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Pankaj Tyagi
| Updated: 24 Dec, 2021 | Category: MSME

MSME registration for Traders: Explained

MSME registration for Traders

Udyam Registration, broadly known as MSME registration is now available for traders. This clarification has already been shared with public couple of months back.  If you are engaged with trading activities (retail or wholesale) then you can opt for this registration and avail all the benefits as available to other registered entities.  This write-up intends to disclose all the detail regarding MSME registration for traders.

MSME registration for traders: Announcement date

On July 2, 2021, the GOI included wholesale and retail traders under the MSME classification, making them eligible for priority sector lending offered by banks and other institutions as per RBI’s norms.    

The beneficiary segments of this announcement would be retail and wholesale trade and repair of four-wheelers and motorcycles, wholesale trade except of four-wheelers and two-wheelers and retail of four-wheelers and two-wheelers

Impact on smaller wholesaler and Retailer

The decision of providing MSME registration for traders has ensured a positive impact on the smaller retailers as well as wholesalers with turnover up to Rs 250 crore in availing prompt credit as part of various schemes released under Atamnirbhar Bharat[1].”

According to the RBI circular released in the month of July, enterprises with Udyog Aadhaar Memorandum under aforesaid three NIC codes are now permitted to migrate to Udyam Registration Portal.

UAM refers to a one page application form for registration which entails a self-declaration format which allows MSME to certify its existence, details regarding bank account, aadhaar details of the promoter and other mandatory details.

Benefits under MSME Registration

Udyam registration, formerly known as MSME Registration renders following benefits to the registered businesses:

Availability of Collateral Free bank loans

The GOI has ensured the availability of colletral-free loan for the small and micro-business sectors. This would allow small businesses to stop wondering around traditional institutions that excels on stringent loan disbursement policies.

The trust known as Credit Guarantee Trust Fund Scheme was launched by the GOI,  Small Industries Development Bank Of India & the Ministry of MSME to ensure this scheme is deployed for all financially aggrieved enterprises.

Cost Relaxation on Patent Registration

Under the prevailing laws, MSMEs registered entities stand eligible for 50% subsidy on their patent registration fees. This would allow small businesses to keep innovating the new projects and technologies.  To become eligible for this subsidy, the entity needs to furnish a prescribed application from to the concerned ministries.

Overdraft Interest Rate Exemption

MSME-registered entities can avail benefit of 1 per cent on the Over Draft in a scheme that varies bank-wise. This would empower the small entities to address unexpected financial crisis with ease.

Industrial Promotion Subsidy Eligibility

Businesses under the MSME registration would stand eligible for subsides relating to Industrial Promotion as provided by the GOI.

Coverage against Deferred payment

The risk of delayed payments is quite prominent in the MSME sector. Small businesses often found helpless as they failed to recover full payment from the vendors which eventually lead to supply chain disruption and poor financial performance.  MSME registration holders can effectively address this loophole as they are under the protection of the government that seeks to penalise defaulters in such a case. As per the Supreme court judgement, individual or entity having business affair with MSME are mandated to make the payment within 15 days or agreed date from the date of business transaction. Any delay in this regard would compel the defaulter to make payment along with the interest. The rate of interest would be charged as per the RBI’s norms.

Concessions on electricity bills

All MSME-registered entities are eligible to avail concessions on their electric bill. This allows business to scale-up the production rate and secure more orders from clients without worrying about capital expenditure on costs like maintenance and electricity. To avail such a benefit, the concerned MSME needs to furnish a prescribed application form to the state electricity department along with the registration certificate.

ISO Certification Charges Reimbursement

Any MSME-registered entity can claim claim reimbursement of the expenses made to secure the ISO certification.

Conclusion

Ministry facilitating MSME registration for traders would provide great deal of advantage to thousands of retails and wholesale –based businesses across India. Since MSME registration aims at rendering various growth-driven schemes and boost business growth, traders and wholesalers would definitely finds it productive to avail the same.

Read our article:MSME Registration – Know the Entire Procedure

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Pankaj Tyagi

Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.

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