CA Vijay Kumar Gupta

Vijay Kumar Gupta

A. Abstract

The Union Ministry of Micro, Small and Medium Enterprises (MSME), vide the Notification Dated 26th June, 2020, the new process of Classification and Registration of enterprises is started from 1st July, 2020. An enterprise for this purpose will be known as Udyam and its Registration Process will be known as ‘Udyam Registration’.

The Central Government, after obtaining the recommendations of the Advisory Committee, has notified certain criteria for classifying the enterprises as micro, small and medium enterprises and has specified the form and procedure for filing the memorandum (Udyam Registration), with effect from 1st July, 2020. Any person who intends to establish a micro, small or medium enterprise may file Udyam Registration online in the Udyam Registration portal on self-declaration. No fees is charged for applying Udyam registration. Mandatory aadhaar of proprietor or partner or promoter or director or Karta is required in case of Udyam registration.

What is Udyam Registration?

In exercise of the powers conferred by sub-section (1) read with sub-section (9) of section 7 and sub-section (2) read with sub-section (3) of section 8, of the Micro, Small and Medium Enterprises Development Act, 2006, (27 of 2006), hereinafter referred to as the said Act, and in supersession of the notifications of the Government of India in the Ministry of Micro, Small and Medium Enterprises number S.O.1702 (E), dated the 1st June, 2020, S.O. 2052 (E), dated the 30th June, 2017, S.O.3322(E), dated the 1st November, 2013 and S.O.1722 (E), dated the 5th October, 2006, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-Section (ii), except as respects things done or omitted to be done before such supersession, the Central Government, after obtaining the recommendations of the Advisory Committee in this behalf, hereby notifies certain criteria for classifying the enterprises as micro, small and medium enterprises and specifies the form and procedure for filing the memorandum (hereafter in this notification to be known as “Udyam Registration”), with effect from the 1st day of July, 2020, namely:–

Type of Enterprises Micro Enterprise Small Enterprise Medium Enterprise
Manufacturing OR Services Sector, Both Investment upto ₹ 1 Cr And Turnover upto ₹ 5 Cr Investment upto ₹ 10 Cr And Turnover upto ₹ 50 Cr Investment upto ₹ 50 Cr And Turnover upto ₹ 250 Cr

(1) 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.

(2) On registration, an enterprise (referred to as “Udyam” in the Udyam Registration portal) will be assigned a permanent identity number to be known as “‘Udyam Registration Number”.

(3) An e-certificate, namely, “Udyam Registration Certificate” shall be issued on completion of the registration process.

(4) 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.

BASIS OF CALCULATION:

Investment In Plant & Machinery or Equipment

1. 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.

2. 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.

3. 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).

4. 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.

5. 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.

B. Turnover

1. 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.

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 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.

C. Composite criteria of investment & Turnover for classification

1. composite criterion of investment and turnover shall apply for classification of an enterprise as micro, small or medium.

2. 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.

3. 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.

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 shall be required for Udyam Registration.

(4) 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).

(5) 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.

(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.

(9) 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.

(10) All enterprises registered till 30th June, 2020, shall be re-classified in accordance with this notification.

(11) The existing enterprises registered prior to 30th June, 2020, shall continue to be valid only for a period up to the 31stday of March, 2021.

(12) An enterprise registered with any other organisation under the Ministry of Micro, Small and Medium Enterprises shall register itself under Udyam Registration.

MSME Registration is free, paperless and based on self- declaration

  • MSME registration process is fully online, paperless and based on self-declaration.
  • No documents or proof are required to be uploaded for registering an MSME.
  • Only Adhaar Number will be enough for registration.
  • PAN & GST linked details on investment and turnover of enterprises will be taken automatically from Government data bases.
  • Our online system will be fully integrated with Income Tax and GSTIN systems.
  • Having PAN & GST number is mandatory from 01.04.2021.
  • Those who have EM-II or UAM registration or any other registration issued by any authority under the Ministry of MSME, will have to re-register themselves.

No enterprise shall file more than one Udyam Registration. However, any number of activities including manufacturing or service or both may be specified or added in one Registration. 

Benefits of Udyam Registration

Udyam registration plays a vital role especially for small and medium sizes of business throughout India. It is found that the overall economic growth of a nation largely depends on its small and medium size businesses.

Udyam registration online offers entrepreneurs to avail incredible advantages under the current MSME scheme of the Indian Government. One of the key benefits of registration is that you can easily get your business included in the state as well as central government business schemes. If you want to grab benefits of these government-run schemes, you need to go through the essential registration process.

Following are some of the Benefits of Udyam Registration:

  • Protection

The business owner will get protection against delay in Payment.

  • Collateral free loans

You can also avail collateral free loans from the bank.

  • Octroi benefits

The business owner can avail octroi benefits.

  • Claim charges

Claim stamp duty and registration charges.

  • Rate of interest

Rates of interest from the banks can be reduced.

  • Concession in electricity

The business owner who opts for Udyog Aadhar can get a concession on Electricity bills.

  • Interest on OD

Exemption of 1 percent  interest rate on Overdraft.

  • Subsidies

Can avail subsidy from NSIC and credit ratings & Eligible for IPS subsidy.

  • Reimbursement

Reimbursement on the payment made for obtaining the ISO certificate.

  • Reservation advantages

Reservation of products for exclusive manufacturing by MSME and SSI.

  • Excise exemption

Avail Excise Exemption Scheme.

  • Government tenders

Avail exemption while applying for government tenders.

  • Direct tax

Exemption under direct tax laws.

  • Bank mortgage

Enjoy easy bank mortgages.

  • International affairs

Can become a part of International business fairs.

  • Benefits for States and Union territories

States and Union territories have their own package of facilities and incentives for small scale.

Facilitation and grievance 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.

Penalty

Whoever intentionally misrepresents or tries to suppress the facts and figures in the Udyam Registration shall be punishable –

  • In case of first conviction, punishable with fine which may extend to Rs.1000/-
  • In case of second or subsequent conviction with fine to which shall not less than Rs.1000/- and may extend to Rs.10,000/-

Author Bio

Qualification: CA in Practice
Company: Gupta Vijay K and Co
Location: New Delhi, New Delhi, IN
Member Since: 23 Jul 2020 | Total Posts: 13
I am Graduate in B. Com(Hons) in 2001 from Delhi University and also Law Graduate, Fellow Member of the ICSI and Fellow Member of the Institute of Chartered Accountants of India Since 2003 and into practice since then. I got rich experience in handling the matters at CIT (Appeals), High Court, C View Full Profile

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8 Comments

  1. GIRI ATIKE says:

    Thank you very much Sir for sharing a wonderful valuable information with us….

    It will so useful to all especially CA Article Students like me….

    Keep on Posting this kind of valuable information sir….once again tq

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