Udyam registration, benefits and services

CS Swati Nivalkar

The Union cabinet approved the modalities and road map for the micro, small and medium enterprises on 1^st June ,2020. India is aiming to take next big leap. The initiative to skill India’s efforts directed towards  economic infrastructural changes, has ramped up micro entrepreneurship models and boosted start up culture.  The young Indian entrepreneur will require knowledgeable workers and skilled technical staff who are flexible, analytical and who can be driving force for gaining market share. The Micro, Small and medium enterprise not only contributes significantly to the Indian Economy in terms of Gross Domestic Products (GDP) but also to exports and employment generation.

In this article tried to throw light on following :

1. UDYAM,

2. MSME Definition,

3. Revised MSME classification,

4. Calculation of Investment

5. Calculation of Turnover,

6. Criteria of Composite Investment and Turnover,

7. Registration process,

8. Registration of Existing Enterprises,

9. Registration Benefits,

10. Services offered on UDYAM Portal.

11. Penalty

1. UDYAM :

As per notification of MSME dated 26.06.2020, Udyam Registration is the new process of MSME/UDYOG AADHAAR Registration launched by the Ministry of Micro, Small and Medium Enterprises effective from July 1, 2020.

2. MEANING OF MSME :

MSME stands for Micro, Small, and Medium Enterprises. In accordance with the Micro, Small, and Medium Enterprises Development (MSMED) Act in 2006, the enterprises are classified into two divisions. a. Manufacturing enterprises – engaged in the manufacturing or production of goods in any industry b. Service enterprises – engaged in providing or rendering services.

3. REVISED MSME CLASSIFICATION

Composite Criteria : Investment and Annual Turnover

Classification	Micro	Small	Medium
Manufacturing & Services	Investment < Rs 1Cr and turnover < 5Cr	Investment < Rs 10Cr and turnover < 50Cr	Investment < Rs 50Cr and turnover < 250Cr

(Note : for turnover calculation Export of Goods and Services will be excluded)

4. CALCULATION OF INVESTMENT :

• 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.
• 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 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).
• 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.
• 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.

5. CALCULATION OF TURNOVER

• Exports of goods or services or both, shall be excluded while calculating the turnover of any enterprise whether micro, small or medium, 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 (CGST Act) and the GSTIN.
• The turnover related figures of such enterprise which do not have PAN will be considered on self-declaration basis for a period up to 31st March, 2021 and thereafter, PAN and GSTIN shall be mandatory.

6. COMPOSITE CRITERIA OF INVESTMENT AND TURNOVER FOR CLASSIFICATION

• 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 either of the two criteria of investment or turnover, it will cease to exist in that category and be placed in the next higher category but no enterprise shall be placed in the lower category unless it goes below the ceiling limits specified for its present category in both the criteria of investment as well as turnover.
• All units with Goods and Services Tax Identification Number (GSTIN) listed against the same Permanent Account Number (PAN) shall be collectively treated as one enterprise and the turnover and investment figures for all of such entities shall be seen together and only the aggregate values will be considered for deciding the category as micro, small or medium enterprise.

7. REGISTRATION PROCESS :

• The registration on UDYAM Registration Portal is paperless, based on self declaration and without any filing fees.
• The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm and of a karta in the case of a Hindu Undivided Family (HUF).
• In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organisation or its authorised signatory shall provide its GSTIN and PAN along with its Aadhaar number.
• In case an enterprise is duly registered as an Udyam with PAN, any deficiency of information for previous years when it did not have PAN shall be filled up on self-declaration basis.
• No enterprise shall file for more than one UDYAM registration, any number of activities including manufacturing or service may be added in one UDYAM registration.
• On registration, an enterprise will be assigned a permanent identity number to be know as “Udyam Registration Number”
• An e-certificate namely, Udyam Registration Certificate shall be issued on completion of registration process.

8. REGISTRATION FOR EXISTING ENTERPRISES :

• 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.
• An enterprise registered with any other organization under the Ministry of Micro, Small and Medium Enterprises shall register itself under Udyam Registration.

