What is Udyam Registration?
A new process of classification and registration of MSME Enterprises launched on July 1, 2020, under the name of 'Udyam registration.' The Union Ministry of Micro, Small and Medium Enterprises (MSME) had announced the same through a notification on June 26.
The MSME Ministry launched a new portal for Udyam Registration www.udyamregistration.gov.in. The portal will guide the entrepreneur's step by step as to what they should know and what they should do.
Classification of Enterprises
An enterprise shall be classified as a micro, small, or medium enterprise based on the following criteria:
Investment in Plant and machinery
Does not exceed Rs.1 cr
Does not exceed Rs.10 cr
Does not exceed Rs.50 cr
Does not exceed Rs.5 cr
Does not exceed Rs.50 cr
Does not exceed Rs.250 cr
- A composite criterion of investment and turnover shall apply for classification of an enterprise as micro, small, or medium.
- If an enterprise crosses the ceiling limits specified for its present category in any of the two criteria of investment or turnover, it will be placed in the next higher category.
- Only when the enterprise goes below the ceiling limit of both the criteria can it be placed in a lower category.
- All units with GST numbers listed against the same Permanent Account Number (PAN) shall be treated as one enterprise, and the turnover and investment figures for all entities shall be seen together.
How to become a micro, small, or medium enterprise?
- Any person who intends to establish a micro, small or medium enterprise may file Udyam Registration online in the Udyam Registration portal, based on self-declaration with no requirement to upload documents, papers, certificates or proof.
- On registration, an enterprise (referred to as – Udyam in the Udyam Registration portal) will be assigned a permanent identification number to be known as – Udyam Registration Number.
- An e-certificate, namely, – Udyam Registration Certificate shall be issued on completion of the registration process.
How to calculate the criteria?
Calculation of Investment in Plant and Machinery/Equipment
Calculation of Turnover
- Will be linked to Income Tax Return (ITR) of the previous years, and plant/ machinery/equipment will have the same definition as defined by Income Tax.
- In the case of a new enterprise, it will be based on self-declaration of the enterprise’s promoter. This will be based on purchase value, whether first hand or second hand excluding GST.
- Exports of goods or services or both shall be excluded.
- Turnover and export turnover for an enterprise shall be linked to the Income Tax Act or the Central Goods and Services Act (CGST Act) and the GSTIN.
- Entities that do not have PAN, for a period up to March 31 ’21, turnover will be considered on a self-declaration basis after the date mentioned above PAN, and GSTIN is mandatory.
- Form for registration shall be as provided in the Udyam Registration portal, and there is no fee for filing Udyam Registration.
- Require Adhaar Number for Udyam Registration(Proprietor’s aadhar for proprietorship, managing partners for partnership, karta’s for HUF, company/LLP/society/trust the signatory person shall provide GSTIN and PAN with Aadhar.
- In case an enterprise is registered as an Udyam with PAN, any deficiency of information for previous years when it did not have PAN shall be filled up on a self-declaration basis.
- No enterprise shall file more than one Udyam Registration.
- All existing enterprises registered under EM–Part-II or UAM shall register again on the Udyam Registration portal on or after July 1 ’20.
- All enterprises registered till June 30, 2020, shall be re-classified under this notification.
- The existing enterprises registered before June 30, 2020, shall continue to be valid only for a period up to the 31stday of March 2021.
- An enterprise registered with any other organization under the Ministry of Micro, Small, and Medium Enterprises shall register itself under Udyam Registration.
- An enterprise having Udyam Registration Number shall update its information online in the Udyam Registration portal, including the details of the ITR and the GST Return and such other additional information as may be required, on self-declaration basis.
- Failure to update the relevant information within the period specified will lead to enterprise liable for suspension of its status.
- In case of graduation (from a lower to a higher category) or reverse-graduation (sliding down to lower category) of an enterprise, a communication will be sent to the enterprise about the change in the status.
- In case of an upward change in terms of investment in Plant and machinery or equipment or turnover or both, and consequent re-classification, an enterprise will maintain its prevailing status till the expiry of one year from the close of the year of registration.
- In case of reverse-graduation of an enterprise, due to re-classification or actual changes in investment in Plant and machinery or equipment or turnover or both, the enterprise will continue in its present category till the closure of the financial year. It will be given the benefit of the changed status only with effect from April 1 of the financial year following the year in which such change took place.
- Champions Control Rooms functioning in various institutions and offices of the MSME including the Development Institutes shall act as Single Window Systems for facilitating the registration process and handholding MSME.
- The District Industries Centres (DICs) will also act as Single Window facilitation Systems in their Districts.
- Any person who cannot file the Udyam Registration may approach any of the above Single Window Systems and facilitate the process, which includes getting an Aadhaar number and thereafter in the further process of Udyam registration.
- In case of any discrepancy or complaint, the General Manager of the District Industries Centre shall undertake an inquiry for verification of the details of Udyam. After that forward the matter with necessary remarks to the Director or Commissioner or Industry Secretary of the State Government who after issuing a notice to the enterprise and after giving an opportunity to present its case and based on the findings, may amend the details or recommend cancellation of the Udyam Registration Certificate.
- According to the MSME Ministry, the new MSME registration process will be extremely simple, seamless, and entrepreneur-friendly.
- It will also help set an example in Ease of Doing Business, not only in India but internationally.
- It will also reduce transaction time, and costs and the entrepreneurs and enterprises will be able to focus on their real work and become globally competitive.