Construction organizations have increasingly struggled with late payments of bills regardless of whether they are from a government agency or a huge corporation. This certainly has a massive impact on the company’s growth and long-term viability. Thus, It is unwise not to have an MSME Registration as a construction company. In this article, we will understand the major advantages of MSME registration for construction company.
What is MSME Registration?
MSME is an acronym for Micro, Small, and Medium Enterprises, and it encourages the growth and promotion of enterprises through a range of incentives and programs.
MSMEs play a vital role in the economic development of every country. The Indian government has created a variety of programs to help small and medium-sized businesses thrive in order to promote new and existing industries.
To take advantage of various government programs, you must first register as an MSME. The registration is known as the MSME registration or Udyam Registration.
What is the MSME Act?
The Micro, Small and Medium Enterprises Development Act of 2006 [MSME] made provisions to address the issue of late payment, requiring any client who fails to make payment to an MSMEs registered contractor, regardless of the contractual conditions, to do so within 45 days.
If the client, the buyer, fails to pay, they will be charged monthly compounded interest at three times the bank rate set by the RBI. Furthermore, in the event of a dispute over the realization of principal and interest, state governments will form MSME councils that will undertake hearings to resolve all problems.
Significant Advantages of MSME registration for construction company
There are unlimited benefits of MSME Registration. However, we have listed the most significant ones that you must know.
- The government has announced a Rs 3 lakh crore credit guarantee fund for lending to industry, especially MSME. Banks and financial institutions will lend money to MSME without demanding collateral under this scheme. This scheme is open to businesses with a revenue of Rs 100 crore and an outstanding limit of Rs 25 crore.
- The MSME Department now has new definitions of MSME so that more construction and other companies can join and take advantage of the schemes offered under MSME Registration.
- The Finance Minister has also announced an increase in the subsidiary debt facility for MSME to Rs 20,000 crore. This compensation would be given to MSME whose accounts have been deemed stressed or non-performing assets. This will aid in the revival of struggling MSME businesses, especially construction companies.
- Another Advantage of MSME Registration for a company is the reduction in EPF Contribution.
- Construction companies after enrolling under MSME Registration get Subsidies on power, taxes, and entry to state-run industrial estates. The construction company can also get Exemption from certain direct taxes in the initial years of your business after successful Udyam Registration.
- Six months would be allocated for project completion under RERA regulations for MSMEs as well. This will assist developers in finishing their projects and obtaining a completion certificate while avoiding any penalties. In addition, TDS levels have been cut by a quarter.
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