Micro, small and medium enterprise are governed under the micro, small and medium enterprise development act which was passed in 2006.
The micro, small and medium enterprise development act 2006 was enacted by the indian government. On 2nd of october, 2006 it became operational. It was created to help micro, small and medium enterprise registration portal become more competitive by promoting and facilitating as well as developing their competitiveness. The government has set specified turnover and investment restriction to determine whether an organization fits into the micro, small and medium category in order to determine whether the micro, small and medium enterprise development act apply to it.
Micro, small and medium enterprise are defined as follows under this act.
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A microbusiness is one that employ less than ten people.
Industry of production and manufacturing. Plant as well as machinery investment are limited to rupees 25 lakh.
Service industry. The investment in equipment as well as machinery does not exceed rupees 10 lakh.
A tiny business is one that among other things.
Industry of production and manufacturing. Plant as well as machinery investment above rupees 25 lakh but does not exceed rupees 5 crore.
Industry of service. Plant and machinery investment total more than rupees 10 lakh but do not exceed rupees 2 crore.
A medium sized business is one that among other things.
Industry of production and manufacturing. Plant and machinery investment total more than rupees 5 crore but do not exceed rupees 10 crore.
Industry of service. Plant and machinery investment exceed rupees 5 crore but does not surpass rupees 10 crore.
Who is eligible to register as an micro, small and medium enterprise ?
According to the above mentioned criteria any micro, small and medium sized enterprise entity can apply for registration.
Limited liability partnership and private limited corporation as well as one person company and proprietorship firm as well as public company can also register as micro, small and medium enterprise.
Micro, small and medium enterprise registration can be obtained regardless of whether the company is in the manufacturing and service industry.
Micro, small and medium enterprise registration can be applied for online by any entrepreneur who has a valid aadhaar number. For the time being an aadhaar number is required for the issuing of an micro, small and medium enterprise certificate.
Is it necessary to submit an application for micro, small and medium enterprise registration?
Although micro, small and medium enterprise registration is not required it is advantage to have one firm registered because it provide numerous benefit in terms of taxation and credit as well as loan. In addition when compared to other enterprise the registered ones have reduced interest rate on loan.
What is the udyog aadhaar number?
You will receive a certificate of micro, small and medium enterprise registration with a 12 digit unique number once you have obtained micro, small and medium enterprise registration. You will have micro, small and medium enterprise registration in your hands once you have this 12 digit udyog aadhar number for your micro, small and medium scale industry.
What are the benefit of registering an micro, small and medium enterprise?
The micro, small and medium enterprise development act was created to encourage support and increase the competitiveness of micro, small and medium sized enterprise. In the first year of business all new industrial unit with micro, small and medium enterprise registration and expansion are exempt from paying stamp duty and registration cost as well as direct tax exemption.
Apart from that there are a number of advantage that you would not be able to obtain without micro, small and medium enterprise registration. Here are some more advantage of the registration.
Micro, small and medium enterprise can take advantage of a variety of tax break.
Many government tender are only open to small and medium sized enterprise.
Many rebate and concession are available once you register as an micro, small and medium enterprise and the cost of obtaining a patent and trademark registration for example and the cost of starting a business is significantly reduced.
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Micro, small and medium enterprise has easy credit availability. It is permissible for public sector bank to classify their micro, small and medium enterprise general banking branches as specialist branch.
This is to ensure that this sector as a whole receives better service.
A composite credit ceiling of rupees 1 crore can be obtained under the reserve bank of india master circular on lending to the micro, small and medium enterprise sector dated 1st of july, 2010.
Bank loan for micro, small and medium enterprise registered enterprise become more affordable. The interest rate is significantly lower than that of ordinary loan.
Micro, small and medium enterprise registered enterprise are given a greater priority for government contract. Licencing and certification from the government
Enterprise registered under micro, small and medium enterprise can additionally carry over credit for minimum alternative tax for up to 15 year instead of the usual ten.
There is a one time settlement fee for overdue micro, small and medium enterprise payment.
Micro, small and medium enterprise form were recently introduced by the master controller audit to ensure that payment owing to micro, small and medium enterprise registered firm are correctly recorded and paid on schedule.