POWr Holiday Countdown

DE-REGISTRATION

A Micro, small and medium Enterprises can violate the regulations in the following ways which will make it liable for de-registration:
  • It crosses the investment limits.
  • It starts manufacturing any new item or items that require an industrial license or other kind of statutory license.
  • It does not satisfy the condition of being owned, controlled or being a subsidiary of any other industrial undertaking.

DE-REGISTRATION

A Micro, small and medium Enterprises can violate the regulations in the following ways which will make it liable for de-registration:
  • It crosses the investment limits.
  • It starts manufacturing any new item or items that require an industrial license or other kind of statutory license.
  • It does not satisfy the condition of being owned, controlled or being a subsidiary of any other industrial undertaking.

DE-REGISTRATION

A Micro, small and medium Enterprises can violate the regulations in the following ways which will make it liable for de-registration:
  • It crosses the investment limits.
  • It starts manufacturing any new item or items that require an industrial license or other kind of statutory license.
  • It does not satisfy the condition of being owned, controlled or being a subsidiary of any other industrial undertaking.

DE-REGISTRATION

A Micro, small and medium Enterprises can violate the regulations in the following ways which will make it liable for de-registration:
  • It crosses the investment limits.
  • It starts manufacturing any new item or items that require an industrial license or other kind of statutory license.
  • It does not satisfy the condition of being owned, controlled or being a subsidiary of any other industrial undertaking.

DE-REGISTRATION

A Micro, small and medium Enterprises can violate the regulations in the following ways which will make it liable for de-registration:
  • It crosses the investment limits.
  • It starts manufacturing any new item or items that require an industrial license or other kind of statutory license.
  • It does not satisfy the condition of being owned, controlled or being a subsidiary of any other industrial undertaking.

The following Factors form Basis of Evaluation

  • The unit has obtained all necessary clearances whether statutory or administrative. e.g. drug license under drug control order, NOC from Pollution Control Board, if required etc.
  • Unit does not violate any locational restrictions in force, at the time of evaluation.
  • Value of plant and machinery is within prescribed limits.
  • Unit is not owned, controlled or subsidiary of any other industrial undertaking as per notification.

PROCEDURE FOR REGISTRATION

Features of the present procedures are as follows:
  • A unit can apply for PRC for any item that does not require industrial license which means items listed in Schedule-III and items not listed in Schedule-I or Schedule-II of the licencing Exemption Notification. Units employing less than 50/100 workers with/without power can apply for registration even for those items included in Schedule-II.
  • Unit applies for PRC in prescribed application form. No field enquiry is done and PRC is issued.
  • PRC is valid for five years. If the entrepreneur is unable to set up the unit in this period, he can apply afresh at the end of five years period.
  • Once the unit commences production, it has to apply for permanent registration on the prescribed form.

PERMANENT REGISTRATION CERTIFICATE

Enables the unit to get the following incentives/concessions:
  • Excise exemptions
  • 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 produced.
  • Availability of raw material depending on existing policy.

PROVISIONAL REGISTRATION CERTIFICATE (PRC)

  • 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.
  • Obtain facilities for accommodation, land, other approvals etc.
  • Obtain various necessary NOCs and clearances from regulatory bodies such as Pollution Control Board, Labour Regulations etc.

FEATURES OF THE SCHEME

Features of the scheme are as follows:
  • DIC is the primary registering centre
  • Registration is voluntary and not compulsory.
  • 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.
  • PRC is normally valid for 5 years and permanent registration is given in perpetuity.

OBJECTIVES OF THE REGISTRATION SCHEME

They are summarised as follows: - To enumerate and maintain a roll of small industries to which the package of incentives and support are targeted. - To provide a certificate enabling the units to avail statutory benefits mainly in terms of protection. - To serve the purpose of collection of statistics. - To create nodal centres at the Centre, State and District levels to promote MSME.

REGISTERING YOUR MSME

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'.

BENEFITS OF REGISTERING

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. The regime of incentives offered by the Centre generally contains the following: - Credit prescription (Priority sector lending), differential rates of interest etc. - Excise Exemption Scheme - Exemption under Direct Tax Laws. - Statutory support such as reservation and the Interest on Delayed Payments Act. (It is to be noted that the Banking Laws, Excise Law and the Direct Taxes Law have incorporated the word MSME 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 MSME). 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.

SSI Registration

Historically, SSIs or Small Scale Industries related concessions and regulations have been dealt with under multiple laws with each provision having varied degree of success. Though there have been concessions in some of the Indirect Tax Acts, the achievements of SSI and their contribution to the economy have been reduced to Statistics for the Budgets and Economic Surveys.

With the emergence of The Micro, Small and Medium Enterprises Development Act in June 2006, things are set to change for Micro, Small and Medium Enterprises (MSMEs). Perhaps the most important provision in this Act and probably the first of its kind relates to help improve cashflows for MSMEs by providing for a penal interest for delayed payments by buyers.

Features

* Classifies Enterprises (instead of Industries) which gives due recognition to the Service Sector

* Simplified Registration process with the District Industries Center. Registration is optional in most cases except for enterprises already registered as SSI Units.

* Statutory National Board for MSMEs and Advisory Board Setup to assist implementation of the Act

Classification of MSMEs under the Act

Classification         Manufacturing (Investment              Service (Investments                                       in Plant & Machinery)                               in Equipments)                       

Micro                                     Rs.25 Lakhs                                                   Rs. 10 Lakhs             

Small                                          Rs.500 Lakhs                                                     Rs. 200 Lakhs             

Medium                                      Rs.1000 Lakhs                                                 Rs. 500 Lakhs

Concessions & benefits to MSMEs under the Act

* Smoother and Competitive Credit flow to MSMEs. RBI through various measures has instructed banks to allow concessional credit to MSMEs including dispensation of collateral for loans upto certain limits, Single window clearance for loans to MSMEs and specialized branches for MSMEs.

* Preference policies for Central and State Government contracts.

* The Act provides that buyers from MSMEs should pay before the date agreed upon between the Buyer and the MSME or 45 days whichever is earlier. Where there is a delay in payment the act provides for payment of interest at three times the RBI rate, compounded on a monthly basis. The 45 days is said to begin from the date of acceptance or deemed acceptance of the bill by the buyer. It has also been made mandatory for all companies to disclose the amounts payable to MSMEs with the interest due. Another interesting feature is that the interest so provided shall not be allowed as a deduction under the Income Tax Act.

* State Governments are to constitute a Facilitation Council to facilitate the collection provision and to act as a dispute resolution mechanism.

It still needs to be seen if the implementation matches the benefits projected in the Act, but atleast now we have an exclusive Act and more than anything else this might induce buyers to pay up on time, every time!

Action has started with many companies requesting information from their Vendors to make adequate disclosures in their books. So, if you fall into the Category of MSME, as a measure to improve your cashflows, go ahead and register now.

 

msme registration

msme registration