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Udyam Registration - All about the new MSME Registration Process

Udyam Registration - All about the new MSME Registration Process

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Prashant Shetty

Prashant Shetty

5 Jul 2020, 11:00 — 9 min read

With effect from July 1, 2020, MSME henceforth will be called Udyam and its Registration Process will be known as 'Udyam Registration'. A new portal has been launched by the MSME ministry - www.udyamregistration.gov.in. It is a single window facilitation system and no other private online or offline system, service, agency or person is authorized or entitled to do MSME Registration or undertake any activity related to the process.

 

Key highlights 

  • Registration Process is totally free. No Costs or Fees are to be paid
  • Registration process is fully online, paperless and based on self-declaration.
  • Only Aadhaar Number that will be required for registration and no documents or proof are required to be uploaded for registrationRegistration number will be given after registration and after completion of the registration process, an Udyam Registration Certificate (URC) will be issued; 
    • Proprietorship firm - Aadhaar number of the proprietor
    • Partnership firm - Aadhaar number of the managing partner
    • Hindu Undivided Family (HUF) - Aadhaar number of the karta.
    • Company / Limited Liability Partnership/ Cooperative Society/ Society / Trust - GSTIN and PAN along with its Aadhaar number
  • URC will have a dynamic QR Code from which details about the enterprise can be accessed
  • No renewal of Registration
  • PAN & GST linked details on investment and turnover of enterprises will be taken automatically from the respective Government data bases;
  • MSME Ministry's  online system will be fully integrated with Income Tax and GSTIN systems;
  • Enterprises who have Entrepreneur Memorandum (EM)-II or Udyog Aadhaar Memorandum (UAM) registration or any other registration issued by any authority under the Ministry of MSME, will also have to re-register themselves;
  • No enterprise can 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;

 

Classification of Enterprises

 

Enterprise

Investment in plant & machinery or Equipment

Turnover

1

Micro

Does not exceed ₹ 1 crore

Does not exceed ₹ 5 crore

2

Small

Does not exceed ₹ 10 crore

Does not exceed ₹ 50 crore

3

Medium

Does not exceed ₹ 50 crore

Does not exceed ₹ 250 crore

 

Investment in plant & machinery or Equipment:

  • Plant and machinery or equipment 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 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.
  • For new enterprises without ITR 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. Exclusion from calculation as specified in the Explanation I to sub-section (1) of section 7 of the Act.

 

Turnover:

  • Turnover Calculation - Exports of goods or services or both will be excluded while calculating the turnover. 
  • Existing enterprises - Information with respect to turnover and export turnover to be linked to the Income Tax Act or the Central Goods and Services Act (CGST Act) and the GSTIN.
  • Enterprises which do not have PAN - turnover will be considered on self-declaration basis for a period up to 31st March 2021 and thereafter, PAN and GSTIN shall be mandatory

 

Classification based on composite criteria of investment and turnover:

  • 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.
  • Enterprise which crosses the ceiling limits specified for its present category in either of the two criteria of investment or turnover, will cease to exist in that category and be placed in the next higher category
  • 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.

 

Registration of existing enterprises registered prior to 30th June, 2020

  • Enterprises who have Entrepreneur Memorandum (EM)-II or Udyog Aadhaar Memorandum (UAM) registration or any other registration issued by any authority under the Ministry of MSME, will also have to re-register themselves
  • Existing registration shall continue to be valid only for a period up to March 31, 2021
  • They shall be re-classified in accordance with new notification

  

Updation of information and transition period in Classification

  • Based on the information furnished or gathered from Government’s sources including ITR or GST return, the classification of the enterprise will be updated.
  • In case of graduation (from a lower to a higher category) or reverse-graduation (sliding down to lower category) of an enterprise, a communication will be sent to the enterprise about the change in the status.
  • In case of an upward change in terms of investment in plant and machinery or equipment or turnover or both, and consequent re-classification, an enterprise will maintain its prevailing status till expiry of one year from the close of the year of registration.
  • In case of reverse-graduation of an enterprise, whether as a result of re-classification or due to actual changes in investment in plant and machinery or equipment or turnover or both, and whether the enterprise is registered under the Act or not, the enterprise will continue in its present category till the closure of the financial year and it will be given the benefit of the changed status only with effect from 1st April of the financial year following the year in which such change took place.

 

Facilitation and grievance redressal of enterprises

For facilitating the registration process and further hand-holding the micro, small and medium enterprises in all possible manner

  • 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.
  • The District Industries Centres (DICs) - Single Window facilitation Systems in their Districts.
  • Any person 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
  • 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.

 

 

As per the GAZETTE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (ii) Government of India Ministry of Micro, Small and Medium Enterprises Dated the 26th June, 2020 Notification.

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Prashant S Shetty

Catalyst for corporates seeking financial restructuring and fund raising

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