Tuesday 8 September 2020

Business comes under MSME




BUSINESS COMES UNDER MSME

 

To check which type of business or industry comes under MSME?

 

We will have to check the NIC Classification List 2008 (NIC Code 2008) as available on Udyam Registration portal & also official memorandum issued on 27th June 2017.

 

In NIC code list most of the activities are eligible for MSME as manufacturer or service provider.

 

But as per office memorandum issued on 27th June 2017 clarified that the activities in Table 1 below would not be included in the manufacturing or services in accordance with Section 7 of the MSMED Act, 2006:-

 

Activities (NIC codes) not covered under MSMED Act, 2006 for registration as MSME:

 

Table 1

NIC Code

Business Activity

02

Forestry and logging

03

Fishing and aquaculture

45*

Wholesale and retail trade and repair of motor vehicles and motorcycles

46*

Wholesale trade except of motor vehicles and motor cycles 47

47*

Retail Trade except of Motor Vehicles and motor cycles

97

Activities of household as employees for domestic personnel

98

Undifferentiated goods and services producing activities of private households for own use

99

Activities of extraterritorial organization and bodies

 

 * As per Ministry of MSME's Office Memorandum dated 2nd July, 2021 has decided to include Retail and Wholesale trade as MSMEs for the limited purpose of Priority Sector Lending and they would be allowed to be registered on Udyam Registration Portal for the NIC Codes 45, 46 & 47 and activities mentioned as above.


The NIC 2 digit activity 01 – crop, animal production, hunting and related activities would also not be included as per Section 7 of the Act except for the sub-classes of activities as 5-digit level given in Table 2 below:

 

Table 2

NIC Code

Business Activity

01462

Production of eggs

01463

Operation of poultry hatcheries

01492

Bee-keeping and production of honey and beeswax

01493

Raising of silk worms, production of silk worm cocoons

01612

Operation of agricultural irrigation equipment

01620

Support activities for animal production

01631

Preparation of crops of primary markets i.e. cleaning, trimming, grading disinfecting

01632

Cotton ginning, cleaning and bailing

01633

Preparation of tobacco leaves

01639

Other post-harvest crop activities, n.e.c

01640

Seed processing for propagation

 

 

Activities mentioned in Table 2 above are covered for MSME registration.

 

Sub Section 1 of Section 7 of Micro Small or Medium Enterprises Development Act, 2006 provides for classification of enterprises engaged in manufacturing or production of goods as well as enterprises engaged in providing or rendering of services as micro, small or medium based on investment in plant and machinery and equipment respectively.

 

Classification of MSME enterprises (Whether Manufacturer or Rendering Services, Both have same criteria now)

 

An enterprise shall be classified as micro, small or medium enterprise on the basis of following criteria:

 

Micro

 

Where the investment in plant & machinery or equipment does not exceed ONE Crore rupees AND turnover doesn't exceed FIVE Crore rupees.

Small

 

Where the investment in plant & machinery or equipment does not exceed TEN Crore rupees AND turnover doesn't exceed FIFTY Crore rupees.

 

Medium

 

Where the investment in plant & machinery or equipment does not exceed FIFTY Crore rupees AND turnover doesn't exceed TWO HUNDRED & FIFTY Crore rupees.

 

 

Composite criteria of investment and turnover shall apply for classification of an enterprise as micro, small or medium.

 

CONCLUSION:


After above it is concluded that to check whether business comes under MSME.

First Check the Activities are not fall under excluding activities as per Official Memorandum dated 27th June 2017


AND


Investment or Turnover criteria should be within the limit as prescribed under Classification of enterprises for MSME.

 

If both above conditions are fulfilled then business/industry will come under MSME.


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DISCLAIMER:- THE ARTICLE HAS BEEN WRITTEN BY SUDHIR ARYA, COMPANY SECRETARY IN PRACTICE & STARTUP CONSULTANT. DUE CARE HAS BEEN TAKEN TO ENSURE THE CORRECTNESS OF INFORMATION. IT'S BASED ON THE RELEVANT INFORMATION AVAILABLE AT THE TIME OF WRITING IT. HOWEVER, THIS ARTICLE CAN'T BE CONSTRUCTED AS LEGAL OPINION AND WRITER WILL NOT BE LIABLE FOR ANY DIRECT OR INDIRECT RESULT FROM THIS ARTICLE. THIS ARTICLE IS ONLY FOR KNOWLEDGE SHARING INITIATIVE.

ANY SUGGESTIONS ARE WELCOME TO INCREASE THE EFFECTIVENESS OF THE ARTICLE. FOR ANY QUERY OR SUGGESTION WRITER CAN BE REACHED AT MAILTOSUDHIRARYA@GMAIL.COM OR WWW.SUDHIRARYA.COM


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