ABC Pvt. Ltd. is engaged in the business of manufacturing of machinery parts. The company has the following investment in fixed assets: Plant and Machinery: ₹115 lakh (including second hand machinery of ₹25 Lakh and poll

An enterprise shall be classified as a micro, small or medium enterprise on the basis of the following criteria, namely: a Micro enterprise, where the investment in plant and machinery or equipment does not exceed one crore rupees and turnover does not exceed five crore rupees; a Small enterprise, where the investment in plant and machinery or equipment does not exceed ten crore rupees and turnover does not exceed fifty crore rupees; and a Medium enterprise, where the investment in plant and machinery or equipment does not exceed fifty crore rupees and turnover does not exceed two hundred and fifty crore rupee. MSME includes all establishment engaged either in manufacturing or rendering services but it does not include those enterprises which are engaged only in trading activities. The expression "plant and machinery or equipment" of the enterprise, shall have the same meaning as assigned to the plant and machinery in the Income Tax Rules, 1962 framed under the Income Tax Act, 1961 and shall include all tangible assets (other than land and building, furniture and fittings). The purchase (invoice) value of a plant and machinery or equipment, whether purchased first hand or second hand, shall be taken into account excluding Goods and Services Tax (GST), on self-disclosure basis, if the enterprise is a new one without any ITR. The cost of certain items specified in the Explanation I to sub-section (1) of section 7 of the Micro, Small and Medium Enterprises Development Act, 2006, shall be excluded from the calculation of the amount of investment in plant and machinery i.e. in calculating the investment in plant and machinery, the cost of pollution control, research and development, industrial safety devices and such other items as may be specified, by notification, shall be excluded. Exports of goods or services or both, shall be excluded while calculating the turnover of any enterprise whether micro, small or medium, for the purposes of classification. In the given situation, the investment in plant and machinery or equipment is ₹95 lakh (₹115 lakh - ₹20 lakh) and the turnover is ₹450 lakh (₹600 lakh - ₹150 lakh). Therefore, ABC Pvt. Ltd. comes under the category of Micro Enterprise as per the new definition of MSME.