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MSME Registration: Major change

In a Notification dated June 26, 2020, the Ministry of Micro, Small, and Medium Enterprises (MSME) published specified criteria for designating enterprises as MSMEs.

If an organization’s investment in plant, machinery, or equipment is less than one crore rupees and its annual turnover is less than five crore rupees, it is classified as a Micro Enterprise.

Also, Read- Print udyam certificate

Small enterprises are defined as those with a capital investment of more than one crore rupees but less than ten crore rupees in plant and machinery or equipment, and a turnover of more than five crore rupees but less than fifty crore rupees.

A Medium Enterprise is defined as a company that invests more than ten crore rupees in plant and machinery or equipment but not more than fifty crore rupees in revenue and has a revenue of more than fifty crore rupees but not more than two hundred and fifty crore rupees.

Note 1: If a company surpasses the ceiling limits for either the turnover or investment criteria for an existing category, it will be shifted to the next higher category based on the investment and turnover requirements. Only if an organization meets both the investment and turnover criteria will it be placed in the lowest tier.

Note 2: The aggregate limit of sales and investment is used to decide whether the firm is micro, small, or medium, and all units with the same PAN number but different GSTIN numbers are treated as a single organization.

Udyam Registration Application:

Micro, Small, and Medium Enterprises must apply online for Udyam registration on the Udyam Registration Portal based on self-declaration with no obligation to furnish any papers. A firm will be awarded a permanent identifying number, known as the “Udyam Registration Number,” as well as an e-certificate, known as the “Udyam Registration Certificate,” after a successful registration.

Calculation of Udyam Registration Investment Value:

The value of a plant, machinery, or equipment investment will be determined by the previous year’s Income Tax Return filed under the Income Tax Act of 1961. The promoter’s self-declaration will be used to determine the worth of a newly created company’s plant, machinery, or equipment.

The purchase price (excluding GST) will be used to determine the investment value when purchasing any plant, machinery, or equipment.

The term “plant and machinery or equipment” must have the same meaning as “plant and machinery” under the Income Tax Act of 1961, and must encompass all tangible assets (other than land and building and furniture and fittings).

Udyam Registration’s turnover is calculated as follows:

For the purpose of determining an enterprise’s turnover for categorization reasons, all information must be linked to the GSTN portal or the Income Tax site, and the value of export will be deducted from the overall turnover of the organization.

Registration for Udyam:

  • The Udyam Registration Portal is used to complete all Udyam registrations.
  • The Aadhar number of the relevant person [Managing Partner in the event of a partnership business] is required to complete the registration form.
  • The GSTN, PAN, and Aadhaar numbers of an authorised signatory of a firm, LLP, Co-operative Society, or Trust must be submitted.

Note: If a company does a lot of different kinds of business or offers a lot of different kinds of services, all of those businesses or services can be described or added in a single Udyam Registration.

Existing business registration: Udyam

On or after July 1, 2020, all current companies registered as EM-Part II [Entrepreneurs Memorandum] or UAM [Udyog Aadhar Memorandum] must re-register. All businesses that were registered before July 1, 2020 will be reclassified using the new criteria, with their present registration certificate valid until December 31, 2021.

Changeover period for information and categorization:

An organization having an Udyam registration number [URN] must update its information on the Udyam Registration Portal, including ITR and GST filing data from the previous year. A company’s status may be suspended if it fails to provide information to Udyam Portal.

The classification of the enterprises will be altered based on the information provided by the business, and the business will be notified of the change in classification.

Documents Required for Udyam Registration:

What papers do I need to register for Udyam in India?

  1. In the case of a proprietorship, the applicant’s Aadhar card and PAN are required for Udyam Registration.
  1. The applicant’s Aadhar number and a valid PAN number are also required in the case of a proprietorship.
  1. In the case of a partnership, the Aadhar and PAN of the partner must be used.
  1. The Directors Aadhar and PAN may be used in the case of a firm.
  1. In the case of an LLP, the Aadhar and PAN card of the chosen partner must be used.

If the applicant or an authorized signatory does not already have a valid Aadhar Card, they must first enrol at an Aadhar enrollment centre. The Udyam Registration process may begin once the Aadhar number is received.

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