SSI stands for Small Scale Industries. Registering an organization as an SSI will rise the organization to various benefits. A brief account of SSI registration, procedures and benefits are following.
MSME is a acronym of Micro, Small and Medium Enterprises. In a developing country like India, MSME industries are the backbone of the country’s economy level.
The MSME sector grants to 45% of India’s Total Industrial Employment, 50% of India’s Total Exports and 95% of all industrial units of the country and more than 6000 types of products are assembled in these industries (As per msme.gov.in). When these industries growth increased, the economy of the country increases as a whole and flourishes. These industries are also identified as small-scale industries or SSI’s.
What are Micro, Small and Medium Enterprise?
MSME are categorized into two classifications:
- Manufacturing enterprise; and
- Service based enterprise.
They are defined in term of investment in Plant and Machinery/ Equipment as given below
|Manufacturing Enterprises||Investment up to Rs 2,500,000||Investment Less than Rs 50,000,000||Investment Less than Rs 100,000,000|
|Service based Enterprises||Investment Less than Rs 10,00,000||Investment Less than Rs 20,000,000||Investment Less than Rs 50,000,000|
- To do the SSI or MSME registration the small and medium scale industry owner has to fill a single form which he can do online as well as offline.
- If a person needs to do registration for more than one industry then also he/she can do individual separate registration.
- To do the registration he/she has to fill a single form which is present at the concern website which is listed below.
- The document needed for the registration is Personal Aadhar number, Industry name, Address, bank account details and some common usual or personal information.
- In this, the person can give self-certified certificates.
- There is no registration fees needed for this process.
- Once the detail-filled and completed the upload you would be getting the registration number.
Benefits of MSME Registration
- Due to the MSME registration, the bank loans become cheaper as the interest rate is very low around 1 to 1.5%. Much lower than interest on regular loans.
- There is various tax benefits provided to MSME.
- It also allowed credit for minimum alternate tax (MAT) to be carried forward for up to 15 years instead of 10 years
- There are many government tenders which are only open to the MSME Industries.
- They get easy process to credit.
- Once registered the cost getting a patent done, or the cost of setting up the industry decreases as many benefits and concessions are available.
- Business registered under MSME is provided higher preference for government license and certification.
- There is a One Time Settlement Fee for non-paid amounts of MSME.
Business Address Proof:
If the business location is self-owned– Allotment letter, possession letter, lease deed or property tax receipt. If there is a municipal license in the business name or in the name of the proprietor, partner or director of the business, no other possession document is needed to be submitted. If the business location is rented– Rent receipt and a no objection certificate from the landlord is needed. Also, any utility bill or document evidencing the landlord’s ownership is to be provided.
Copies of Sale Bill and Purchase Bill:
Business is wanted to provide a copy of sale bill related to each end product that it will supply. Also, for each raw material that it will purchase, a purchase bill has to be provided for verification process.
Benefits of SSI Registering:
Even though there is no statutory basis for SSI registration, organizations would normally get registered to avail some benefits, incentives or support provided either by the Central or State Government. Some of the incentives are as follows:
- Credit prescription (Priority sector lending), differential rates of interest
- Excise Exemption Scheme
- Direct Tax exemption
- Statutory support
Banking Laws, Excise Law and the Direct Taxes Law have incorporated the term SSI in their exemption notifications. Though in many cases they may declare it differently, generally the registration certificate provided by the registering authority is shown as proof of being registered as an SSI. States/Union Territories have their own separate set of facilities and incentives for small scale industries. They tent to development of industrial estates, tax subsidies, power tariff subsidies, capital investment subsidies and other required support. Both the Center and the State Governments, whether under law or otherwise, mainly focus their incentives and support packages generally to entities registered with them.
Objectives of Registration under the SSI scheme:
- To have follow up of small scale industries to which the incentives and support can be focused.
- To give a certificate enabling the organizations to avail statutory benefits and prevention.
- To enable collection of statistics.
- To create nodal centers at various ranges to promote SSI.
Features of SSI Scheme:
- District Industries Center is the primary registering authority
- SSI Registration is voluntary and not be considered as mandatory
- There are two types of registrations. Initially, a provisional registration certificate is provided and after commencement of production, a permanent registration certificate is given
- The provisional registration certificate is valid for a time period of 5 years from the registration date and permanent registration is provided in perpetuity.
The permanent registration certificate entitles the organization to the following benefits:
- Income-Tax exemption and Sales Tax exemption as per State Govt. Policy.
- Incentives and concessions in power tariff etc.
- Price and purchase preference for goods manufactured.
- Availability of raw material in accordance with already existing policy.
- Permanent registration of very small units should be renewed after 5 years.
SSI Registration Procedure:
- An organization can file for provisional registration certificate for any item that does not need an industrial license.
- On receipt of application, a provisional registration certificate is provided without any further related field enquiry
- Once the organization commences production, it will be wanted to apply for permanent registration in the required form.
The following essential features are considered while providing the permanent registration certificate
- The organization has acquired all necessary clearances whether statutory or administrative.
- The organization does not violate any location-specific restrictions in force, at the time of evaluation.
- Value of plant and machinery is within the mentioned limitations.
- Organization is not owned, controlled or subsidiary of any other industrial undertaking as per notification provided at the time of filing.
A SSI registration can be revoked if the following conditions are violated
- Investment limitations are crossed as compared to the given limits at the time of filing process.
- Manufacturing of a new item or items that need an industrial license or other kind of related statutory license.
- It violates the condition of being owned, controlled or being a subsidiary of any other industrial undertaking.
Every nation’s economic growth is based on its young, small businesses. The Indian government, in accordance with this concept, provides numerous benefits to such organizations so that they may achieve growth with less complexity. To avail of these benefits, the organizations that get qualified must get an MSME or SSI Registration (regulated by the MSMED Act), which is among the easiest of government registrations to be provided.
