Starting and running a small business is a challenge, and especially in the case of finance, there are many challenges. But do you know that the good news is that if your business comes under the classification of MSME, then you can get many financial benefits? From tax exemption to easy loans, you just have to go to the Udyam registration portal and get your MSME registered. After that, the doors of many schemes will open.
In this article, we will explore how Udyam registration helps the business to save tax and how it can easily get access to loans.
What does Udyam registration mean?
Udyam registration is a government-backed initiative aimed at supporting small businesses. When you register your business on the Udyam registration portal, the government recognizes your business as MSME.
All you need is an Aadhaar number, PAN and all basic business details, and you can apply online.
Once you register, you get the registration number and Udyam Registration Certificate. The Udyam Registration Certificate is proof that your business falls under the MSME category. A single paper certificate gives your business multiple advantages, especially when it comes to tax and loan benefits.
Loan Benefits After MSME Registration
Collateral-Free Loan
This is the biggest benefit for MSMEs. Credit Guarantee Fund Transfer
The government provides credit guarantees to banks and NBFCs under micro and small enterprises.
This means that you can avail a loan without pledging anything.
The loan amount is up to Rs 2 crore.
You can use this for working capital, machinery, and inventory expansion.
Low Interest Rate
Many banks offer loans at low interest rates to registered MSME businesses as compared to regular commercial loans. After getting registered, you will become a trusted borrower in the eyes of the banks.
This will help in reducing your monthly EMI burden and increase your savings.For example, if the interest rate of a regular business loan is 14%, then MSMEs will get the same loan at an interest rate of 10 to 12%. This depends on the creditworthiness of the MSMEs and the policy of the bank.
Fast loan approval
Registered MSMEs get priority in many schemes, which means that loan application processing can be done at a faster rate.
The data of MSMEs is shared directly with lenders from the Udyam portal. It makes verification even easier and quicker.
Overdraft Facility with Interest Rebate
Under certain MSME-linked bank accounts, you can get an overdraft facility with a concession of 1% on the interest rate. This is especially helpful in managing short-term cash flow issues.
Tax Benefits After MSME Registration
MSME registration doesn’t directly reduce your taxes, but it gives you access to multiple tax-related benefits that indirectly save money.
Tax exemption on startup costs
MSMEs can claim a deduction for the setup cost of their business, for equipment, marketing, and initial operation. Due to all these deductions, your taxable income gets reduced in the tax you pay.
Credit-linked Capital Subsidy
Under this scheme, MSMEs get capital subsidies to carry out operations. If your business invests in better machinery and software, then you can claim part of the cost as a subsidy, due to which your overall tax outgo can be reduced.
Timely Payment Benefit
Under the MSME Act, if the buyer delays in making payment for more than 45 days, then it is liable to pay interest at three times the bank rate of the RBI. This amount is taxable for buyers and non-taxable for MSMEs and offers indirect tax benefits to enterprises that are registered MSMEs.
GST Benefit
MSMEs with a turnover up to Rs 1.5 crore can opt for the GST Composition Scheme, which allows them to pay at a lower tax rate. Also, businesses with MSME registration get priority for GST refunds, and it also happens that they are often exempted from mandatory audits.
Additional Perks for MSME Registered Businesses
Along with loan and tax benefits, MSME registration offers several extra advantages:
- Subsidies on ISO certification
- Concession on electricity bills
- Barcode registration subsidy
- Reimbursement for participating in trade fairs and expos
- Priority in government tenders
How to Register for MSME (Udyam Registration)?
- Go to the Udyam registration portal. And fill the Udyam registration form.
- Use your Aadhaar card, active mobile number
- Fill in PAN, GST, and business details
- No documents required to upload
- Submit and download your certificate
You Can Apply for Udyam Annexure Download Through Udyam Portal
Conclusion
MSME registration is no longer just a formality; due to this, MSME owners can save a lot of taxes and can also get finance easily. No matter what kind of business you have, if it comes under the category of MSME, then complete the Udyam registration process today and make your business credible. It will help your business to grow at a faster rate.
