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Proposal to amend the classification of MSMEs gets green lit by the Union Cabinet
Industry News- Mar 19,18
The Union Cabinet has approved the Ministry’s proposal to amend the Section 7 of the Micro, Small and Medium enterprises Development (MSMED) Act, 2006 to change the criteria of classification of MSMEs from ‘investment in plant & machinery/equipment’ to ‘annual turnover’
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The Union Cabinet has approved the Ministry’s proposal to amend the Section 7 of the Micro, Small and Medium enterprises Development (MSMED) Act, 2006 to change the criteria of classification of MSMEs from ‘investment in plant & machinery/equipment’ to ‘annual turnover’ and to withdraw the MSMED (Amendment) Bill, 2015 pending in Lok Sabha.
The MSME units producing goods and rendering services will be defined in terms of annual turnover, as under:
- A micro enterprise will be defined as a unit where the annual turnover does not exceed Rs 50 million.
- A small enterprise will be defined as a unit where the annual turnover is more than Rs 50 million but does not exceed Rs 750 million.
- A medium enterprise will be defined as a unit where the annual turnover is more than Rs 750 million but does not exceed Rs 2.5 billion.
Additionally, the Central Government may, by notification, vary turnover limits, which shall not exceed thrice the limits specified in Section 7 of the MSMED Act. The above amendment will encourage ease of doing business, make the norms of classification growth-oriented and align them with the new tax regime revolving around GST.
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