Becoming a Micro, Small or Medium Enterprise

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.

On Registration, an enterprise will be assigned a Permanent Identity Number to be known as Udyam Registration Number
An E- Certificate, namely, “Udyam Registration Certificate” shall be issued on completion of the registration process.

Classification of Enterprises

Type Investment Turnover
Min Max Min
Micro N.A. 1 Crore Rupees Does not Exceed 5 Crore Rupees
Small >1 Crore Rupees 10 Crore Rupees Does not Exceed 50 Crore Rupees
Medium > 10 Crore Rupees 50 Crore Rupees Does not Exceed 250 Crore Rupees

Composite Criteria applies

A Composite Criterion of investment and turnover shall apply for Classification of an enterprise as micro, small or medium

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 turnover and investment figures for all such entities shall be seen together and only the aggregate values will be considered for deciding the category as a micro, small or medium enterprise.

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.

Example of Composite Criteria

Turnover Investment Category
5 Crore 1 Crore Micro
50 Crore 10 Crore Small
250 Crore 50 Crore Medium
5 Crore 10 Crore Small
50 Crore 50 Crore Medium

Calculation of Investment in Plant & Machinery or Equipment

  • 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.

Calculation of Turnover

  • Export of Goods/Services will be Excluded from the Calculation of Turnover Purpose.
  • Information as regards Turnover and Exports turnover for an enterprise will be Linked to Income Tax Act or CGST Act or GSTIN.
  • The Turnover of Such Enterprise which Doesn’t have PAN will be considered on Self-declaration Basis up to 31st March 2021, thereafter PAN and GSTIN are Compulsory.

Registration Process

Go to Udyam Registration Portal->

Status of Firm Document Of Whom
Proprietorship Aadhaar Card Proprietor
Partnership Aadhaar Card Managing Partner
HUF Aadhaar Card Karta
Company/LLP/Co-Operative Society/Society/Trust PAN & GSTIN Aadhaar Card of its Authorised Signatory

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

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

Registration of Existing Enterprises

All Existing Enterprises Shall Register Again on the Udyam Registration Portal on or after the 1st day of July 2020

All Enterprises shall be reclassified as per New Notification

Existing Enterprises registered before 30th June 2020 shall continue to be valid for a period up to 31st March 2021.

Any Enterprise which is registered with any other Organisation under MSME Shall register itself under Udyam Registration.

Updation of Registration and Transition Period in Classification

  • An enterprise having Udyam Registration shall update including the details of GST and ITR for the previous Financial Year and such other info as per self- declaration Basis.
  • Failure on Updating info will lead to suspension of its Status
  • Based on Info gathered from Government sources like IT Department and GST department, the classification of enterprise will be updated.
  • Any Graduation (from lower to higher), Reverse Graduation (Higher to Lower) of enterprise, a communication will be sent to the enterprise about the change of status.
  • If any upward change in terms of investment/ Turnover or both, and consequent reclassification an enterprise will maintain its prevailing status till the expiry of one year from the close of the year of operation.
  • In case of reverse graduation of an enterprise(Higher to Lower), the enterprise will continue in its present category till the closure of the financial year and it will be given the benefit to the changed status only with effect from 1st April of the financial year following the year in which such change takes place.

Facilities and grievance redressal of enterprise

  • Champions Control Rooms functioning in MSME’s including the Development institute shall act as Single Window Systems for the facilitation of Registration Process.
  • District industries centers will act as Single Window Facilitation systems.
  • Any person unable to file the Udyam Registration for any reason including lack of Aadhaar Number may approach anyone of the Single Window systems for Udyam registration purposes
  • In case of any discrepancy or complaint, the General Manager of the District Industries Centre of the concerned District shall undertake an inquiry 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 allowing presenting 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.

Disclaimer: The contents of this article are for information purposes only and does not constitute an advice or a legal opinion and are personal views of the author. It is based upon relevant law and/or facts available at that point of time and prepared with due accuracy & reliability. Readers are requested to check and refer relevant provisions of statute, latest judicial pronouncements, circulars, clarifications etc before acting on the basis of the above write up.  The possibility of other views on the subject matter cannot be ruled out. By the use of the said information, you agree that Author / TaxGuru is not responsible or liable in any manner for the authenticity, accuracy, completeness, errors or any kind of omissions in this piece of information for any action taken thereof. This is not any kind of advertisement or solicitation of work by a professional.

Author Bio

Qualification: CA in Practice
Company: Anna & Associates
Location: Machilipatnam, Andhra Pradesh, IN
Member Since: 04 Jun 2020 | Total Posts: 4

My Published Posts

Join Taxguru’s Network for Latest updates on Income Tax, GST, Company Law, Corporate Laws and other related subjects.

Join us on Whatsapp

taxguru on whatsapp GROUP LINK

Join us on Telegram

taxguru on telegram GROUP LINK

Download our App


More Under Corporate Law

Leave a Comment

Your email address will not be published. Required fields are marked *

Search Posts by Date

February 2024