What is UDYAM registration?
- The Union Ministry of Micro, Small and Medium Enterprises (MSME) had made the announcement regarding the new process of classification and registration of MSME Enterprises which was launched on July 1, 2020 under the name of ‘Udyam registration’ through a notification on June 26.
- All the existing registered enterprises having valid Udyog Adhaar Number will now be moved under Udyam registration.
- On registration, an enterprise (referred to as “Udyam” in the Udyam Registration portal) 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.
Do existing enterprise require new registration?
- All existing enterprises registered under EM–Part-II or UAM shall register again on the Udyam Registration portal on or after the 1st day of July, 2020.
- All enterprises registered till 30th June, 2020, shall be re-classified in accordance with this notification.
- The existing enterprises registered prior to 30th June, 2020, shall continue to be valid only for a period up to the 31st day of March, 2021.
- An enterprise registered with any other organisation under the Ministry of Micro, Small and Medium Enterprises shall register itself under Udyam Registration.
How to determine category of classification on the basis of investment and turnover?
- Classification of enterprise shall be done on the basis of composite criteria of investment and turnover.
- 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 and be placed in the next higher category but 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.
- For instance: In an enterprise having investment of Rs. 4 Crore and Turnover of Rs.5 Crore then in which category enterprise shall fall?
- As per the notification, if the investment falls under Small and turnover falls under Micro, then, the enterprise will be placed in the higher category i.e. Small.
- 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 as micro, small or medium enterprise.
- Calculation of the investment in plant and machinery or equipment
- Investment in plant and machinery or equipment will be on the basis of the previous year Income Tax Return.
- In case of new enterprise, the investment will be calculated based on self-declaration of the promoter of the enterprise.
- Invoice value of a plant and machinery or equipment excluding shall be the basis of self-disclosure.
- When new enterprise files ITR, investment in plant and machinery or equipment shall be on the basis information furnished in 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).
- Calculation of Turnover
- For calculating the turnover of Micro, small or medium enterprise, export of goods or services or both shall not be taken into account.
- Information as regards turnover and exports turnover for an enterprise shall be linked to the Income Tax Act or the Central Goods and Services Act (CGST Act) and the GSTIN.
- The turnover related figures of such enterprise which do not have PAN will be considered on self-declaration basis for a period up to 31st March, 2021 and thereafter, PAN and GSTIN shall be mandatory.
MSME Registration Procedure on Udyam Registration portal :
- The form for registration shall be as provided in the Udyam Registration portal.
- There will be no fee for filing Udyam Registration.
- Aadhaar number shall be required for Udyam Registration.
- The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm and of a karta in the case of a Hindu Undivided Family (HUF).
- In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organisation or its authorized signatory shall provide its GSTIN and PAN along with its Aadhaar number.
- In case an enterprise is duly registered as an Udyam with PAN, any deficiency of information for previous years when it did not have PAN shall be filled up on self-declaration basis.
- 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 updation process shall be liable to such penalty as specified under section 27 of the Act.
Updation of information by MSME on Udyam Registration portal :
- An enterprise having Udyam Registration Number shall update its information online in the Udyam Registration portal, including the details of the ITR and the GST Return for the previous financial year and such other additional information as may be required, on self-declaration basis.
- Failure to update the relevant information within the period specified in the online Udyam will render the enterprise liable for suspension of its status.
- 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.
Transition period due to change in status :
If an upward or downward change has occurred – a transition period will be triggered.The following transition process is stated in the official notification:
- 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 for one year – from the close of the year of registration.
- In case of downward changes, whether it is due to re-classification or actual changes in investment in plant and machinery or equipment or turnover or both, the enterprise will continue in its present category till the closure of the financial year. It will be given the benefit of the changed status only with effect from – April 1 of the financial year that follows the year in which such change took place.
Benefits of Udyam Registration :
- Bank Loans (Collateral Free) : Credit Guarantee Scheme for Micro and Small Enterprises which covers collateral free credit facility (both term loan and/ or working capital) extended by eligible lending institutions to new and existing micro and small enterprises up to Rs.200 lakhs. Further, Small Industries Development Bank of India (SIDBI) provides financial aid to the MSMEs through Pradhan Mantri MUDRA (Micro Units Development and Refinance Agency) Yojana.
- Credit linked capital subsidy : The Credit Linked Capital Subsidy(MSME – CLCSS) Scheme offers a 15% capital subsidy to MSE’s for induction of well-established and improved technology. The subsidy is available on loans of up to Rs 1 crore availed for modernizing plant and machinery.
- Eligibility for lower rates of interest : Enterprises that have MSME Registration can avail benefit of 1% exemption on interest rate on OD.
- Export incentives scheme : The Foreign Trade Policy supports the MSMEs by offering specific incentives such as Interest Equalization scheme, under which all exporters who are MSMEs across all ITC (HS) codes are granted 3% rate subvention for pre and post shipment Rupee Export Credit with effect from 1st April, 2015 for five years.
- Power tariff subsidies : Enterprises that have MSME Registration Certificate can avail Concession on electricity bill by making application to electricity department along with MSME Registration Certificate.
- Subsidy on Patent registration : Enterprises that have MSME Registration Certificate can avail 50% subsidy for patent registration by making application to respective ministry.
- Protection against delayed payments : The Ministry of Micro, Small and Medium Enterprises gives protection to MSME Registered Business against delay in payments from Buyers and right of interest on delayed payment through conciliation and arbitration and settlement of dispute be done in minimum time
- Reimbursement of ISO certification charges : Enterprises that have MSME Registration Certificate can claim reimbursement of ISO Certification expenses by making application to respective authority.
- Industrial Promotion Subsidy Eligibility : Enterprises registered under MSME are also eligible for a subsidy for Industrial Promotion as suggested by the Government.
- CHAMPIONS portal : To assist MSMEs in India to march them into the big league as national and global champions. As the name suggests, the portal is for making the smaller units big by solving their grievances, encouraging, supporting, helping and hand holding.
We urge you to get your enterprise registered under UDYAM registration and take the benefit of the available schemes.