Analysis of Ministry of Micro, Small and Medium Enterprises – Notification dated June 26, 2020
The Ministry of Micro, Small and Medium Enterprises (MSME) has set out a notification dated June 26, 2020 regarding the new registration process called ‘Udyam Registration’ and classification of MSMEs. Under this all the existing enterprises registered under EM-Part II or Udyog Aadhaar Registration (UAM) shall re-register on the Udyam Registration portal on or after 1st July, 2020. It is optional for enterprises to be registered as MSME.
Following are the key points in Udyam Registration:
- Aadhaar number shall be required for registration.
- The Aadhaar number shall be of the proprietor in case of proprietorship firm, of the managing partner in case of partnership firm and karta in case of HUF;
- In case of a Company, LLP, Society, Cooperative Society or a trust are required to provide GSTIN and PAN along with Aadhaar number.
- There will be no fees in filing the Udyam Registration.
- The registration will be based on self-declaration with no requirement to upload documents, papers, certificates or proof.
The notification also states new classification of enterprises:
Calculation of Investment in Plant & Machinery
- The calculation of investment in Plant & Machinery is linked to the Income Tax Return (ITR) filed in the previous year.
- In case of a new enterprise, the investment will be based on the self-declaration of the promoter.
- Purchase price excluding GST paid shall be considered as part of investment.
- Plant & Machinery shall include all tangible assets except Land & Building and Furniture & Fixtures.
Calculation of Turnover
- Turnover of the immediate preceding financial year shall be considered for calculation;
- Exports of goods and services shall be excluded while calculating the turnover for the purpose of classification and shall be linked to the CGST Act or Income tax Act and the GSTIN.
In case PAN is not available, then turnover shall be considered on self-declaration basis till March 31, 2021.
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