9. UPDATION OF INFORMATION AND TRANSITION PERIOD IN CLASSIFICATION :

• 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 for the previous financial year and such other additional information as may be required, on self declaration basis.
• Failure to update the relevant information within the period specified in the online Udyam Registration portal will render the enterprise liable for suspension of its status.
• Based on the information furnished or gathered from Government’s sources including ITR or GST return, the classification of the enterprise will be updated.
• 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 reclassification, an 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, whether as a result of re-classification or due to 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.

10. FACILITIES AND GREIVANCE REDRESSAL OF ENTERPRISES :

• 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.
• The District Industries Centres (DICs) will also act as Single Window facilitation Systems in their Districts.
• Any person who is not able to file the Udyam Registration for any reason including for lack of Aadhaar number, may approach any of the above Single Window Systems for Udyam Registration purposes with his 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, 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 enterprise and thereafter forward the matter with necessary remarks to the Director or Commissioner or Industry Secretary concerned 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 to the Ministry of Micro, Small or Medium Enterprises, Government of India, for cancellation of the Udyam Registration Certificate.

11. REGISTRATION BENEFITS :

• Collateral Free Loans from Bank :

The Credit Guarantee Fund Scheme (CGS) for Micro and Small Enterprises was launched by the Government of India to make available collateral-free credit to the micro and small enterprise sectors. This initiative guarantees funds to micro and small sector enterprises. Under this scheme, both the old as well as the new enterprises can claim the benefits.

• Easy Clearance of Pending Payments

Under the MSME registration benefits, a buyer is expected to make a payment for the goods/services within 15 days of the purchase. If the buyer delays, the payment for more than 45 days, the enterprise is eligible to charge compound interest which is 3 times the rate notified by RBI. At times, the buyers of services or products from the MSME’s or SSIs tend to delay the payment. The settlement of such disputes must be done in minimum time through conciliation and arbitration.

• Overdraft Facility with Interest Exemption :

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. Although this can vary from bank to bank.

• 50% discount on trademark and Patent Fees

Business enterprises registered under the MSME Act are given a hefty subsidy of 50 per cent for patent registration. This can be availed by sending an application to the respective ministry. In addition to this, one of the great MSME registration benefits is to get subsidy for industrial promotion suggested by the Government.

• Some Concession on Electricity bills

can avail concession on electricity bills.  Registered MSME have to submit the bill along with the application and copy of registered Certificate.

• Reimbursement of ISO Certification charges

Registered MSME‘s can claim the  expenses for reimbursement that were spent on ISO certification.

• Government Tenders

Registered MSME‘s can get Government tenders easily.

• Tax Exemptions

Registered MSME‘s get exemptions under direct tax laws

12. SERVICES OFFERED UNDER UDYAM

A. CHAMPIONS

Creation and Harmonious Application of Modern Processes for Increasing the Output and National Strength.

Objectives of the CHAMPIONS

• To help the MSMEs in this difficult situation in terms of finance, raw materials, labour, permissions, etc.
• To help the MSMEs capture new opportunities including manufacturing of medical items & accessories.
• To identify the sparks, i.e., the bright MSMEs who can withstand at present and become national and international champions.

B. MSME SAMADHAAN- Delayed Payments to Micro and Small Enterprises under Micro, Small and Medium Enterprise Development (MSMED) Act, 2006

Ministry of MSME has taken an initiative for filing online application by the supplier MSE unit against the buyer of goods/services before the concerned MSEFC of his/her State/UT.

The buyer is liable to pay compound interest with the monthly rests to the supplier on the amount at the three times of the bank rate notified by RBI in case he does not make payment to the supplier for his supplies of goods or services within 45 days of the acceptance of the goods/service rendered.

All States/UTs have notified Authority for Filing Entrepreneur’s Memorandum, 33 States/UTs (i.e. except Arunachal Pradesh, Assam and Manipur) have Notified rules of MSEFC and all the 36 States/UTs have constituted MSEFCs, as per provisions laid down under MSMED Act 2006.

Every reference made to MSEFC shall be decided within a period of ninety days from the date of making such a reference as per provisions laid in the Act.

If the Appellant (not being the supplier) wants to file an appeal, no application for setting aside any decree or award by the MSEFC shall be entertained by any court unless the appellant (not being supplier) has deposited with it, the 75% of the award amount.

C. MSME SAMBANDH – Public Procurement Policy Monitoring Portal

The Public Procurement Policy for Micro and Small Enterprises (MSME) order 2012 has mandated Every Central Ministry/Department/PSU shall set an annual goal for procurement from the MSE sector at the beginning of the year, with the objective of achieving an overall procurement goal of minimum 25 per cent of the total annual purchases from the products or services produced or rendered by MSEs. Out of 25% target of annual procurement from MSEs.

In order to make the Public Procurement Policy more effective, a Public Procurement Portal “MSME SAMBANDH” was launched on 8th December, 2017. The Portal tracks the procurement made by CPSEs from MSEs including SC-ST MSEs on a quarterly basis and contains the necessary information relating to the requirement of CPSEs in terms of items required, quantity, specifications, last purchase price etc. Therefore, the portal helps in effective monitoring while also enabling MSEs to build their capacities and participate in Public Procurement market.

D. MSME SAMPARK – Placement Portal for MSME Technology Centre Trainee

The MSME Sampark portal is a digital platform, wherein, jobseekers (passed out trainees / students of 18 MSME Technology Centres) and recruiters (various reputed national & multinational companies) register themselves for getting employment and getting right kind of manpower respectively.

While major corporates have well-defined recruitment processes with a national reach, the challenge remains for small businesses and entrepreneurs to find the right person for the job with relevant experience and  skill-set. On the other hand, the job seekers struggle to match their skill sets with the role, position, required experience, monetary expectation, location & industry verticals leaves with too many parameters to be matched in a limited opportunity map. To bridge this gap between the Recruiters and Job Seekers, The Ministry of MSME has launched –   MSME SAMPARK.

E. Entrepreneurship and Skill Development Programme (ESDP)

The objective of the programme is to motivate youth representing different sections of the society including SC/ST/Women, differently-abled, Ex-servicemen and BPL persons to consider self employment or entrepreneurship as one of the career options. The ultimate objective is to promote new enterprises, capacity building of existing MSMEs and inculcating entrepreneurial culture in the country. As per scheme guidelines, in EAP and E-SDP there should be overall 40% women participation.

The program includes the following :-

• Industrial Motivation Campaigns (IMCs)
• Entrepreneurship Awareness Programmes (EAPs)
• Entrepreneurship-cum-Skill Development Programme (E-SDP)
• Management Development Programmes (MDPs)

Vocational and Educational Training:

The Regional Testing Centres, Field Testing Stations and Autonomous bodies like Tool Rooms and Technology Development Centres (TDCs) of the Ministry conduct long term, short term, trade/field-specific and industry-specific tailor-made courses as well as vocational training programmes.

11. PENALTY :

Whoever intentionally misrepresents or attempts to suppress the self-declared facts and figures appearing in the Udyam Registration or updation process shall be liable to such penalty as specified under section 27 of the Act.

Punishment as given under  Section 27 of MSME Act :

(a) in the case of the first conviction, with fine which may extend to rupees one thousand; and

(b) in the case of second or subsequent conviction, with fine which shall not be less than rupees one thousand but may extend to rupees ten thousand.

Conclusion :

Government has made every effort to make India “Atmanirbhar” by providing this MSME – UDYAM platform by not only redefining MSME criteria but have also launched various schemes and services which will give a thrust to business of Small and Medium Entrepreneurs. Government vision of  Atmanirbhar Bharat is not only to take care of our own country’s need by locally  produced Goods and Services provided, but also to increase demand for our goods and services by improving standard of our goods produced and services provided in Global  Market.

Reference :- https://udyamregistration.gov.in/ and MSME Notification date 26.06.2020

(Author can be reached at Email Id : [email protected])