SMALL SCALE INDUSTRIES (SSI) REGISTRATION
Small Scale and ancillary units (i.e. undertaking
with investment in plant and machinery of less than Rs. 10 million) should seek
registration with the Director of Industries of the concerned State Government.
Registering your SSI Unit
The main purpose of Registration is to maintain
statistics and maintain a roll of such units for the purposes of providing
incentives and support services. States have generally adopted the uniform
registration procedures as per the guidelines. However, there may be some
modifications done by States. It must be noted that small industries is
basically a state subject. States use the same registration scheme for
implementing their own policies. It is possible that some states may have a
'SIDO registration scheme' and a 'State registration scheme'.
Objectives
of the Registration Scheme
They are
summarised as follows:
1.
To enumerate and maintain a roll of small
industries to which the package of incentives and support are targeted.
2.
To provide a certificate enabling the units to
avail statutory benefits mainly in terms of protection.
3.
To serve the purpose of collection of statistics.
4.
To create nodal centres at the Centre, State and
District levels to promote SSI.
Features
of the Scheme
Features of the scheme are as follows:
1. DIC is the primary registering centre
registration is voluntary and not compulsory.
2. Two types of registration is done in all States.
First a provisional registration certificate is given. And after commencement of
production, a permanent registration certificate is given.
3. PRC is normally valid for 2 years and permanent
registration is given in perpetuity.
Provisional
Registration Certificate (PRC)
o This is given for the pre-operative period and
enables the units to obtain the term loans and working capital from financial
institutions/banks under priority sector lending.
o Obtain facilities for accommodation, land, other
approvals etc.
o Obtain various necessary NOCs and clearances from
regulatory bodies such as Pollution Control Board, Labour Regulations etc.
Permanent
Registration Certificate
Enables the
unit to get the following incentives/concessions:
1. Income-Tax exemption and Sales Tax exemption as per State Govt. Policy.
2. Incentives and concessions in power tariff etc.
3. Price and purchase preference for goods produced.
4. Availability of raw material depending on existing policy.
5. Permanent registration of tiny units should be renewed after 5 years.
The registration under Micro, Small and
Medium Enterprises Development (MSMED) Act, 2006 is for facilitating the
promotion and development and enhancing the competitiveness of Micro, Small and
Medium enterprises.
What are Micro, Small and Medium enterprises?
What
are Micro, Small and Medium enterprises?
The following slabs have been prescribed under the MSMED Act to determine the
status of the Enterprise:
No.
|
Type of Enterprise
|
Manufacturing Enterprises
(Investment in Plant and Machinery) |
Service Industry
(Investment in equipment) |
1.
|
Micro
|
Does not exceed Rs. 25 Lakh
|
Does not exceed Rs. 10 Lakh
|
2.
|
Small
|
Exceeds Rs. 25 Lakh but does not exceed Rs.
5 Crore
|
Exceeds Rs. 10 Lakh but does not exceed Rs.
2 Crore
|
3.
|
Medium
|
Exceeds Rs. 5 Crore but does not exceed Rs.
10 Crore
|
Exceeds Rs. 2 Crore but does not exceed Rs.
5 Crore
|
Which are the classes of enterprises that may qualify for Registration?
All classes of enterprises, whether Proprietorship, Hindu undivided family,
Association of persons, Co-operative society, Partnership firm, Company or
Undertaking, by whatever name called can apply for the registration and get
qualified for the benefits provided under the Act.
Whether the Registration is mandatory / compulsory ?
A Medium enterprise engaged in the manufacture or production of goods has to
compulsorily register under the MSMED Act. For other Enterprises the
registration is discretionary or optional.
Taking into consideration the benefits available under the Act, it is
recommended that every enterprise shall opt for the registration.
ENEFITS OF SSI/MSME REGISTRATION
The registration scheme has no statutory basis.
Units would normally get registered to avail some benefits, incentives or
support given either by the Central or State Govt. Benefits available under the
MSMED Act Registration of Micro, Small and Medium (MSM) Enterprises under MSMED
Act is a very powerful medium to enjoy the regime of incentives offered by the
Centre generally contains the following:
Micro and Small Enterprises:
1.
Easy finance availability from Banks, without collateral
requirement
2.
Protection against delay in payment from Buyers and
right of interest on delayed payment
3.
