Calculation of Investment in Plant and Machinery for M.S.M.E

Effective from 1st July 2020, there is a change in investment in plant and machinery concepts so aware while taking MSME registration under the MSME Act.

The below factors should be considered for the understanding of investment in plant and machinery

(i) The calculation of investment in plant and machinery or equipment will be linked to the Income Tax Return (ITR) of the previous years filed under the Income Tax Act, 1961.

(ii) In the case of a new enterprise, where no prior ITR is available, the investment will be based on
self-declaration of the promoter of the enterprise and such relaxation shall end after the 31st March of the financial year in which it files its first ITR.casolutionsglobal

(iii) 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).

(iv) 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.

(v) The cost of certain items specified in the Explanation I to sub-section (1) of section 7 of the Act shall be excluded from the calculation of the amount of investment in plant and machinery.


Priyansh Minocha

Priyansh Minocha is C.E.O and Director at Amonest India Private Limited and Founder at Casolutionsglobal

Leave a Reply