scanned photo identity proof
2. Supporting document for organization
3. First sale bill
4. Electricity bill/Self certification document (if unit runs without electricity)
5. Main raw material purchase bill
6. Scanned copy of full signature of the entrepreneur

Guidelines for filing Entrepreneurs Memorandum For Setting Up Micro, Small or Medium Enterprise
1.	Memorandum is to be filed with the Regional Industries Centre / District Industries Centre by a Micro, Small or Medium Enterprise as the case may be under subsection(1) of section 8 of the Micro, Small & Medium Enterprises Development(MSMED) Act,2006.
2.	There is no fee for processing the memorandum.
3.	Existing units should fill up only Part II of the memorandum.
4.	In case of any change in the information, at any point of time, please inform the details within three month to RIC/ DIC.
5.	Fill up whichever is applicable.
6.	All codes other than pin code shall be filled by the RIC/DIC.
7.	Form number will be system generated.
8.	Enclose a self-certified copy of Power of Attorney/Board Resolution/Society Resolution, wherever applicable, while signing as Partner/Managing Director or Authorized person, etc.
9.	Enclose a certified/notarized copy of the Partnership Deed, Memorandum of Association and Articles of Association certificate.
10.	For registration purpose the entrepreneur must be ready with the following:
	a) Scanned copy of Identity Proof: Any one of Voter Id / Pan card /Adhar Card / Bank Passbook (first page with photo) / Driving License.
	b) Scanned Copy of full signature of the entrepreneur filing this Memorandum.
	c) Valid E-mail Id and Mobile number.

Benefits of Registering MSME under MSME Act 2006

1. Protection against delay in payment from Buyers: Timely receipt of payment, in respect of supply of goods or rendering of services to any buyer as it becomes a statutory obligation for the buyer.“Any Buyer who has purchased any goods or availed any services from MSM Enterprises which has filed a memorandum with the authority, then the buyer shall make the payment on or before the date agreed upon between him and the supplier in writing or within a period of 15 days from the day the goods are delivered or services are rendered.However the period of credit, in any case, cannot exceed 45 days from the date of delivering product or services.”
2. Also MSM Enterprises are eligible to receive interest on delayed payment from the buyers @ 3 times of the bank rate notified by RBI
3. Eligible for availing exemption under:
   a) Excise Scheme (SSI Exemption by NN 8/2003)
   b) Direct Tax Laws
4. Easy finance availability from Banks, without collateral requirement : MSME are classified as Priority (lending) sector by RBIBenefit for Priority Sector: “Advantage of being classified under Priority Sector: All banks are provided with the target for Priority Sector lending (40% of Adjusted Net Bank Credit or equivalent amount of off-Balance sheet exposure, whichever is higher {As per NN RBI/2014-15/95}) which it has to achieve. Further, advances to MSE sector will be reckoned in computing achievement under the overall priority sector target.
5. There are a number of schemes and programmes to help and assist entrepreneurs, especially small businesses. Besides this, several other Ministries have also been supporting the cause of MSME sector. A comprehensive list/ details of such schemes and programmes for the stakeholders are presented here.

Consequence of Non Registration

1. Since filing is optional, no penalty is attracted. However, filing the memorandum is prerequisite to qualify as a ‘supplier’ for Chapter V purposes and non-filing will make the supplier ineligible to benefits under Chapter V relating to right to receive timely payment and right to receive interest under Sec 16 for delayed payment.
2. According to Sec 28(1), whoever intentionally contravenes or attempts to contravene or abets the contravention of any of the provisions contained in subsection (1) of Sec 8 shall be punishable:
   a) First conviction: Fine which can extend up to 1000/- rupees
   b) Second or subsequent conviction: Minimum 1000/- rupees but which can extend up to 10000/- rupees

Obligation for buyers in case of entering into contract with registered MSME

1. The Buyers have to confirm the registration of the suppliers under the MSMED Act, 2006
2. Date of Credit Period:
   a) Date as agreed between the Supplier and Buyer as per agreement
   b)45 days from the date of Delivery/ deemed date of Delivery, whichever is earlier

Note: 15 days from the date of acceptance or the day of deemed acceptance of any goods or services from a supplier would be treated as the credit period if nothing is agreed between the Buyer and Supplier.

