The Union Cabinet today approved the change in criteria for classifying MSMEs from ‘Investment in Plant & Machinery' to annual turnover. As per the new classification, enterprises having an annual turnover less than or equal to Rs 5 crore will fall under the ‘micro' category.
Units having turnover between Rs 5 crore to Rs 75 crore will be classified as small enterprises, whereas those having turnover between Rs 75 crore and Rs 250 crore will be classified as enterprises.
According to the government, the move will encourage ease of doing business, make the norms of classification growth- oriented and align classification norms to the new tax regime revolving around GST.
Also Read: Certain MSMEs Can Now Repay Loans Within 180 Days Without Becoming NPA
The decision was taken at a meeting of the Union Cabinet chaired by Prime Minister Narendra Modi.
Section 7 of the Micro, Small & Medium Enterprises Development (MSMED) Act 2006, will accordingly be amended to define units producing goods and rendering services. At present, the section classifies MSMEs on the basis of investment in plant and machinery for manufacturing units, and investment in equipment for services enterprises.
Also Read: Union Budget: Government To Announce Steps To Tackle Bad Loans In MSME Sector
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