Micro Small and Medium Enterprises who obtain registration under the MSMED Act, 2006 can avail benefits under many schemes issued by the government.
Before discussing further on what are these benefits and how to obtain the registration, you must know who is MSME and how are you qualified for the same.
The Government of India has enacted the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 in terms of which the definition of micro, small and medium enterprises is as under:
The companies are segregated into micro, small and medium enterprises based on their investment in equipment and plant and machinery.
- Micro Enterprise:
- Investment in Machinery: Not more than INR 25 lakh
- Investment in equipment: Not more than INR 10 lakh
- Small Enterprise:
- Investment in Machinery: Between INR 25 lakh and 5 Crore
- Investment in equipment: between INR 10 lakh and 2 Crore
- Medium enterprise:
- Investment in Machinery: Between INR 5 Crore and 10 Crores
- Investment in equipment: Between INR 2 Crore and 5 Crore
Being a freelance designer, you should know about everything that protects your interest and enhances your business.
Listed below are advantages that you get for your MSME registration.
1.Collateral Free loans from banks:
The Credit Guarantee Fund Scheme for Micro and Small Enterprises (CGS) was launched by the GOI to make available collateral-free credit to the micro and small enterprise sector. Both the existing and the new enterprises are eligible to be covered under the scheme. The Ministry of Micro, Small and Medium Enterprises, Government of India and Small Industries Development Bank of India (SIDBI), established a Trust named Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) to implement the Credit Guarantee Fund Scheme for Micro and Small Enterprises.
2. A hefty 50% subsidy on Patent registration
Enterprises that have MSME Registration Certificate can avail 50% subsidy for patent registration by making an application to respective ministry.
3. 1% exemption on the interest rate on overdraft
Enterprises that have MSME Registration can avail the benefit of 1% exemption on the interest rate on OD as mentioned in the scheme (this is bank-dependent).
4. Eligible for Industrial Promotion subsidy
Enterprises that have MSME Registration are eligible for Industrial Promotion Subsidy as may be prescribed by the government in this behalf.
5. Protection against delayed payments
The Ministry of Micro, Small and Medium Enterprises gives protection to MSME Registered Business against delay in payments from Buyers and right of interest on delayed payment through conciliation and arbitration and settlement of dispute be done in minimum time. If any micro or small enterprise that has MSME registration, supplies any goods or services, then the buyer is required to make the payment on or before the date agreed upon between the buyer and the micro or small enterprise. In case there is no payment date on the agreement, then the buyer is required to make payment within fifteen days of acceptance of goods or services.
Further, in any case, a payment due to a micro or small enterprise cannot exceed forty-five days from the day of acceptance or the day of deemed acceptance. In case of failure by the buyer to make the payment on time, the buyer is required to pay compound interest with monthly interest rests to the supplier on that amount from the agreed date of payment or fifteen days of acceptance of goods or service. The penal interest chargeable for delayed payment to an MSME enterprise is three times of the bank rate notified by the Reserve Bank of India.
6. Concession in electricity bills:
Enterprises that have MSME Registration Certificate can avail Concession on electricity bill by making an application to the electricity department along with MSME Registration Certificate.
7. Reimbursement of ISO Certification charges
Enterprises that have MSME Registration Certificate can claim reimbursement of ISO Certification expenses by making an application to the respective authority.