Bikky Khosla | 13 Feb, 2018
Union Cabinet last week approved a proposal to change the definition
of Micro, Small and Medium enterprises. Since
1950s Small Scale Industries (SSIs) and later MSMEs have been
traditionally defined based on their investment in plant and
machinery for manufacturing units, and investment in equipment for
service enterprises, and now the new definition define them based on
which came on the heel of the Budgetary proposal to the
tax to companies
having turnover up to Rupee 250 crore, is
a welcome one.
to the new definition, a micro enterprise is a unit where the annual
turnover does not exceed Rs. 5 crore, a small enterprise is one where
annual turnover is between Rs. 5 crore and Rs 75 crore, and a
enterprises is where the turnover is more than Rs 75 crore but does
not exceed Rs 250 crore. In order to give
this new MSME
into effect, the Section 7 of the Micro, Small and Medium Enterprises
Development (MSMED) Act, 2006 will be amended in
the coming days.
move also aligns the definition with GST regime. It
will be easier now for authorities to verify claims of businesses
using the sales data they have from the GST Network. This
will eliminate the need for inspections, make the classification
system progressive, and contribute to ease of doing business as well.
It is also expected that with this new definition the Government will
do away with those clauses that exclude medium sector from various
promotional schemes for the sector.
in another positive development, the RBI last week gave MSMEs
an extension of up to 180 days to clear their loans to banks. Now,
they shall continue to be classified as a standard asset in the books
of banks and NBFCs subject to amount from the borrower overdue as on
September 1, 2017 and payments from the borrower due between
September 1, 2017 and January 31, 2018 are paid not later than 180
days from their respective original due dates. No doubt, this move
will help MSMEs to adjust to the new formalised business environment
under the GST.
invite your opinions.