MSME – TaxAcumen

MSME

Payment to MSMEs – An Overview

by DEEPA KAINTURA April 16, 2025

MSME Registered Enterprises are favoured by the Indian Government by various means , provisions and benefits for them. MSMEs massively contribute for the employment in Indian economy. These units are backbone of our economy.

To know who are eligible to be MSMEs and how to get register as MSME. Click on the link here https://taxacumen.in/?p=916

One of the benefits MSMEs get from the Government is the provisions and rules made for the payment to be made to MSMEs. Any transaction which is being done with MSME needs to be done timely to ensure proper legal compliances.

Payment to MSMEs need to be done as per agreed date (contract terms and conditions) or within 45 days, if there is an written agreement to avoid interest to be paid along with principal amount as per the Section 15 of the Micro, Small, Medium Enterprises Development Act, 2006. And in case of no written agreement, Payment must be done within 15 days from the acceptance of goods/services.

Also, In the Budget 2023 – 2024, the Finance Minister proposed an amendment to Section 43B of the Income Tax Act, 1961, to include payment made to MSMEs. It affects the big businesses who delay the payment to be made to MSMEs. Now, Deduction will be allowed to those for the expenses on accrual basis, only if payment made timely with the prescribed timelimit specified in MSMED Act.

Also, the Companies registered with Registrar of Companies (ROC) who have any outstanding dues to be paid to MSMEs suppliers, must file the “MSME FORM 1” for the half year starting from October, 2024 to March, 2025. The Due date to file the said form is 30 April 2025. And for the period starting from April to September, the MSME FORM 1 must be filed on or before 30th October.

The Buyer is required to pay compound interest, three times the RBI Bank Rate, on the principal amount, calculated monthly from the agreed payment date or 15 days after the acceptance of goods/services. The said Interest is not deductible (Disallowed) as an expense under the Income Tax Act, 1961.

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About Author – Deepa Kaintura

I am a lawyer by profession. I am a legal consultant in TaxAcumen providing services to corporates about GST, Income Tax, ROC Compliances, etc. My love for finance and law encouraged me to write and share the knowledge with the readers here.

MSME

How to get registered as a MSME in India?

by DEEPA KAINTURA February 22, 2025

MSME stands for Micro, Small and Medium Enterprises in India. The business entities on the basis of their Investment value in Plant and Machinery and Turnover can decide and get to know that, whether it falls into the definition of MSME and get benefited with the schemes which are applicable for MSMEs.

In the Budget 2025-26, the criteria limit has been revised w.e.f. 01.04.2025. The revised limit has been mentioned with previous limits for better understanding of our readers. The last classification criteria was nnotified w.e.f. 01.07.2020, in the gazette of India which is as provided below:

(i) a micro enterprise, where the investment in Plant and Machinery or Equipment does not exceed 1 crore rupees and turnover does not exceed 5 crore rupees; (w.e.f. 01.04.2025, investment criteria is 2.5 crores and turnover is 10 crores)

(ii) a small enterprise, where the investment in Plant and Machinery or Equipment does not exceed 10 crore rupees and turnover does not exceed 50 crore rupees; (w.e.f. 01.04.2025, investment criteria is 25 crores and turnover is 100 crores)

(iii) a medium enterprise, where the investment in Plant and Machinery or Equipment does not exceed 50 crore rupees and turnover does not exceed 250 crore rupees (w.e.f. 01.04.2025, investment criteria is 125 crores and turnover is 500 crores)

There are plenty of schemes and benefits available for the entities that fall under this criteria. To get the benefit, One needs to get itself registered for the same. Here, we are going to provide you with an overview of the registration process.

Firstly, to get the MSME registration certificate, you can apply through the Udyam Registration Portal https://udyamregistration.gov.in/UdyamRegistration.aspx

Secondly, Documents and Information required for the Registration are as follows:

Business Name
Type of Business Organization (Proprietorship Firm, Partnership firm, Pvt Ltd, etc.)
Proof of Business entity (Partnership Deed, Certificate of Incorporation (COI) along with MOA and AOA, etc.)
Aadhaar Number of Individual, being the Applicant
PAN of Individual, being the Applicant
Address of Premise to be registered
Business Activity
Bank Cheque or Passbook page for Bank Account Details
Investment Value
Turnover Value / Financial Statement
Income Tax Return, if any

Thirdly, the Steps to be followed for Registration

Step 1

Validate the Aadhar Number of the applicant through the OTP and Mobile Number on the Registration Portal.

Step 2

Fill out the Complete Application form with your Business details. Select the business activity of the entity carefully.

Step 3

Click on the Submit Option and enter the OTP received.

Step 4

You will get the UDYAM Registration details and certificate in your mailbox.

The registration can be done by the applicant itself. There is no Government Fee involved while getting registered for UDYAM. Business Activity and Business Code need to be selected accurately while filling out the form.

For the professional advice, one can reach to us: