Udyam Registration procedure – Hi Reader! In this article we learn about the Udyam Registration procedure. Government of India has issued notification on 26th June 2020 regarding Udyam Registration. In the said notification they launched new process of classification and registration of MSME Enterprises under the Name of “Udyam registration”. For Udyam registration, the MSME Ministry also launched a portal www.udyamregistration.gov.in.
Criteria for classification as a micro, small or medium enterprise: –
| Enterprises | Investment in Plant and Machinery or Equipment – Limit | Turnover Limit |
| Micro Enterprise | Investment does not exceed One Cr. | Turnover does not exceed Five Cr. |
| Small Enterprise | Investment does not exceed Ten Cr. | Turnover does not exceed fifty Cr. |
| Medium Enterprise | Investment does not exceed Fifty Cr. | Turnover does not exceed Two hundred and fifty Cr. |
How to determine Turnover limit of Enterprises for Udyam Registration:-
1. Turnover and Exports turnover for enterprises should be taken from Income Tax Act (ITR) or CGST Act and GSTIN.
2. Turnover does not include exports of goods or services or both for the purposes of MSME classification.
3. If Enterprise does not have PAN then self-declaration turnover can be taken upto 31st March 2021 and thereafter, PAN and GSTIN shall be mandatory.
How to determine value of Investment in Plant and Machinery or Equipment for Udyam Registration:-
1. The Value of Plant and machinery or equipment shall be taken from previous years ITR filed under the Income Tax Act, 1961.
2. In case of New enterprises where no ITR is available then self-declare value of Investment in plant and machinery or Equipment by promoter shall be taken for MSME Classification. However, such relaxation shall end after the 31st March of the financial year in which it files its first ITR.
3. In case of new enterprises without ITR (where value of investment on self-disclosure basis) the purchase value of a plant and machinery or equipment shall be taken for classification. Purchase Value does not include GST paid on Invoice. Value of second hand goods also considered for value of investment.
4. The cost of certain items specified in the Explanation I to sub-section (1) of section 7 of the Act shall be excluded from the value of investment in plant and machinery. For example: – cost of pollution control, research and development, industrial safety devices and such other items as may be specified shall be excluded.
5. Plant and Machinery or Equipment shall also include all tangible assets other than land and building, furniture and fittings.
Plant and machinery or equipment definition under Udyam registration shall have the same meaning as assigned to the plant and machinery in the Income Tax Rules, 1962.
Whether criteria of Investment and Turnover to be checked collectively or separately for MSME Classification –
Enterprises should apply both conditions mutually for classification as micro, small and medium. On the basis of current value of investment and turnover, an enterprise is to be classified as micro, small or medium enterprises. In future, if enterprises crossed the ceiling limits specified for its present category in either of the two criteria of investment or turnover then it will cease to exist in that category and will be place in higher category. On the other hand no enterprises 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.
An enterprise having multiple GST does not treat the multiple enterprises for MSME Registration. The figure of investment and turnover should be checked on PAN India basis i.e. aggregate values under a Permanent Account Number (PAN) shall be considered for classification as micro, small or medium enterprise.
Benefits of MSME Registration: –
1. Udyam registration portal will have integration with GeM (Government e-Market Place), CPPP (Central Public Procurement portal) and various other State Government portals. Due to integration with other portal its give MSMEs the quick access to their market place, e-tender process and other benefits and services.
2. Udyam Registration helps in delayed payments of MSME Enterprises since of its integration with TReDS and SAMADHAAN Portal.
3. Each Udyam registration certificate shall be a dynamic and QR Code. With the help of QR Code anyone can access the exact web page of the concerned MSME on Udyam portal. This will bring ease of doing business.
4. With the help of Udyam registration, various other schemes and benefits of Ministry of MSME can be accessed.
5. Udyam Registration helps in getting bank loan with low interest rates.
Registration of Existing Enterprises: –
1. The Enterprises registered under UAM or EM–Part-II shall register again on the Udyam Registration portal on or after the 1st day of July, 2020.
2. All existing enterprises registered till 30th June, 2020, shall be re-classified in accordance with this notification.
3. The existing enterprises registered prior to 30th June, 2020, shall continue to be valid only for a period up to the 31st March 2021.
4. An enterprise registered with any other organisation under the Ministry of Micro, Small and Medium Enterprises shall again register itself under Udyam Registration.
Udyam Registration procedure: –
The process of Udyam registration is fully online. It’s also paperless and based on self-declaration. No documents or proof are required to be uploaded for Udyam registration. Enterprise may file Udyam Registration form online through Udyam Registration portal. No fee to be charged during Udyam Registration procedure. An Enterprise can’t apply more than one Udyam registration irrespective of its number of activities. All activities such as manufacturing or services or both shall be specified or added in one unique udyam registration.
After completion of the registration process, a certificate will be issued online. This certificate will have a dynamic QR Code.
Documents require for Udyam Registration: –
1. Aadhaar Number of proprietor in case of Individual.
2. Aadhaar Number of managing partner in case of a partnership firm.
3. Aadhaar number of Karta in case of HUF (Hindu Undivided Family).
4. Aadhaar number of authorized signatory in case of company or LLP or cooperative Society or Trust.
5. GSTIN and PAN number also required in case of Company or LLP or Cooperative Society or Trust.
Please note that an enterprise shall be liable for such penalties under section 27 of the act if in case it’s found that facts and figures show in the Udyam registration is intentionally misrepresented.
Updating of Information and transition period in classification
1. An enterprise shall update its information regarding ITR and GST Return for Previous F.Y. in the Udyam Registration portal, on self declaration basis.
2. In case failure to update the relevant information within time limit then enterprise liable for suspension of its status.
3. After the relevant updated the classification of the enterprise will be updated.
4. A communication will be sent to the enterprises in case of change of status from a lower to a higher category or from a higher to a lower category.
5. In case of an upward change, an enterprise will maintain its current status up to expiry of one year. The one year shall be count from the close of the year of registration.
6. In case of downward change, the enterprise will continue in its present category till the closure of the financial year.
Timely Payment to MSME (Section 43B): In Budget 2023, it is proposed to insert section 43B (h) to provide that any sum payable by the assessee to a MSME beyond the time limit specified in section 15 of the MSMED Act 2006 i.e. within 15 days or before the due date (which cannot be more than 45 days) shall be allowed as deduction only on actual payment. However, it is also proposed that the proviso to section 43B of the Act shall not apply to such payments. This amendment will take effect from 1st April, 2024 i.e. assessment year 2024-25.
Also See, “Offences with Fine and penalty under GST
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