The Micro, small and medium enterprise sector is the backbone of the Indian economy. In accordance with the provision of the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006 Micro, Small, and medium enterprise are classified into two classes. Manufacturing and service enterprise. As notified vide S.O. 1642(E) dated 29th September 2006 issued by the Ministry of MSME, the micro enterprise is an enterprise where investment in plant and machinery does not exceed 25 Lakhs rupees; Small Enterprise is an enterprise where investment in plant and machinery is more than 25 Lakh rupees but does not exceed 5Crore rupees; Medium Enterprises is an enterprise where investment in machinery and plant is greater than 5 crore rupees but not less than 10 crore rupees. For the MSME in the service sector, the recommended equipment investment should be less than Rs. 10 lakhs, between Rs. 10 lakhs to Rs. 2 crores, and between Rs. 2 crores to Rs. 5 crores respectively.
In line with the commitment to the MSME sector, certain relaxations have already been implemented for them. The following Micro, Small and Medium enterprises are not required to obtain GST registration:
- Individuals engaged in the intra-State taxable supply of goods services, or both, so long as their annual gross income does not exceed the threshold exemption level of Rs. 20 lakhs. Persons involved in the inter-State taxable supply of services only (not goods), if their aggregate turnover in a financial year does not surpass the threshold exemption level, which is 20 lakhs rupees, as required. However, For inter-state suppliers of goods, registration under GST is compulsory, even if their combined turnover for the year does not go over the threshold amount.
- A supplier of services, except a person engaged in the supply of restaurant service, is currently not eligible for the composition levy scheme.
- Manufacturers of tobacco, pan masala, and ice cream are prohibited from choosing the GST composition levy scheme.
- As a trade facilitation measure, the government has notified that all eligible registered persons have an annual turnover up to Rs. 1.5 crores may opt for filing of the details of outward supply of goods or services or both made during the quarter, shall be reported quarterly in FORM GSTR-1.
- A person who opts to pay tax under the composition scheme may supply services, of a value not to exceed 10% of the turnover in a State or Union territory in the previous financial year, or 5 Lakhs rupees, whichever is higher
Registration of MSME Business shall benefit from availing from the Central or State Government and the Banking Sector. Benefits such as Collateral Free loans from banks, Subsidy on Patent Registration, Overdraft Interest Rate Exemption, Industrial Promotion Subsidy Eligibility, Protection against Payments (Delayed Payments), Fewer Electricity Bills, ISO Certification Charges Reimbursement, Special consideration on international trade fairs, Waiver of Stamp Duty and Registration Fees, Exemption under Direct Tax Laws, Bar Code registration subsidy, Subsidy on NSIC Performance and Credit ratings, Eligible for IPS subsidy, Access to Tenders, The Reservation Policy has two objectives, W1% exemption on the interest rate on OD, 15% CLCSS subsidy to purchase fully, Reservation policies to manufacturing/production sector
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