Policies, Codes & Other Documents
Micro, Small and Medium Enterprises (MSME), governed under the MSMED Act of 2006, are famously known as the ‘backbone’ of our country’s economy. In June 2020, the Union Cabinet officially revised thedefinition of MSMEs, increasing the investment and turnover slabs for qualification. This effectively brought more businesses under the ambit of the ‘MSME’ definition.
Let’s take a look at the new definition of ‘MSME’ and how it benefits your business.
According to the previous classification, a business with an investment of up to Rs. 25 lakhs was a micro business. Businesses with an investment of up to Rs. 5 crores and Rs. 10 crores fell into the ‘small’ and ‘medium’ categories, respectively.
According to the MSME new definition:
This means that even with an increased turnover, many businesses will still be classified as MSMEs. Thus, the government subsidies and tax benefits that are available to MSMEs will now extend to more businesses in the country. But there’s more.
The new MSME definition benefits all MSMEs looking for funding to expand their footprint. The government extends several benefits to such businesses looking for loans. There are quite a few government schemes that offer collateral-free loans, better business loan interest rates, and other loan subsidies.
For instance, as part of its Atmanirbhar Bharat Abhiyaan package in 2020, the government announced the following for MSMEs –
This is just one example of how MSMEs in India have much to gain, given their importance to our economy. To benefit from such schemes, you need to register your business with the government and get an MSME/Udyam certificate.
What’s more, many private and public lenders offer easy MSME loans to support growing businesses and their needs. Thus, if you fall under this category, you will get adequate financial support from several quarters.
By registering as an MSME (Udyam), your business can enjoy a lot of benefits, some of which are summarised below.
Since the new definition of MSMEs has led to an upward revision in their investment limit, it has also helped in the expansion of medium and small businesses as well. The Indian Government grants several benefits to such businesses to ease out their business operations. Let’s find out some of them.
In the case of small businesses with an annual turnover of below 40 lakhs, GST registration is not compulsory. The GST council has made the decision to double the current GST limit for MSMEs to Rs. 40 lakhs from the previous limit of Rs. 20 lakhs. So, every business that comes under the 40-lakh annual turnover category is exempted from this tax.
The ISO MSME reimbursement scheme has been expanded to provide help to MSMEs to seek their ISO certifications. This certification is required for the standardisation of products and for meeting international quality standards too. The expansion of this scheme provided a one-time reimbursement, especially to small businesses that have already acquired the ISO 14001/ISO 9000 certification.
Tata Capital understands the importance of MSMEs for our economy. Thus, we extend easy business loans to help you expand your business and make the most of subsidy schemes available to MSMEs.
With an easy business loan eligibility criteria and competitive interest rates, you can find quick credit at Tata Capital. You can avail MSME loans ranging from Rs. 5 lakhs to Rs. 75 lakhs for a loan tenure between 12-36 months.
Enjoy customisable repayment schedules and a quick loan disbursal at Tata Capital. For more information on MSME loans, check out our website today.
Policies, Codes & Other Documents