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Udyam Vs.Udyog Aadhar for MSME Registration

Micro, Small, and Medium Enterprises registration can be obtained per the MSME Act. A new process of Udyam Registration has been introduced with effect from 01.07.2020 vide Govt. of India Notification S.O. 2119(E), Ministry of MSME, GOI dated 26.06.2020. Any person who intends to set up an MSME may file Udyam Registration online in the Udyam Registration Portal, based on self-declaration, with no requirement to upload documents, papers, certificates, or proof. The MSME registration is not yet made mandatory by the Government of India. Still, it is beneficial because it provides many benefits in terms of taxation, setting up the business, credit facilities, loans, etc. The present article briefs the Udyam Vs. Udyog Aadhar for MSME Registration.

Udyam Registration

Udyam registration is the new process for registering MSME launched by the Ministry of Micro, Small & Medium Enterprises on July 1, 2020. The government of India initiated Udyam registration as a substitute to the earlier method of Udyog Aadhaar to make it easier for MSMEs to register with the government portal.

Earlier, the process of Udyog Aadhaar registration was lengthy and confusing. The person registering for the same had to go through many categories and documents, requiring a lot of paperwork. With this new process, any person can register easily in a single window without needing extensive documents or paperwork for the same.

Know more about the MSME – Udyam Registration

Udyog Aadhar for MSME

The Ministry of MSME notified a one-page Udyog Aadhar Memorandum (UAM) through the Gazette of India on 18.09.2015 as part of an initiative to ease the Registration of MSMEs.

The process for obtaining MSME registration has been simplified by introducing the Udyog Aadhar for MSME in India. Before the Udyog Aadhaar, two filings, namely Entrepreneur Memorandum-I (EM-I) and Entrepreneur Memorandum-II (EM-II) had to be filed to obtain MSME or SSI Registration. With Udyog Aadhaar, obtaining SSI or MSME registration has been drastically simplified.  

In addition to simplifying the registration process, the MSME registration form has also been simplified. Udyog Aadhaar registration form was made in a self-declaration format under which the MSME self-certifies its existence, bank account details, promoter/owners’ Aadhar, and other essential information required. Based on the simple form submitted, the business would be issued online, at a minimum, a unique identifier or Udyog Aadhaar, making the unit formally registered as an SSI or MSME.

Entrepreneurs Memorandum (Part-II) / [EM-II]

After the implementation of the Micro, Small, and Medium Enterprises Development Act, 2006, with effect from October 2006, the filing of Entrepreneurs Memorandum Part-I and Part-II came into vogue.  

According to MSME Act, MSMEs file Entrepreneurs Memorandum (Part-I) at District Industries Centers (DICs) before setting up an enterprise, applicants used to file applications for obtaining utilities, building plan approval from local bodies, consent to establish from the State Pollution Control Board or applying for a term loan from the bank or a financial institution to set up the enterprise along with a copy of EM-I.  

After the commencement of the project, the entrepreneur concerned files the Entrepreneurs Memorandum (Part-II) / [EM-II]. Before the MSMED Act 2006, there was a system of registration for small-scale industrial units by the DICs. Filing of EM-II is discretionary.

To ameliorate the ease of doing business, the MSME department has developed a web portal for online filing of Entrepreneurship Memorandum I and II – required for obtaining MSME registration. The objective of introducing such a feature was to make the SSI or MSME registration process simple and available from anywhere.  

UAM registration/Udyam registration is given after an enterprise starts commercial operations.

Earlier MSME or SSI Registration 

Before introducing Entrepreneurship Memorandum, I and II, the State’s District Industry Centers, managed the MSME Registration in each state. The procedure for obtaining SSI or MSME registration was through manual filing, and entrepreneurs found it difficult to obtain SSI or MSME registration as the process was ridden with challenges. 

Differences between Udyog Aadhaar and Udyam registration

Udyam and Udyog Aadhaar are the same processes used to register MSMEs in India. The earlier Udyog Aadhaar registration has been transformed to the new Udyam registration since July 2020.  

Registration Method

For the registration process, Udyog Aadhaar only requires the applicant’s Aadhaar card and PAN number, and it provides instant self-certification as per old MSME criteria. In contrast, Udyam Registration only requires the applicant’s Aadhaar card and provides verified certification per new MSME criteria. 

Integration of Other Portals

Udyam registration is fully integrated with other MSME portals While Udyog Aadhaar is not integrated with other government portals such as Gem 

Form for Registration

Compared to Udyog Aadhaar, the Udyam Portal features a longer form requiring details from the Income Tax portal and GST departments for the registration procedure. Udyam registration requires an Aadhaar card linked to a mobile number.

Number of Registration 

Udyog Aadhaar can be registered several times with different corporate names, but Udyam registration can be obtained by a single person with a single Aadhar card.  

Key benefits of Udyam registration 

Udyam registration provides many benefits to MSE businesses, including easy bank loans without a collateral mortgage, electricity bill concessions, special preference in procuring government tenders 1 percent interest rate exemption on bank overdrafts, fast dispute resolution, tax rebates, protection against buyer payment delays, and a special 50 percent discount on government trademark and patent fees.

Get your Udyam Registration through IndiaFilings

The registration process involves filing various forms and documents, which can be time-consuming and tedious. IndiaFilings offers a hassle-free Udyog Aadhar/Udyam Registration service to help businesses get their registration done quickly and easily. With our team of experts, we provide end-to-end assistance for registration, including helping clients understand the fees associated with it. This helps businesses save time, money, and effort in getting their registration done.

Get in touch with IndiaFilings to get your Udayam Registration certificate.