Udyam Registration is the new process of MSME/Udyog Aadhar Registration launched by the Ministry of Micro, Small and Medium Enterprises (MSME) effective from July 1, 2020.
MSME stands for Micro, Small and Medium Enterprises. MSMEs are governed under the Micro, Small, and Medium Enterprises Development (MSMED) Act in 2006, which aims to facilitate the promotion, development and enhancing the competitiveness of micro, small and medium enterprises.
MSME enterprises are classified into two divisions:
- Manufacturing enterprises: engaged in the manufacturing or production of goods in any industry.
- Service enterprises: engaged in providing or rendering services.
Qualification for Udyam
Each kind of business element is qualified to register under the Udyam registration
- Partnership firm
- Hindu Undivided Family (HUF)
- One Person Company (OPC)
- Limited liability partnership (LLP)
- Private limited Company
- Public Limited Company
- Co-operative Societies
- Any Association of Persons
As per Notification No. S.O. 1702(E) Dated 01.06.2020, effective from July 01, 2020, the MSMEs are categorised on the basis of Investment in plant and machinery and Annul Turnover as under:
Investment in Plant and Machinery
Investment <Rs.1 crore
Investment <Rs. 10 crore
Investment <Rs. 50 crore
Turnover <Rs.5 crore
Turnover <Rs.50 crore
Turnover <Rs.250 crore
Calculation of Turnover and Investment
- Calculation of Turnover:
- Exports of goods or services, shall be excluded from turnover for the purposes of classification.
- Information as regards turnover and exports turnover for an enterprise shall be linked to the Income Tax Act or the Central Goods and Services Act and the GSTIN.
- The turnover of enterprise which do not have PAN will be considered on self-declaration basis for a period up to 31st March, 2021. Thereafter PAN and GSTIN shall be mandatory.
- Calculation of Investment/ Value of Plant & Machinery:
- The Govt. by way of office memorandum dated Aug 06, 2020, clarified that the Value of Plant and Machinery or Equipment 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).
- In 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.
- The online Form for Udyam Registration captures depreciated cost as of 31st March each year of the relevant previous year. Therefore, the value of Plant and Machinery or Equipment for all purposes of the Notification No. S.O. 2119(E) dated 26.6.2020 and for all the enterprises shall mean the Written Down Value (WDV) as at the end of the Financial Year as defined in the Income Tax Act and not the cost of acquisition or original price, which was applicable in the context of the earlier classification criteria.
- In case of new enterprises, the purchase 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)
Benefits of Udyam Registration
- Udyam registered entities gets protection against delay in payment from Buyers and rights of interest on delayed payment. Buyer is expected to make a payment for the good or services within 15 days of the purchase. If the buyer delays, the payment for more than 45 days, the Udyam register enterprises are eligible to charge compound interest which is 3 times the rate notified by RBI.
- Time-bound resolution of disputes with buyers through conciliation and arbitration
- The Credit Guarantee Fund Scheme for Micro and Small Enterprises to make available collateral-free credit, this initiative guarantees funds to micro and small sector enterprises.
- Udyam registered entities get preference in government tenders.
- Udyam registered entities will get concession in electricity bills.
- Reimbursement of ISO certification Expenses/subsidy on ISO certification
- Registration with National Small Industries Corporation NSIC
- Reservation policies to manufacturing/production sector enterprises
- Businesses or enterprises registered as MSME/SSI under the MSME Act are eligible to avail a benefit of 1% on the overdraft as part of the Credit Guarantee Trust Fund Scheme.
- Business enterprises registered under the Udyam are given a hefty subsidy of 50 per cent for patent registrations.
- Udyam registered entities can claim the expenses for reimbursement that were spent on ISO certification.
- Udyam registered entities get exemptions under direct tax laws.
Following documents are required to register under Udyam Registration:
- Aadhar Card
- Balance sheet
- Certificate of Incorporation (in case of Company)
- Certificate of commencement of business
- List of total number of employees with gender wise breakup
Udyam Registration Process
The registration process is very simple and user friendly. Udyam Registration is a self-declaration paperless and free-of-cost platform for entrepreneurs to register their enterprises. Enterprises don’t have to provide any documents or proof except the Aadhaar card for the registration.
Moreover, the portal will automatically pull PAN and GST-linked details on investment in the business, according to Udyam Registration since it is integrated with Income Tax and GSTIN systems. MSMEs are given a permanent registration number and a certificate post-registration. The certificate bears a QR Code from which the details about the enterprise can be accessed. An applicant can directly submit an online application using an Aadhar number through the MSME portal https://udyamregistration.gov.in/Government-of-India/Ministry-of-MSME/online-registration.htm.
The registration process is divided into two categories as under:
- New Registration: New Business who are not registered yet as MSME
New registration is to be obtained by applicants who do not hold UDYOD Aadhar or EM-II. To make fresh registration, new applicants have to visit on .www.udyasmregistration.gov.in.
- Migration: Business who is already registered as EM-II or UAM
Businesses with EM-II or UAM registration will have to re-register themselves. Importantly, the Reserve Bank of India (RBI) had last year clarified that existing EMs part II and/or UAMs of MSMEs obtained before June 30, 2020, will continue to remain valid till March 31, 2021, even as they had to register before March under Udyam Registration on or after July 1, 2020. However, renewal of new registration won’t be required.
Steps For New Registration:
- Click on “For New Entrepreneurs who are not registered yet on MSME”
- Enter Aadhar no. and Name of the Entrepreneur
- Choose type of organization from the dropdown and enter PAN Details
- Enter mobile no. and email address of the entrepreneur
- Enter details relating to the social category, Gender, Name of Enterprise, Name of Unit
- Enter the details relating to the social category, Gender, Name of Enterprise, Name of Unit
- Enter the details relating to Official Address, Status of Enterprises, Bank Details
- Enter the Bank Details, Major Activity of Units, NIC, Relating to Official Address, Status of Enterprises, Bank Details
- Enter the details of Employees, Investment in Plant & Machinery, Turnover
- Select if you are interested in getting registered on the e-Market Portal & TReDS portal
- Click on Submit and Generate OTP
- Verify with OTP and Verification Code
- Cheers! You are registered