MSMEs are an integral part of the Indian business ecosystem. It is extremely
important to understand their role in the overall growth prospects of the India.
This sector generates way more revenue that contributes directly towards the
GDP of the country and as a result of this many entrepreneurs are slowly
finding their way into the MSME sector. The regulatory policies are quite fair
and the provision introduced by the Ministry of MSME is quite relevant for
the welfare of the sector as a whole. There has recently been some addition
and notification regarding the MSME upgradation. Enjoy Benefits for 3 years
of your MSME upgradation is the new mantra for the existing businesses to
continue excelling in their field. The notification replaces the old text with the
new insertion as in case of an upward change in terms of investment in plant
and machinery or equipment or turnover or both, and consequent re-classification,
an enterprise shall continue to avail of all non-tax benefits of the category
(micro or small or medium) it was in before the reclassification, for a period
of three years from the date of such upward change.
It is very important to note the fact that there were few notifications
previously released by the Ministry of MSME regarding the current
matter. It is observed that many of the MSME businesses were
reluctant to show their revenue as majority of the small business
owners were concerned of the fact that if they upgrade their businesses
from their current level to a level higher up, they would be bereft
of the existing benefits they were availing as being a part of the
MSME industry. This was proved to be entirely wrong when the
Government announced their circular recently. It was announced that
all the MSME that have registered themselves under the Government
portal have the provision for continuing to receive all the non-tax
benefits for up to a period of 3 years which was 1 year earlier.
For more information: https://smeventure.com/cross-border-trading-is-enhanced-by-msme-participation/
The decision has been taken after due deliberations with MSME
stakeholders and is in line with the Aatma Nirbhar Bharat Abhiyan,
as per the official statement. The statement clarifies that if in case an
enterprise sees an upward change in terms of investment in plant
and machinery or equipment or turnover or both, and consequent re-
classification, it can still avail all non-tax benefits of the category it
was in before the re-classification. Instead of one year the MSME
Ministry has allowed those registered MSMEs to continue to avail of
non-tax benefits for three years.
Non-tax benefits include benefits of various schemes of the
Government, including Public Procurement Policy, Delayed Payments,
etc. The Federation of Indian Micro and Small & Medium Enterprises
(FISME) has welcomed the move and thanked the Government for
positively responding to request of MSMEs .A large number of small
enterprises suddenly became ineligible after reclassification. Some
were in the middle of tendering process. The clarification will help clear
the air regarding the current misunderstanding of the upgradation
process.
It was very interesting to note that many of the micro enterprises did
not want themselves to be classified as small enterprises. Similarly,
majority of the small businesses did not want themselves to be
classified as Medium enterprises. Lastly, most of the existing medium
enterprises did not want to be classified under the category of a large
corporate. Each of the MSME category levels were concerned about the
benefits that they were currently receiving. It was only after repeated
circulars from the Government, the participants of the MSME sector
realized that the Ministry of MSME has made such provisions in which
all the MSME levels can continue enjoying their benefits even after they
upgrade themselves.
Do watch: https://www.youtube.com/shorts/mxmhEv0xPgM
The process of upgradation of the business is an important factor for
the business itself. Majority of the clients and their partners start taking
a notice when one of the existing enterprise is upgraded to a new level.
It is very important for all the MSME stakeholders to understand this
and act accordingly. Even after the change of the classification the
MSME enterprises can still have the same benefits that they were able
to get before the process of upgradation. The process of upgradation
just helps in classifying the tier of the business in a much proper way.
The MSME sector has many schemes launched by the ministry of
MSMEs for the welfare of the businesses belonging to this sector. One
of the well known scheme is the technology upgradation fund scheme
MSME. There are plenty of non-tax benefits for the businesses that
upgrade their current tier level of operation.
Small businesses are now able to understand that they were not losing
anything at all if they upgrade their level from previous tier to the next
tier. This was solely due to the clear cut circular provided by the
Government. Majority of the MSME businesses had to face issues in
business if they were not aware about this circular. It is thus extremely
important for the MSMEs to receive timely update and information
regarding the changes put forth by the Government and not panic. The
free flow of correct information within the MSME sector is the number
one priority of the stakeholders in the current environment. They are
trying their level best to establish better means of communication
models within the sector. It will prove to be pivotal in the coming years
as the operations within the MSME sector experience a steady growth.
Many of the businesses have processed the information regarding the
MSME upgradation correctly and have already upgraded and still enjoy
the non-tax benefits as laid down by the circular. The process of MSME
upgrade is also easy. The technology upgradation fund scheme MSME is
also beneficial as the whole MSME industry is gearing towards massive
technological changes. It is thus fair to assume that clear information
from the Government helps the MSME industry moving forward in the
future.