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MSME Defination

MSME DEFINITION

In accordance with the provision of Micro, Small & Medium Enterprises Development (MSMED) Act, 2006, the revised definition of MSMEs has been communicated vide Gazette notification no.S.O.1702 (E) dated 1st June 2020 and Gazette notification vide S.O. 2119(E) dated 26th June 2020. The revised definition of MSMEs is effective from 1st July 2020.

An enterprise shall be classified as a Micro, Small or Medium enterprise on the basis of the following criteria -

Segment	Classification based on
Micro Enterprise	Where the investment in Plant & Machinery or Equipment does not exceed one crore rupees and turnover does not exceed five crore rupees.
Small Enterprise	Where the investment in Plant & Machinery or Equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees.
Medium Enterprise	Where the investment in Plant & Machinery or Equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupees.

Composite criteria of investment and turnover for classification:

A composite criterion of investment and turnover shall apply for classification of an enterprise as micro, small or medium.
If an enterprise crosses the ceiling limits specified for its present category in either of the two criteria of investment or turnover, it will cease to exist in that category and be placed in the next higher category but no enterprise shall be placed in the lower category unless it goes below the ceiling limits specified for its present category in both the criteria of investment as well as turnover.
All units with Goods and Services Tax Identification Number (GSTIN) listed against the same Permanent Account Number (PAN) shall be collectively treated as one enterprise and the turnover and investment figures for all of such entities shall be seen together and only the aggregate values will be considered for deciding the category as micro, small or medium enterprise.

"The online form for Udyam Registration captures depreciated cost as on 31st March each year of the relevant previous year. Therefore, the value of Plant and Machinery or Equipment for all purposes of the Gazette notification No. S.O. 2119(E) dated June 26, 2020 and for all the enterprises shall mean the Written Down Value (WDV) as at the end of the Financial Year as defined in the Income Tax Act and not cost of acquisition or original price, which was applicable in the context of the earlier classification criteria".

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MSME DEFINITION

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