MSME stands for Micro, Small, and Medium Enterprises. MSMEs are small businesses that are engaged in manufacturing, processing, or preservation of goods, or providing services. In India, MSMEs play a significant role in the country’s economy, as they contribute to job creation, exports, and overall economic growth.

MSMEs can register themselves with the MSME Department and obtain Udhyam Registration Certificate. It’s a single day process with no government fees involved.

MSMEs are classified based on the investment in plant, machinery and equipments. The classification is as follows:

MSME department assist MSME registered entities to streamline its collection and provide protection against bad-debts. As per MSME Act, the buyer must pay compounded interest if the payment is delayed for more than 45 days after accepting the goods or services from an MSME Supplier. The rate of interest is thrice what the reserve bank of India charges. (Currently around 27% per annum)

Additionally, Income Tax Act is also proposed to be amended to include a provision that expenditure of purchasing goods/services from any MSME entity will be allowed while computing income under the head Profits and Gains from Business or Profession only when payments due to that MSME Supplier entity are made within time-frame specified in MSMED Act, 2006 i.e. within 45 days from the date of invoice.

This amendment aims to protect MSME enterprises from potential Working Capital crunch due to delays in collection of dues from their customers and support in fast collections from customer.

Assess below link to Register as MSME with MSME department and avail benefits:

https://udyamregistration.gov.in/Government-India/Ministry-MSME-registration.htm