MSME Registration Eligibility

MSME – Udyam Registration

MSME – Udyam Registration

Vide notification dated 26th June 2020, the Ministry of Micro, Small and Medium Enterprises notifies revised criteria for classifying the enterprises as Micro, Small and Medium Enterprises (i.e., MSME) and lay down the form and procedure for ‘Udyam Registration’. The present article briefly analysis the said notification.

Revised Classification

The basis for classification of an enterprise as a micro, small and medium enterprise is-

ClassificationInvestment in plant and machinery or equipmentTurnover
Micro enterpriseNot more than INR 1 CroreNot more than INR 5 Crore
Small enterpriseNot more than INR 10 CroreNot more than INR 50 Crore
Medium enterpriseNot more than INR 50 CroreNot more than INR 250 Crore

 

Following points are to be taken care of while calculating the investment in plant and machinery or equipment and turnover for the purpose of classification-

  • The investment in plant and machinery or equipment shall be considered as per the Income Tax Return of the previous year.
  • In the case where there is no prior income tax return, the investment in plant and machinery or equipment shall be based on self-declaration of the promoter of the enterprise. Here, the invoice value of the plant and machinery or equipment excluding Goods and Service Tax is to be self-declared.
  • While calculating turnover for the purpose of classification, export turnover of goods or services or both shall be excluded.
  • Turnover as per Income Tax Act or the Central Goods and Service Tax Act shall be considered.

Udyam registration of new enterprise

In order to register under Udyam Registration Portal, the new enterprise is required to follow the below steps-

  • The new enterprise willing to establish as an MSME needs to apply for online Udyam Registration in Udyam Registration Portal.
  • The application is based on self-declaration, and there is no further requirement to upload any documents, certificates, papers, or proofs.
  • On successful submission of application, the enterprise will be assigned ‘Udyam Registration Number’ (i.e., permanent identity number).
  • On completion of the registration process, the enterprise shall be issued a ‘Udyam Registration Certificate’.
  • Other points to be kept in mind-
    • Udyam registration is free of cost.
    • Aadhaar number is mandatory for obtaining udyam registration. Following aadhaar number is required based on the type of firm-
Type of firmThe person whose Aadhaar number is required
Proprietorship firmProprietor
Partnership firmManaging partner
Hindu Undivided FamilyKarta
Company or a Co-operative Society or a Trust or a Limited Liability PartnershipAuthorized signatory

Importantly, an enterprise can file only one Udyam registration. Additionally, a multiple number of activities of the enterprise i.e., manufacturing, services or both can be added in one Udyam registration.

Udyam registration for existing enterprise

The existing enterprises registered either under EM-Part – II or UAM or registered with any other organization under the Ministry of Micro, Small and Medium Enterprises are required to register again on the Udyam Registration Portal. Such enterprises are required to apply and obtain Udyam Registration on or after 1st July 2020.

The enterprises registered prior to 30th June 2020 should note the following points-

  • Such enterprises shall be re-classified based on the revised criteria notified under notification dated 26th June 2020; and
  • Such enterprises registered prior to 30th June 2020 shall be valid only till 31st March 2021.

Updation of information in Udyam registration

The enterprise already having the Udyam registration number needs to update its information online on the Udyam Registration Portal. In case of failure, the enterprise would be liable for suspension of its status.

The classification of the enterprise shall be updated based on the information collected from the income tax return or the goods and service tax return. The updation, if any, and its consequence are explained hereunder-

Type of updationConsequence of updation
Upward graduationThe enterprise will continue to maintain its prevailing status till the expiry of one year from the close of the year of the registration.
Downward graduationThe enterprise will continue its prevailing status till the close of the financial year. The benefit of the changed status will be available from subsequent financial year.
Udyam Registration Circular

Post by poonamgandhi

CA Poonam Gandhi is a Chartered Accountant and a Lawyer. With a wide practice experience and deep understanding of different laws and taxes, she has been an independent professional writer in the field of taxation, finance and laws.