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Government Approves Change In The Criteria For Classifying MSME’s


Author: CA Manan Trivedi
Posted On: Tuesday 13 February 2018

Tags: MSME micro industry reforms plant & machinery msme classification

The Union Cabinet on 8th February, 2018, in a meeting chaired by Prime Minister NarendraModi, approved the change in criteria for classifying entities as MSME from classification based on the “investment in Plant & Machinery (P&M) for manufacturing units and investment in Equipments for service oriented enterprises” to “annual turnover”.

The existing limits for investment in P&M / Equipments as per the provisions of Micro, Small & Medium Enterprises Development Act, 2006 are as under:

Existing Criteria:

Enterprise

Manufacturing Sector

Service Sector

 

Investment in P&M

Investment in Equipments

Micro

Not exceeding Rs.25 Lakhs

Not exceeding Rs.10 Lakhs

Small

More than Rs.25 Lakhs but not exceeding Rs.5 crores

More than Rs.10 Lakhs but not exceeding Rs.2 crores

Medium

More than Rs.5 crores but not exceeding Rs.10 crores

More than Rs.2 crores but not exceeding Rs.5 crores

 

The Union Cabinet has approved the criteria based on annual turnover of the enterprises for classification. The new criteria is as under:

Proposed Criteria:

Enterprise

Manufacturing Sector or Service Sector

 

Annual Turnover

Micro

Not exceeding Rs.5 crores

Small

More than Rs.5 crores but not exceeding Rs.75 crores.

Medium

More than Rs.75 crores but not exceeding Rs.250 crores.

The change is with a view to extend benefits to larger number of entities and encourage ease of doing business in the country. Also, it is a step to align the classification norms with the GST making it more growth oriented.

Section 7 of the Micro, Small & Medium Enterprises Development Act, 2006 shall be amended suitably in due course of time to replace the existing classification norms. 

Please feel free to write to us on manan@apmh.in for any further queries on the above blog.

 

 

 

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