Ease of doing business for MSMEs: The MSME ministry has allowed registered MSMEs to continue to avail non-tax benefits for three years, instead of earlier one year, in case of upward graduation in their category and consequent reclassification, for instance growing from a micro enterprise to a small enterprise or a small enterprise to a medium business. Non-tax benefits include benefits of various schemes of the government, including public procurement policy, delayed payments, etc. The announcement was made in a notification by the ministry on Tuesday.
“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 nontax benefits of the category (micro or small or medium) it was in before the re-classification, for a period of three years from the date of such upward change,” the notification read.
The decision has been taken after due deliberations with MSME stakeholders and is in line with the Atmanirbhar Bharat Abhiyan, the MSME Ministry said in a statement on Wednesday.
Importantly, 93,048 micro enterprises in the country’s 6.3 crore-strong MSME sector had scaled up to become small enterprises post-pandemic between July 2020 and July 2022, as per data shared by the Minister of State for MSMEs Bhanu Pratap Singh Verma in Parliament this monsoon session. On the other hand, 10,141 small enterprises grew into the medium business category during the said period.
Subscribe to Financial Express SME newsletter now: Your weekly dose of news, views, and updates from the world of micro, small, and medium enterprises
The government had revised the MSME classification in 2020 after Covid to get more businesses to benefit from the schemes and initiatives offered to MSMEs. Businesses up to Rs 1 crore investment and Rs 5 crore turnover were categorised under micro segment from earlier less than Rs 25 lakh investment.
Likewise, less than Rs 10 crore investment and Rs 50 crore turnover were considered small businesses vis-a-vis up to Rs 5 crore investment earlier. For medium enterprises, the investment limit was expanded from less than Rs 10 crore to less than Rs 50 crore along with up to Rs 250 crore turnover. The revised definition removed the distinction between the manufacturing and services sectors.
However, the government might enhance the turnover limit for small businesses further based on inputs for MSMEs. MSME Minister Narayan Rane in April this year had said that he will take up MSMEs’ suggestion of increasing the current turnover limit of small enterprises with the Finance Ministry and Prime Minister Narendra Modi. The request to increase the limit from the current Rs 50 crore to Rs 100 crore was made by multiple industry associations in a meeting with Rane and other top officials of the MSME Ministry.
Also read: Delayed payment complaints by small businesses against ministries, PSUs drop in H1 FY23