Government of India has launched a new portal called Udyam Registration on July 1st, 2020, for registration of enterprises in India. Government wants to make MSME registration seamless through this portal by making process fully online, paperless and based on self-declaration. With this portal, Government has made it clear that no documents or proofs are required to be uploaded for registering an MSME. With this step, Government has taken a big leap in ease of doing business in India.
What is Udyam
As per Notification Dated 26th June, 2020, all Micro, Small and Medium Enterprises (MSME) in India will now be referred as Udyam from July 1st, 2020 onwards and its registration Process will be known as Udyam Registration.
From July 1st, 2020, criteria of categorization of Manufacturing and Service Enterprises will be as follows
- Micro Enterprise - Investment less than ₹ 1 crore and Turnover less than ₹ 5 crore
- Small Enterprise - Investment less than ₹ 10 crore and Turnover less than ₹ 50 crore
- Medium Enterprise - Investment less than ₹ 50 crore and Turnover less than ₹ 250 crore
Please note that in case of manufacturing enterprise, investment in plant and machinery to be considered whereas in case of service enterprise, investment in equipment’s to be considered.
What is Udyam Registration Number (URN)?
Udyam Registration Number is a unique identification number for MSME (Micro Small and Medium Enterprises) earlier known as the MSME/SSI/Udyog Aadhaar Registration (UAM) number.
Procedure of Registration
Login to the Udyam Registration Portal by Government of India
Select an option out of the two:
New Entrepreneurs who are not registered yet as MSME.
Entrepreneurs already having registration as EM – II or UAM.
Aadhaar number is mandatory in all cases for the registration.
Fill the self-declaration form along with required information without any attachment of documents, certificates or proofs.
Submit the form without any fees.
E-certificate namely Udyam Registration Certificate will be issued on completion.
- All Udyam registered enterprises shall update their required information including ITR and GST Return for the previous financial year on self-declaration basis.
- Based on the information furnished as mentioned above, the classification of enterprise will be updated and will be intimated to the enterprise if any change occurs.
- Single Window facilitation systems at the district and regional level which will handle the registration and other matters related to Udyam.
- In case of Company, LLP etc. PAN and GSTIN details of the company will be used for registration. Further, Aadhaar Card of authorised signatory will be used for registration.
The Ministry of MSME has further issued guidelines vide Press Release dated 01st July 2020 to highlights the process of Udyam Registration
Frequently Asked Questions(FAQs)
Whether both the criteria for classification have to be satisfied?
Yes, if an enterprise crosses the ceiling limit of either of the criteria (Investment or Turnover) then the enterprise will be categorized under the next higher classification.
However, if an enterprise falls below the ceiling limit in both the criteria then only it can be declassified into lower category.
Whether the enterprises will be considered on GSTIN basis or PAN India basis?
All units with GSTIN listed against the same 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 of enterprise.
How to determine the value of Investment for deciding the category of an existing enterprise?
Value of investment in plant and machinery or equipment shall be taken on the basis of previous year income tax returns filed under the Income Tax Act, 1961.
How to determine the value of Investment for deciding the category of a new enterprise?
The value of investment shall be taken on the basis of the self-declaration of the promoters till it filed its 1st Income Tax Return after the closure of the financial year.
Whether value of second hand plant and machinery or equipment will be considered for value of investment?
Definition of Plant and Machinery or Equipment?
Plant and Machinery or Equipment shall have the same meaning as assigned to plant and machinery under the Income Tax Rules, 1962 and shall include all tangible assets (other than land and building, furniture and fittings.
Definition of Turnover?
Turnover shall be taken on the basis of Income Tax Act or the GSTIN. The turnover will exclude export turnover of goods or services or both in all category of enterprises.
How to determine the turnover in case the enterprise do not have PAN and GSTIN?
The turnover will be taken on the basis of the self-declaration of the promoter. After 31st March 2021, it is mandatory for all such enterprises to have PAN and GSTIN.
Whether separate Udyam Registration is required for all business units of a PAN holder?
No, any number of activities including manufacturing or service or both may be registered in one Udyam Registration.
Whether existing EM-Part-II or UAM will not be valid after 1st July 2020?
All existing EM-Part-II or UAM will be valid only upto 31st March 2021 and have to reclassify themselves as per this new classification.
Whether transportation and insurance cost shall be added to the value of investment?
According to the said Notification Dated 26th June, 2020, only GST value shall be excluded from value of investment. Further it is mentioned in the notification that it will supersede all the earlier issued notifications. The notification which was issued earlier for including transportation cost will not be applicable anymore. The ministry may clarify In the due course of time.
Whether there will be any penalty/fine for making wrong self-declaration at the time of registration?
Yes, penalty will be applicable u/s 27 of the MSME Act for any misinformation. Penalty of ₹ 10,000 might be applicable.