Preference in procuring Government tenders,
4.
Stamp duty and Octroi benefits,
5.
Concession in electricity bills
6.
Reservation policies to manufacturing / production
sector enterprises
7.
Time-bound resolution of disputes with Buyers
through conciliation and arbitration
8.
Reimbursement of ISO Certification Expenses
9.
Credit prescription (Priority sector lending),
differential rates of interest etc.
10.
Excise Exemption Scheme
11.
Exemption under Direct Tax Laws.
12.
Stamp duty and Octroi benefits,
13.
Statutory support such as reservation and the
Interest on Delayed Payments Act.
14.
Subsidy on ISO Certifications
15.
Subsidy on NSIC Performance and Credit ratings
16.
Participation in Govt Purchase registrations
17.
Regsiattion with NSIC
18.
Counter Guarantee from Govt. of India through CGSTI
19.
Waiver in Earnest Money (Security Deposit ) in Govt.
tenders
20.
Stamp duty and Octroi benefits,
21.
15% weightage in price Preference.
22.
Reduction in rate of Interest from banks (Subject
to ratings)
23.
Free of Cost Govt tenders
(It is to be noted that the Banking Laws, Excise Law and the Direct Taxes Law
have incorporated the word SSI in their exemption notifications. Though in many
cases they may define it differently. However, generally the registration
certificate issued by the registering authority is seen as proof of being SSI).
States/UTs have their own package of facilities and incentives for small scale.
They relate to development of industrial estates, tax subsidies, power tariff
subsidies, capital investment subsidies and other support. Both the Centre and
the State, whether under law or otherwise, target their incentives and support
packages generally to units registered with them.
Medium Enterprises:
1.
Easy finance availability from Banks, without
collateral requirement
2.
Preference in procuring Government tenders
3.
Reservation policies to manufacturing / production
sector enterprises
4.
Time-bound resolution of disputes with Buyers
through conciliation and arbitration
The Buyers have to ensure whether those suppliers of goods and services are
under the purview of MSMED Act i.e. the Buyers have to confirm the registration
of the suppliers under the MSMED Act.
The Buyer should ensure the payment before the end of credit period decided
else the interest would be payable.
In case of disputes, application to Micro and Small Enterprises Facilitation
Council (MSEFC) would trigger the conciliation and arbitration process. Once
the application is done under MSEFC, there is no provision to withdraw the
proceedings. Therefore, the Buyer should ensure the best ways to resolve the
disputes, if any, instead approaching to MSEFC in the initial stages of
dispute.
The Buyers need to ensure that the Buyer does not owe any outstanding amount
including interest due to MSM Enterprises for more than 15 days. Otherwise, the
Buyer needs to disclose this non-payment in the Annual Financials of the Buyer.
Payment
of interest
The Act provides for the payment of compound
interest at 3 times the Bank Rate by the Buyer in case of failure to make the
payment with in maximum of 45 days from the date of receipt of goods or
services.
Disclosure
of delayed payment in audited accounts
Where any buyer is required to get his annual
accounts audited under any law for the time being in force, such buyer shall
furnish the following additional information in his annual statement of
accounts, namely: -
- The
principal amount and the interest due thereon (to be shown separately)
remaining unpaid to any supplier (micro or small enterprise) as at the end of
each accounting year.
- The amount
of interest paid by the buyer along with the amounts of the payment made to the
supplier beyond the appointed day during each accounting year.
- The amount
of interest due and payable for the period of delay in making payment
(‘payment’ here means the payment which have been made but beyond the appointed
day during the year and without adding the interest thereon specified under
this Act for the period of delay).
Disallowance
of interest under Income Tax Act, 1961
According to the Income Tax Act, 1961 the amount of
interest payable or paid by any buyer, for delayed payments to Micro and Small
Enterprises shall not be allowed as deduction for the purpose of computation
income under the Income Tax Act, 1961. Printing of MSMED Registration/EM Number
on the letter heads
The Micro and Small Enterprises should mention/get printed on their letter
heads, supply order sheets, invoices, bills and other relevant documents, the
MSMED Registration/Entrepreneurs Memorandum (EM) Number allotted by a competent
authority, so that there remains an identification of being a MSE supplier.
PRESENTED BY
DIWAKAR AGRAWAL
MOB-: 91-99911746549
