Udyam Registration – MSME

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To tackle the disruption caused by the Coronavirus Pandemic, Indian Government has been taking various measures. One such measure was giving special attention to the small and medium size businesses which comes under purview of Micro, Small and Medium Enterprises (MSME) to give momentum for promoting economy. Hence, once social distancing and movement restrictions norms are lifted, MSME sector will be a key player in the growth of the nation. Further, to make the registration of MSME’s easier, Udyam Registration has recently been launched and has already gained a lot of appreciation from legal experts.

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In this article, we will discuss about Udyam Registration by MSME along with key details and process.

Introduction of Udyam Registration

Effective from July 1, 2020, Indian Government has introduced new process for registration of Micro, Small and Medium Enterprises (MSME), known as Udyam Registration. This process aims to facilitate online registration of MSME’s with no requirement of proof of documents, except Aadhar. Udyam Registration has also been completely integrated with GST and IT Systems.

Udyam Registration : MSME and its classification

  • MSME includes such enterprises which are engaged in manufacturing, preservation and processing of goods and rendering services up to a specified limit. After the proposal of Finance Minister, the Ministry of Micro, Small and Medium Enterprises on 1st June 2020 amended the definition of MSME to widen the scope and bring huge number of firms within the definition of MSME.
  • To determine whether the your business entity or enterprise falls within the limits of MSME and under which category, Calculation of amount for Investment in Plant, Machinery and Equipment, and Annual Turnover is required to be calculated.The revised definition of MSME has removed the bifurcation of investment limits of Manufacturing and Services Industry, which was earlier prevalent.
Classification Investment in plant and machinery and equipment Turnover
Micro enterprise Not more than INR 1 Crore Not more than INR 5 Crore
Small enterprise Not more than INR 10 Crore Not more than INR 50 Crore
Medium enterprise Not more than INR 50 Crore Not more than INR 250 Crore

Hence, now a large number of service providers will now be covered under the definition of MSME because of lesser investment in plant and machinery or equipment and turnover in comparison to Manufacturing entity with equal profits.

After this notification, the existing MSME’s can register themselves through the process of Udyam Registration. To avail various benefits under the multiple schemes of Ministry, filing the application under the Udyam Registration shall be a considered as a pre-requisite and necessity.

Note: Indian Government has made it clear that except the portal of Udyam Registration facilitation system, no other offline or online system, agency, service or person is authorized to do MSME Registration or any activity related to it.

Advantages of getting Udyam Registration

The advantages of getting registered under Udyam are as follows:

  • Accessing various government tenders easily
  • Interest amount on bank loan become lower than regular interest rates.
  • Multiple tax rebates
  • Easy access to get approvals, licenses and registrations when registered under Udyam
  • Multiple Tariff, tax and capital subsidies
  • Cost of getting a patent and establishment of industry becomes cheaper as many concessions and rebates are granted

Documents Requirement for Udyam Registration

This new process of MSME Registration under Udyam Registration can be done by filing a self-declaration. This means that any person who wish to establish MSME can file Udyam Registration online on its website/portal (https://udyamregistration.gov.in/) on the basis of self declaration without uploading any paper, document, proof or certificate.

  • For registration as an MSME under Udyam Portal, only Aadhar of following persons are required:
Type of Business Entity Aadhar of
Partnership Firm Managing Partner
Proprietorship Proprietor
Hindu Undivided Family (HUF) Karta
LLP/Company/Co-Operatives/Trust/Any other organization Authorized Signatory
  • In case of a LLP, Company, Society, Trust or Cooperative Society, such entity shall also provide its GSTIN and PAN
  • In case of non-availability of Aadhar, the business entity can approach MSME Development Institutions or District Industries.

Process of Udyam Registration

Udyam Registration - MSME

The process of Udyam Registration is simple and can be done as follows:

Step 1: First of all, the business entity needs to register itself on the portal of Udyam Registration (https://udyamregistration.gov.in/) by mentioning its name and Aadhar details

Step 2: After entering the details mentioned in Step 1, a Permanent Identity number will be generated. Please note that no fee and document need to be provided

Step 3: After completion of application form and registration, a E-Certificate for registration including Permanent Identity Number will be generated

Step 4: Now, you need to submit details of Income Tax Return/GST Return on the portal of Udyam itself

Step 5: With regard to filing details of ITR and GST Returns, the reclassification within categories of MSME will be made