Importance of MSMEs in India
Micro, small and medium enterprises (MSMEs) are considered as the backbone of India’s economic growth, accounting for almost 40% of gross industrial value and 45% of total direct and indirect exports. Hence, the government has established enormous schemes and aids to ensure the MSME lead a struggle free existence in the country, and also contribute, to the Indian Economy. Some of these schemes have been started by the central government, while remaining others are promoted by the state government. To avail of them, however, you require an Udyog Aadhar registration.
Benefits of an MSME Registration
Benefits from Banks: All banks and other financial institutions consider MSMEs and have provided special schemes for them. This usually involves priority sector lending, which defines that the likelihood of your business being granted a loan is high and with lower bank interest rates. There may also be preferential treatment in case of delay in repayment of their loans.
Tax Benefits: According to your business range, you may enjoy an excise exemption scheme as well as exemption from some important direct taxes in the initial years of your business.
Benefits from State Governments: Most states provide those who’ve registered under the MSMED Act subsidies on power, taxes and entry to state-run industrial estates. In specific, there is a sales tax exemption in most states and purchase preference on goods manufactured.
Benefits from Central Government: The central government, from time to time, announces and updated schemes to benefit MSMEs, such as the credit guarantee scheme.
Credit Guarantee Scheme (CGTMSE)
One of the major problems that the small scale industries face is credit and input of income from several sources to support them. The Credit Guarantee scheme, established to support MSME, comes with alterations to create it more beneficial for small range of traders.
The salient characteristics of the scheme involve,
1. Enhancing the optimal eligibility loan from Rs. 25 lakh to Rs. 50 lakh.
2. Lower the one-time guarantee for loans availed of by the MSME in North-Eastern region of India from 1.5% to 0.75%.
3. Rising the extent of guarantee carry from 75% to 80% for:
4. Women operated Medium and small scale enterprises
5. Micro enterprises, which have the eligibility for getting loans up to 5 lakhs
6. Loans acquired in North Eastern region of the country
7. Lowering the one-time guarantee fee for all loans availed in North Eastern India from 1.5% to 0.75%.
Apart from these advantages, the government also continues, in a prescribed manner, to enhance the ‘List of products reserved for purchase from MSME’. A detailed list is available in the authorized official website. Accordingly, the MSME is aided by the government to crate use of these product lists, and manufacture and supply these manufactured products to large scale industries, and make profit in this kind of process.
Documents Required for MSME registration in India
For promoting startups or entrepreneurship, the government gives special advantages to the small businesses in the form of subsidies and incentives. Also, banks provide loans at low interest rates to set up these kinds of businesses. For availing those, the small businesses want to register under Micro, Small and Medium Enterprises (MSMEs) act. If a business is registered under MSMEs act, it can avail various advantages like cheaper bank loans, tax benefits, preference during the tender process, and access to several schemes and incentives of government.
What are MSME Enterprises?
MSME enterprises of manufacturing sector can be divided on the basis of capital amount invested in plant and operating machinery –
- Micro enterprises– Enterprises investing less than 25 lakhs in plant and machinery
- Small enterprises– Enterprises investing between 25 lakhs and 5 crores in plant and machinery
- Medium enterprises– Enterprises investing between 5 crores and 10 crores in plant and machinery
MSME enterprises in the service based sector can be classified on the basis of amount invested in equipment-
- Micro enterprises– Enterprises investing less than 10 lakhs
- Small enterprises– Enterprises investing more than 10 lakhs but less than 2 crores
- Medium enterprises– Enterprises investing 2 crores but less than 5 crores.
Aadhar number is now mandatory for registering under MSME act. An application is to be applied through online using Udyog Aadhar Registration, and this can be verified using e-Aadhar One Time Password (OTP). Provisional registration is provided in the initial five years if an entity hasn’t commenced its business yet. During this period, it can acquire loans from banks, and apply for several NOCs from regulatory bodies. Once the entity starts its operations, it can file for a permanent license which has lifetime validity, unless it is canceled.
The enterprise has to provide business address proof, copies of purchase and sale bill, and licenses from regulatory bodies.
Business Address Proof
If the business place is self-owned– Allotment letter, possession letter, lease deed or property tax receipt. If there is a municipal license in the business name or in the name of the proprietor, partner or director of the business, no other possession document is needed to be provided.
If the business place is rented– Rent receipt and a no objection certificate (NOC) from the land owner is needed. Also, any utility bill or document evidencing the land owner’s ownership is to be submitted.
Copies of Sale Bill and Purchase Bill
Business is needed to provide copy of sale bill related to each end product that it will supply. Also, for each raw material if it is small that it will purchase, a purchase bill has to be provided.
Partnership Deed/ MoA and AoA
If the business is a partnership firm, the entity compulsorily provides its partnership deed. If the partnership firm is registered, it has to provide partnership registration certificate also. In case of a company, copy of Memorandum of Association and Articles of Association, and certificate of incorporation has to be compulsorily provided. With it, copy of the resolution presented in the general meeting, and a copy of board resolution authorizing a director to sign the MSME application is also to be provided.
Copy of Licenses and Bills of Machinery Purchased
In certain cases, the applicant has to provide a copy of industrial license which is to be acquired by providing an application to Govt. of India. Further, all bills and receipts related to purchase and installation of plant and machinery have to be maintained safe and wanted to be submitted on demand. MSME, hence, has various support systems in the state as well as the center, in terms of both commencing a new project as well as its continued before existence. The government also focuses to supply trained professional, input resources and the flow of capital via assistance from venture capitalists, and via private equity funds.
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