New MSME Definitions : PRO’s and Cons

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What are the Changes in the existing MSME Definition :

The existing definition was linked to investment in plant and machinery, but now the govt. has shifted towards Investment and Turnover combined methodology.

Critique:-

  • In case of their [MSMEs] global investment, if it’s more than the prescribed limit, they would no longer be able to enjoy the relaxations meant for them.
  • For many firms, if either their investment increases or turnover increases, they will lose the status of an MSME.
  • People Say that the Turnover limits are kept low Less.
  • Some say that new definitions set forth are definitely confusing, a lot of companies will now have to start re-evaluating their numbers, Profit and Loss (P&L) statement etc. to try and fit in these new regulations.

Bright Side :-

  • Proponents say that the increase in investment limits will bring many new units within the realm of the MSME sector, and this will lead to more inclusive growth that is relevant to the present situation.
  • This is much more Transparent System : Since details of investments and turnover are easily available in books of accounts that are required to be statutorily maintained, compliance should not be an issue. Turnover details should be available in the GST system.

What Benefits MSME’s Enjoy ( Why MSME Tag Matter):-

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