Step 6: Once the process is completed, you will be allotted Udyam Registration Number (URN)

For your Knowledge:

The Champions Control Rooms functioning in various institutions and offices of the Ministry of Micro, Small and Medium Enterprises including the Development Institutes (MSME-DI) shall act as Single Window Systems for facilitating the registration process and further handholding the micro, small and medium enterprises in all possible manner

Things to Remember during Udyam Registration

  • No business entity/enterprise is allowed to file more than one registration. However, you can include any number of activities which may include manufacturing or services, or both, in one single registration application of Udyam.
  • Ready to face penalty if you are found to intentionally attempts to suppress or misrepresents any self declared facts and figures
  • All existing enterprises registered under EM–Part-II or UAM shall register again on the Udyam Registration portal on or after the 1st day of July, 2020.
  • All enterprises registered till 30th June, 2020, shall be re-classified in accordance with this notification.
  • The existing enterprises registered prior to 30th June, 2020, shall continue to be valid only for a period up to the 31st day of March, 2021, post which they are required to register under Udyam Registration Portal before expiry of their registration under EM–Part-II or UAM
  • An enterprise registered with any other organisation under the Ministry of Micro, Small and Medium Enterprises shall register itself under Udyam Registration.

Get MSME License

Steps to be followed while facing issues with regard to Udyam Registration

In case you face any issue with regard to Udyam Registration, you can note down the following:

  • In case of non-availability of Aadhar: In case you are not able to file the Udyam Registration due to lack of or non availability of Aadhaar number, you may approach MSME Development Institutes or District Industries Centers which act as Single Window Systems for Udyam Registration purposes with
    • Aadhaar enrolment identity slip, or
    • Copy of Aadhaar enrolment request, or
    • Bank photo pass book, or
    • Voter identity card or
    • Passport, or
    • Driving licence
  • and the Single Window Systems will facilitate the process including getting an Aadhaar number and thereafter in the further process of Udyam Registration.
  • In case of any discrepancy or complaint in your Udyam Registration: In case of any discrepancy or complaint, the General Manager of the District Industries Centre of the concerned District shall undertake an enquiry for verification of the details of Udyam Registration submitted by the business entity or enterprise and thereafter forward the matter with necessary remarks to the Director or Commissioner or Industry Secretary concerned of the State Government.
    They will 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 to the Ministry of Micro, Small or Medium Enterprises, Government of India, for cancellation of the Udyam Registration Certificate.

Updation of Information on Udyam Registration Portal

  • Once your business entity has been granted with Udyam Registration Number, you have to update its information online in the Udyam Registration portal, including the details of the ITR and the GST Return for the previous financial year and such other additional information as may be required, on selfdeclaration basis.
  • In case of Failure to update the relevant information within the period specified in the online Udyam Registration portal, it will render the enterprise liable for suspension of its status.

Transition Period for Changes in Classification

  • On the basis of information gathered or furnished from governmental sources, including Income tax return or GST return, the classification of the enterprise will be updated.
  • In case of graduation from lower to a higher category or reverse graduation from higher to lower category of an enterprise, a communication with regard to it will be sent to the enterprise
  • The enterprise will maintain its prevailing status till 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 because of any actual changes in investment in plant and machinery or equipment or turnover or both, and whether the enterprise is registered under the Act or not, the enterprise will continue in its present category till the closure of the financial year and it will be given the benefit of the changed status only with effect from 1st April of the financial year following the year in which such change took place.

Takeaway

Udyam Registration is a simple and convenient way of registering an MSME in India. Ministry of MSME under this registration has    linked information which is already submitted under GST and Income Tax. Hence, it comes with security and reliability of information. Under this registration process, the scheme of Aatma Nirbhar Bharat has been justified which in turn will promote ease of doing business in India. Post COVID era, such steps will help in restarting economy with more benefits and enthusiasm.

For more information on Udyam Registration, give a call to our professional experts at Legal Window or drop an e-mail at admin@legalwindow.in

CS Urvashi Jain is an associate member of the Institute of Company Secretaries of India. Her expertise, inter-alia, is in regulatory approvals, licenses, registrations for any organization set up in India. She posse’s good exposure to compliance management system, legal due diligence, drafting and vetting of various legal agreements. She has good command in drafting manuals, blogs, guides, interpretations and providing opinions on the different core areas of companies act, intellectual properties and taxation.

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