Micro and Small Enterprises Facilitation Council (MSEFC)

Application to Micro and Small Enterprises Facilitation Council (MSEFC) can be made in case of dispute for starting the arbitration process. Once the application is done under MSEFC, there is no provision to withdraw the proceedings.

MSME Schemes

 SME Division Scheme 

1. Scheme for 'Providing financial assistance on International Cooperation'

2. Scheme for 'providing financial assistance for performance and credit rating under PCR Scheme

3. Scheme for providing establishment of new institutions (EDIs), strengthening the infrastructure for EDIs under ATI Scheme

4. Scheme for providing financial assistance on marketing support under Marketing Assistance Scheme

ARI Division Scheme

1. Scheme for providing financial assistance to set up new enterprises under PMEGP

2. Scheme of Fund for Regeneration of Traditional Industries(SFURTI).

3. Scheme for providing insurance cover to khadi artisans under Janshree Bima Yojana

4. Scheme for providing financial assistance to Khadi institutions under MDA

5. Scheme for providing financial assistance for R & D activities of Coir Board under Central Sector Plan Scheme of Science & Technology (S&T) of the Coir Board

6. Scheme for providing financial assistance to Coir units under Coir Udyami Yojana(CUY)

7. Scheme for providing financial assistance to Coir Vikas Yojana(CVY)

DC MSME Scheme

1. Scheme for 'Providing Financial Assistance on Bar-Code' an NMCP Scheme

2. Scheme for 'Support for entrepreneurial and managerial development of SMEs through incubators'- an NMCP Scheme

3. Scheme for ' Enabling manufacturing sector to be competitive through Quality Management Standards and Quality technology tools'- an NMCP Scheme

4. Scheme for 'Building Awareness on Intellectual Property Rights' (IPR) for the Micro, Small & Medium Enterprises- an NMCP Scheme

5. Scheme for 'Lean Manufacturing Competitiveness of Micro Small and Medium Enterprises (LMCS)'- an NMCP Scheme

6. Scheme for 'Setting up Mini Tool Room & Training Centres under PPP Mode'- an NMCP Scheme

7. Scheme for 'Building Design expertise of MSMEs Manufacturing sector (Design clinic scheme)'- an NMCP Scheme

8. Scheme for 'Marketing Assistance and Technology Up-gradation of MSMEs'- an NMCP Scheme

9. Scheme for 'Technology and Quality Upgradation (TEQUP) Support to MSMEs'- an NMCP Scheme

10. Scheme for 'Promotion of ICT in Indian Manufacturing Sector (ICT)'- an NMCP Scheme

11. Scheme for 'Micro & Small Enterprises Cluster Development Programme (MSE-CDP)'

12. Scheme for 'Credit Linked Capital Subsidy for Technology Upgradation (CLCS- TU)'

13. Scheme for 'Credit Guarantee Fund for Micro and SmalI Enterprises'

14. Scheme for 'ISO 9000/ISO 14001 Certification Reimbursement

15. Scheme for 'Market Development Assistance (MDA) to MSMEs'

16. Scheme 'Strengthening of Training Infrastructure of existing and new Entrepreneurship Development Institutions'

17. Scheme for 'Micro Finance Programme'

18. Scheme for 'National Awards'

19. Scheme for 'Supporting 5 selected universities / colleges to run 1200 entrepreneurship clubs per annum'

20. Scheme for 'Trade Related Entrepreneurship Assistance and Development (TREAD) Scheme to Women'

21. Scheme for 'Entrepreneurship Skill Development Programmes (ESDP)'

22. Scheme for 'Vendor Development Programme for Ancillarisation'

Prepared by: Hardeep Singh. For any query or any suggestions visit Contact Us section

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