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Module: General Practice

Q7: Regarding the "Composite Criteria" for MSME classification used in 2026, which of the following statements is INCORRECT?

A
To maintain a category status (e.g., Small), an enterprise must stay within both the investment and turnover limits.
B
If an enterprise exceeds the limit for either investment or turnover, it is placed in the next higher category.
C
Exports of goods or services are included when calculating the turnover limit.
D
Investment calculation is linked to the Income Tax Return (ITR) of the previous years.
✅ Correct Answer: C
Correct Option: C (This statement is False). Concept: Calculation of Turnover (Composite Criteria). The Rule: According to the MSMED Act and 2020/2025 notifications, Exports of goods or services are EXCLUDED from the turnover calculation.
Why this matters: This provision encourages MSMEs to export without fear that high export revenue will push them into a "Large" category where they lose benefits.
Clarification on others: A & B: Correct.
You must meet both criteria to stay "Small". Crossing either makes you "Medium". D: Correct.
The Udyam portal fetches investment data directly from ITR filings.
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