Government Schemes for MSME & Tax Incentives for Business

The MSME Act of 2006 defines a microenterprise as a corporation with an investment of less than or equal to Rs. 25 lakhs and a small business as one with an investment between Rs. 25 lakhs and Rs. 5 crores. The investment range for a medium-sized business is between 5 to 10 crores. Land and building costs, among others, were not included in these investments, as was explicitly stated in the Ministry of Small-Scale Industries’ serial NO.S. O1772(E) issued October 5, 2006. This expenditure is restricted to the manufacturing and production industries and covers the first outlay.

Government Schemes for MSMEs & Programmes for Startups

Micro-enterprises should spend 10 lakhs on service sector investments, small- and medium-sized businesses no more than 2 crores, and large businesses no more than 5 crores, but all should spend at least 2 crores. This article provides a high-level summary of the government MSME schemes and programmes open to SMEs. Let us see them in detail.

Udyog Aadhaar Memorandum

It is now common knowledge that obtaining an Aadhar card is required before registering for government schemes for MSMEs. If you want to open an MSME, you must first register it; to do that, you’ll need an Aadhar card. Participating in this programme will qualify you for government subsidies, grants, and all kinds of MSME loan schemes. The registration process is available both online and at the relevant agencies.

Zero Defect and Zero Effect

All manufactured and exported products must meet the required specifications or risk being rejected and sent back. It is assumed that the goods will be exported and qualify for the concession.

Quality Management and Quality Technology Tools

We need to sign up for the Udyog Aadhaar programme, which will help micro, small, and medium-sized firms (MSMEs) learn what regulations they must follow and how to adapt to new technologies, before we can launch our MSME. Educators invest a lot of time and energy into organizing seminars, campaigns, and other activities designed to help newcomers make sense of the new technology.

Grievance Monitoring System

For business owners, signing up for this programme is an excellent move since it provides a forum for their concerns to be heard and addressed. Users can also see where their complaints stand at any given time.


Here is where we display our creativity by putting forward and developing new plans, concepts, etc. The government will likely cover 75%-80% of the total project cost if it determines that the idea is both novel and beneficial. So, signing up for this programme is crucial.

Credit Linked Capital Subsidy Scheme

The government will subsidize their purchase under this plan to encourage using new technologies instead of older, less effective ones. These grants are available straight from the bank.

Women Entrepreneurship

This plan is aimed squarely at women eager to launch their own companies. The government provides everything you need to know to advance your career or grow your business—some of the government’s initiatives are aimed at boosting India’s micro, small, and medium-sized enterprises. If you stick to all these plans, your company will run smoothly due to the fact that government programmes provide a rock upon which new MSMEs can build.

Also Read: MSMEs- Driving Growth With Digital Transformation

Ways to Manage GST for Small Business Success

Ministry of Micro, Small, and Medium Businesses data from March 27, 2022, shows that over 7.9 million MSMEs are operating in India. MSMEs account for over 30 percent of all manufacturing output in the country.
According to Statista, as of the 2016 fiscal year, almost 110 million Indians were employed by micro, small, and medium-sized enterprises (MSMEs). More MSME enterprise jobs are found in urban centers than in rural ones.

In the period under review, the country’s largest source of new jobs came from microbusinesses. India relies heavily on its MSMEs. The Indian government introduced the Goods and Services Tax (GST) Act on March 29, 2017, and it went into effect on July 1. The government predicted that creating a unified market and a workable tax system would increase the efficiency of businesses, especially micro, small, and medium-sized enterprises (MSMEs).

Pros of GST for Small Businesses

The benefits of the GST Act and its eventual goals are outlined below.

  • Filling out the GST return will not take too long.
  • Registration for GST can be completed entirely online.
  • There would be only fewer indirect taxes enacted.
  • Companies with GST registration can conduct business across state lines effortlessly.
  • GST has brought order to formerly unregulated business sectors using an electronic system.
  • A single GSTIN may be utilized for all GST-related activities after it has been issued.
  • GST offers a fixed-rate tax filing composition plan, reducing tax liabilities and rates.
  • The ITC can be easily claimed if compliance has been established.
  • Under GST registration, tax evasion is easier to track down.

The goal is to expand the number of businesses subject to GST, and this would encourage people to buy more stuff. Including GST in the market ensures fair pricing for consumers.

Ways MSMEs Manage GST Compliance & GST Recommendations

Around the beginning of 2022, Local Circles polled Indian business people about their experiences implementing GST. The results of the survey include the following:

  • 37% of businesses would devote more time to GST compliance than pre-GST company taxation.
  • Half of the businesses have reported an increase in their monthly accounting costs.
  • 75% of businesses reported that input-output invoice matching would be the most challenging part of the GST.
  • Less than half, 45% of businesses have had a positive experience with GST, while nearly a quarter, 24%, have had a negative one.

GST Guidelines for Micro, Small, and Medium-Sized Enterprises

We need to increase the maximum file size to be uploaded to the portal because papers larger than that are not accepted. Electronic invoices should have a grace period of at least 24 hours or be sent out to businesses automatically. E-invoicing will be implemented if the annual revenue exceeds Rs. 10 cr. As of October 1, 2022, this practice is prohibited for micro, small, and medium-sized enterprises.

Online GST registration is available; state GST offices may conduct onsite checks.

SMEs should speak with the GST department’s employees who provide anti-corruption measures. Finding the existence of a new registration that falls under state or central jurisdiction can take time and effort. Many new registrants and taxpayers have questions about the information their state jurisdiction office provided. The income tax department needs a separate tribunal because of the vast number of legal and factual issues at play. There is no goods and services tax imposed on petroleum products.

Government Eases GST for MSMEs

The government is easing regulations for small and medium-sized businesses. The government, aware of the tremendous contribution of MSMEs, takes a number of measures to promote their development. The same has eased several MSME-related compliances as part of the GST system.

To attract more taxpayers, particularly micro, small, and medium enterprises (MSME), GST may burden these businesses by increasing compliance costs, and related outlays. But, over time, GST would render the same MSMEs increasingly competitive by bringing MSMEs and major corporations closer to the point of equilibrium. As a result, micro, small, and medium-sized enterprises (MSMEs) would better compete with multinational corporations based in countries with lower manufacturing costs, such as Bangladesh, the Philippines, and China.

The Bottomline
Micro, small, and medium-sized enterprises (MSME) drive a nation’s economy, and the government has implemented several programmes to help them thrive. Financial aid, simplified tax compliance, and encouragement of innovation and quality control are all goals of efforts like the GST Act, the Credit Linked Capital Subsidy Programme, and the Udyog Aadhaar Memorandum. Small and medium-sized enterprises (SMEs) can prosper in today’s market by using these programmes and properly overseeing their GST compliance.

MSMEBlog offers insights into the Govt. Schemes available for MSMEs. Learn more about government MSME schemes by visiting

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