MSME: New definition that will take effect from 1st July



Quick Summary
The definition of Micro, Small, and Medium Enterprises (MSMEs) has been revised, with changes effective from 1st July 2020. The new criteria now consider both overall investment and turnover, replacing the previous focus solely on plant and machinery investment. This update aims to provide clearer guidelines and support for businesses across manufacturing and service sectors.

REVISION IN MSMEs (Micro, Small and Medium Enterprises)

Government has revised the following things in relation to MSME:

 

Existing

Current (now revised)

Revised

For MSME, an enterprise has to consider investment in Plant & Machinery or Equipment

Now Enterprise has to consider overall investment done by them

Specified investment in Plant & Machinery or Equipment

No Turnover Criteria

New Turnover Criteria Introduced

Export not to consider in Turnover

Different criteria for manufacturing and service sector

Composite Criteria for both sectors

Composite Criteria-investment and turnover limit for medium enterprise increased

MSME Definition Revised: What You Need to Know

Manufacturing Enterprises:

  1. For Micro: - Investment in plant & machinery or equipment< INR 25 Lakh, but now Investment in plant & machinery or equipment < INR 1 cr. and Turnover < INR 5 cr.
  2. For Small: - Investment in plant & machinery or equipment > INR 25 Lakh< INR 5 cr., but now Investment in plant & machinery or equipment > INR 1 cr. < INR 10 cr. and Turnover > INR 5cr.< INR 50 cr.
  3. For Medium: - Investment in plant & machinery or equipment > INR 5 cr.< INR 10 cr., but now Investment in plant & machinery or equipment > INR 10 cr.< INR 50 cr. and Turnover > INR 50 cr.< INR 250 cr.
 

Servicing Enterprises:

  1. For Micro: - Investment in plant & machinery or equipment < INR 10 Lakh, but now Investment in plant & machinery or equipment < INR 1 cr. and Turnover < INR 5 cr.
  2. For Small: - Investment in plant & machinery or equipment > INR 10 Lakh< INR 2 cr., but now Investment in plant & machinery or equipment > INR 1 cr. < INR 10 cr. and Turnover > INR 5 cr.< INR 50 cr.
  3. For Medium: - Investment in plant & machinery or equipment > INR 2 cr.< INR 5 cr., but now Investment in plant & machinery or equipment > INR 10 cr.< INR 50 cr. and Turnover > INR 50 cr.< INR 250 cr.

The above change shall come into effect from 1st July, 2020

Government has launched CHAMPION portal. It has following objectives: -

  1. To help the MSMEs in this difficult situation in terms of finance, raw materials, labour, permissions, etc.
  2. To help the MSMEs capture new opportunities including manufacturing of medical items & accessories.
  3. To identify the sparks, i.e., the bright MSMEs who can withstand at present and become national and international champions.
 

Link:




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CS CA

Hello! I am a qualified chartered accountant and a company secretary. I am into CA Practice I am here to share my views in form of articles. Keep supporting and message me any suggestions Thank you.

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