The Ministry of Micro, Small and Medium Enterprises (‘MSME’), vide notification dated 26.06.2020, declared the new process of classification and registration of enterprises as MSME. This Notification comes into effect from 01.07.2020.
All the existing registered enterprises are required to register again on “Udyam Portal”as per new classification. Further the registration process on the portal is simplified.
I) NEW CRITERIA FOR CLASSIFICATION OF MSME
|Investment in Plant & Machinery or Equipment and Turnover|
|Manufacturing and Service sector||Investment < 1 crore||Investment < 10 crore||Investment < 50 crore|
|Turnover <5 crore||Turnover <50 crore||Turnover <250 crore|
1) A composite criteria of investment and turnover shall apply for classification of an enterprise as micro, small or medium.
2) Calculation of Investment in Plant and Machinery or Equipment
|Existing Enterprise||New Enterprise|
|1) Investment will be based on ITR return of the previous years.||1) Investment will be based on self-declaration of the promoter.
(Investment will be revised accordingly after filing First ITR).
2) Invoice value of a plant and machinery or equipment shall be taken into account (excluding GST).
1. The expression “Plant and Machinery or Equipment” shall be as per Income Tax Rules, 1962 and shall include all tangible assets (other than land and building, furniture and fittings).
2. The cost of certain items specified in the Explanation I of Section 7(1) of the MSME Act shall be excluded from the calculation of investment
3) Calculation of Turnover
|Items included in turnover||Items excluded in turnover|
|1) Information as regards turnover and exports turnover for an enterprise shall be linked to the Income Tax Act and GSTIN.||1) Exports of goods or services or both
1) The turnover of enterprises which do not have PAN will be on self-declaration basis for a period up to 31st March, 2021 and thereafter, PAN and GSTIN shall be mandatory.
II) REGISTRATION OF EXISTING ENTERPRISE
1. All existing enterprises registered prior to 30th June, 2020, shall continue to be valid only for a period up to 31.03.2021.
2. Such enterprises mentioned above shall register again on Udyam Registration Portal after July 1st, 2020.
3. All enterprises registered till 30th June, 2020, shall be re-classified in accordance with this notification
III) INFORMATION REQUIRED FOR REGISTRATION
1. Aadhar number linked with updated Mobile number of Authorised Signatory.
2. PAN and GSTIN of Enterprise
3. Details of Investment in Plant and Machinery or Equipment
4. Details of Turnover
5. Main Business activity of enterprise
IV) PROCESS OF REGISTRATION
1. The form for registration shall be as provided in the Udyam Registration portal.
2. Registration will be based on self-declaration basis with no requirement to upload any documents.There will be no fee for filing Udyam Registration.
3. Aadhaar number with updated mobile number shall be required for Udyam Registration.
4. Upon registration, an enterprise will be assigned a permanent identity number to be known as “Udyam Registration Number”.
5. An e-certificate, namely, “Udyam Registration Certificate” shall be issued on completion of the registration process.
V) UPDATION OF INFORMATION
1. After obtaining Udyam Registration Number, an enterprise shall update details of the ITR and the GST Return for the previous financial year on self-declaration basis.
2. Failure to update the relevant information will render the enterprise liable for suspension of its status.
Author: Ms. Ranjana Gupta is an Associate at M&K Associates and can be reached at [email protected]
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