MSME stands for Micro, Small and Medium enterprises. MSMEs has emerged as the ‘backbone of the economy’. Ministry of MSME urge to promote growth and development of MSMEs so as to create new enterprises with more employment opportunities. They urge to enhance manufacturing base in the country by improving performance of MSMEs through development schemes, financial aids and assistance, thus, leading our country ‘INDIA’ towards the Campaign of “MAKE IN INDIA” “SELF RELAINT INDIA”.
REVISED CRITERIA FOR CLASSIFICATION OF MSME
An enterprise* shall be recognised as a MSME upon fulfilling the criteria mentioned below and thereafter getting itself registered at ‘Udyam Registration Portal’
Revised/ New criteria for classification of MSME based on both Investment and Turnover (as per the notification issued by the Ministry of Micro, Small and Medium Enterprises in the Official Gazette dated 26.06.2020)
(NOTE: The New criteria for classification of MSME as issued by the Ministry of Micro, Small and Medium Enterprises shall be effective from 01.07.2020.)
An enterprise shall be classified as MSME on the following basis:
- Composite criteria based on BOTH Investment and Turnover shall apply;
- If an enterprise crosses the ceiling limits specified for its present category in either of the two criteria of investment or turnover, it will be placed in the next higher category. But when an enterprise goes below the ceiling limits specified for its present category for both criteria, only then it shall be placed in the lower category;
- If an enterprise have more than one unit and all such units have different GST number against same PAN, then all such units shall be considered as one enterprise and aggregate values of turnover and investments of all such units shall be considered for categorising the enterprise as Micro or Small or Medium.
Points to be considered while Calculation of Investment in Plant & Machinery or Equipment
(1) The calculation of investment shall be as previous year Income Tax Return (ITR).
(2) In case of a New Enterprise where no prior ITR is available,
- Calculation of investment will be based on self-declaration of the promoter
- Invoice amount/ value of plant & machinery or equipment shall be the base for calculation of investment and such invoice value shall be exclusive of GST.
This relaxation shall end after the 31st March of the financial year in which it files its first ITR and thereafter calculation shall be as per the values mentioned in the ITR.
(3) The expression ‘plant and machinery or equipment’, shall have the same meaning as assigned to it in the Income Tax Rules, 1962 and shall include all tangible assets (other than land and building, furniture and fittings).
Points to be considered in Calculation of Turnover
(1) Exports of goods or services or both, shall be excluded while Calculating Turnover of any enterprise for MSME Classification.
(2) 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.
(3) The turnover related figures of such enterprise not having PAN will be considered on self-declaration basis for a period up to 31st March, 2021. Thereafter, PAN and GSTIN shall be mandatory.
HOW TO BECOME A MSME?
Any person who intends to establish a Micro or Small or Medium Enterprise
REGISTRATION PROCESS
1. The form for registration shall be as provided in the Udyam Registration portal.
2. There will be no fee for filing Udyam Registration.
3. Aadhaar number is mandatory for registration.
4. The Aadhaar number shall be of
Proprietor – For Proprietorship Firm,
Managing Partner – Partnership Firm, and
Karta – Hindu Undivided Family (HUF).
5. In case of a Company or a LLP 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.
6. 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.
7. No enterprise shall file more than one Udyam Registration: Provided that any number of activities including manufacturing or service or both may be specified or added in one Udyam Registration.
8. 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.
Updation of Information
(1) 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. In case, enterprise fails to update information at the portal, it will be liable for suspension of its status.
(3) Based on the information furnished or gathered from Government’s sources including ITR or GST return, the classification of the enterprise will be updated.
Change of Status and Transition period in classification
(1) 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.
(2) In case of an upward change in terms of investment or turnover or both, and consequent re-classification, an enterprise will maintain its prevailing status till expiry of one year from the close of the year of registration.
(3) In case of reverse-graduation of an enterprise, whether as a result of re-classification or due to actual changes in investment 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.
Important Note:
1. All enterprises registered till 30th June, 2020, shall be re-classified in accordance with this notification.
2. 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.
Author Bio
Hi,
A merchant exporter who sale product in his own brand name but manufacture by other, registered under MSME? Sale in India and also abroad.
Thanks.