Micro, Small & Medium Enterprises Development Act, 2006 1.

Classification of enterprises for the purpose of this act: Following limits are for Manufacturing industries:

i. Micro enterprises : Investment in plan & machinery does not Exceed Rs. 2 5 lacs (<= Rs. 25 lacs) ii. Small Enterprises: Invest. In P&M greater than Rs. 25 Lacs but does not exceed Rs.5 cr. (>25 lacs but <= 5cr) iii. Medium enterprises: Invest in P&M greater than Rs. 5 Cr. but does not ex ceed Rs. 10 Cr. (>5 Cr. But <= 10Cr) Following limits are for Service providing industries:

i. Micro enterprises: Investment in Equipments does not Exceed Rs. 10 lac (<= Rs.10 lakhs) ii. Small Enterprises: Invest. In Equip. greater than 10 Lakhs but does not exceed Rs.2 cr. (>Rs.10 lakhs but <=Rs. 2cr) iii. Medium enterprises: Invest in Equip. greater than 5 Cr but does not exce ed Rs.10 Cr. (>Rs.2Cr. But <= Rs.5Cr) 2. i. Filling ii. Filling Filling of memorandum: For: Micro enterprises Small enterprises Medium enterprises engaged in providing services of memorandum is optional. (At their discretion) For: Medium enterprises engaged in the manufacture or production of goods of memorandum is Mandatory.

3. Inclusion & exclusion while Calculating the investment in Plant and mach inery Vide Notification Dated 5th October, 2006 the central government specifies follo wing items, the cost of which shall be excluded while calculating the investment in plan & machinery in case of enterprises engaged in manufacture or production of goods: i. Equipment such as tools, jigs, dies, moulds and spare parts for maintena nce and the cost of consumable stores; ii. Installation of plan & machinery; iii. Research & development equipment and pollution control equipment; iv. Power generation set and extra transformer installed by the enterprise a s per the regulation of the state electricity board; v. Bank charges and service charges paid to the national small industries c orporation or the state small industries corporation; vi. Procurement or installation of cables , wiring, bus bars, electrical con trol panels (not mounted on individual machines), oil circuit breakers or miniat ure circuit breakers which are necessarily to be used for providing electrical p ower to the plant and machinery or for safety measures; vii. Gas producer plants; viii. Transportation charges ( excluding sales-tax or value added tax and exci se duty) for indigenous machinery form the place of their manufacture to the sit e of the enterprise;

ix. Charges paid for technical know-how for erection of plant and machinery; x. Such storage tanks which store raw materials and finished products only and are not linked with the manufacturing process; and xi. Fire fighting equipment. While calculating the investment in plant and machinery referred in above paragr aph, the original price thereof, irrespective of whether the plant and machinery are new or second hand, shall be taken in to account provided that in the case of imported machinery, the following shall be included in calculating the value, namely: i. Import duty (excluding miscellaneous expenses such as transportation fro m the port to the site of the factory, demurrage paid at the port); ii. Shipping charges; iii. Customs clearance charges; and iv. Sales tax or value added tax (VAT). 4. Authority Where Memorandum is to be filled:

Vide notification date 29 September, 2006 central government specifies General manager, District Industries centre or district level officer of equivalent rank in the directorate or department dealing with MSME of state Government or union territory administration with which memorandum shall be filled by a person who intends to establish or has already established a medium enterprise engaged in t he manufacture or production of goods. NOTE: Same authority was specified for the medium enterprises engaged in providi ng service through separate Notification.