Registration under MSME Development Act, 2006 and its benefits ~ BusinessLawsIndia

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:

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

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

Scanned photo identity proof
Supporting document for organization
First sale bill
Electricity bill/Self certification document (if unit runs without electricity)
Main raw material purchase bill
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

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.”
Also MSM Enterprises are eligible to receive interest on delayed payment from the buyers @ 3 times of the bank rate notified by RBI
Eligible for availing exemption under:
a) Excise Scheme (SSI Exemption by NN 8/2003)
b) Direct Tax Laws
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.
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

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.

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

The Buyers have to confirm the registration of the suppliers under the MSMED Act, 2006

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.