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99% organizations in India now in MSME class

(Representative impression)NEW DELHI: A change in definition of micro, little and medium enterprises (MSME) has turned India into a country of tiny corporations as virtually 99% of the entities now fall below the classification based mostly on the twin parameters of investment and turnover. An entity can be categorized as a micro organization if investment is up to Rs 1 crore and turnover does not exceed Rs 5 crore. The corresponding figures are Rs 10 crore and Rs 50 crore for compact and Rs 50 crore and Rs 250 crore for medium enterprises . Govt to use I-T, GST data to plug gapsInvestment in plant and machinery has been the classic parameter on which MSMEs have been categorized, enabling them entry to various sops such as concessional finance, nevertheless the major gain of excise obligation reduction has been lost ever due to the fact the GST routine was applied. Authorities sources explained to TOI that figures with the GST authorities clearly show that 99% of the entities have a turnover that matches into the MSME definition. Extra than 50 % the companies registered with GST Network have much less than Rs 20 lakh turnover, the before registration threshold. As an extra relief, export turnover has been excluded to enable additional units to get the advantage. Likewise, cash flow tax department’s evaluation showed that when it arrives to investment, the written down value of assets, that is soon after depreciation, there are a few thousand entities in India that have investments in plant and machinery or products that exceed Rs 50 crore, the ceiling for medium enterprises. The quantities have arrive as a surprise to policymakers as the definition was finalized just before on the lookout at them in element. It is only now that the MSME ministry has sought to plug the gaps as it detected that by utilizing 1 Aadhaar selection, 5 Udyog Aadhaar Quantities could be created, encouraging companies to split their units into five individual entities and claim all the benefits. It has now made the decision to tap the income tax and GST databases to get a much better photo of enterprises saying benefits.

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