Udyam Registration/MSME Registration

MSME registration is also called Udyam registration. The entities that fulfil the MSME classification can apply for Udyam Registration/MSME Registration from the government portal, the Udyam portal. The MSME registration is entirely online and can be obtained from the Udyam registration portal. It is not mandatory for MSMEs to obtain this registration, but it is beneficial to get one’s business registered under this because it provides a lot of benefits in terms of taxation, setting up the business, credit facilities, loans etc. MSME stands for Micro, Small, and Medium Enterprises. It is a classification introduced by the Government of India following the Micro, Small, and Medium Enterprises Development (MSMED) Act of 2006. These enterprises primarily produce, manufacture, process, or preserve goods and commodities. The MSME sector is crucial to India’s economy, contributing significantly to employment generation and overall economic growth.   Tej and Associates offers MSME registration along with other essential tax services like PAN, TAN, TDS, TRC, GST registrations, Shops Act, Professional Tax, Employee Provident Fund .  Employee State Insurance, Non STPI and STPI, Import Export Code, and Trade Licence.     

 Udyam Registration/MSME Registration

Udyam Registration is an electronic certificate issued by the Indian government to Micro, Small, and Medium-sized Enterprises (MSMEs) operating in the country. It has replaced the earlier Udyog Aadhaar Memorandum (UAM) registration process. While Udyam registration is not mandatory, it offers significant benefits to MSMEs, making it advantageous for them to apply for this registration.

• By obtaining Udyam registration, MSMEs become eligible for various government benefits and incentives exclusively available to enterprises under the MSME category.
• The registration process for Udyam is entirely based on self-declaration, eliminating the need to upload any documents, papers, certificates, or proofs.

Udyam Registration Number

Upon successful registration, the enterprise, referred to as “Udyam” in the Udyam Registration portal, will be allotted a unique and permanent identity number known as the “Udyam Registration Number.”

Udyam Registration Certificate

After completing the registration process, an e-certificate called the “Udyam Registration Certificate” will be issued to the enterprise. This certificate serves as an official confirmation of their eligibility for government benefits and support.  

Eligibility for MSME Registration

  Udyam registration is open to enterprises within specific threshold limits, encompassing trading, manufacturing, and service sectors. The eligibility criteria for applying for Udyam registration are as follows:

• Micro Enterprises: Micro enterprises are those whose investment in machinery, plant, or equipment does not exceed Rs. 1 crore, and their annual turnover is below Rs. 5 crore.
• Small Enterprises: Small enterprises are those whose investment in machinery, plant, or equipment is below Rs. 10 crore, and their annual turnover is less than Rs—50 crore.
• Medium Enterprises: Medium enterprises are those whose machinery, plant, or equipment investment does not surpass Rs. 50 crore and their annual turnover does not exceed Rs. 250 crore.

To be eligible for Udyam registration, businesses must fall within their respective category’s specified investment and turnover limits.  

Who can apply for Udyam registration?

  Individuals wishing to establish a micro, small, or medium enterprise in India can apply for Udyam Registration. It extends to various types of entities, including:

• Proprietorships
• Hindu Undivided Family (HUF)
• Partnership Firms
• One-Person Companies (OPCs)
• Private Limited Companies
• Limited Companies
• Producer Companies
• Limited Liability Partnerships (LLPs)
• Any association of persons
• Cooperative societies
• Any other undertaking

Regardless of the entity type, if it falls within the MSME classification and meets the relevant criteria, it can apply for Udyam registration.    

Benefits of Udyam Registration

  Udyam Registration offers a range of compelling benefits to registered Micro, Small, and Medium-sized Enterprises (MSMEs). These advantages are instrumental in fostering their growth and development:

• Access to Government Schemes: Udyam registration is a prerequisite for MSMEs to avail themselves of various government schemes and programs the Ministry of MSME offers. These schemes include the Credit Linked Capital Subsidy, Credit Guarantee, Public Procurement Policy, and more. Registering under Udyam ensures that MSMEs can tap into these initiatives and receive essential financial support and incentives.
• Seamless Integration: The Udyam portal seamlessly integrates with other critical government systems, such as the income tax portal, GST identification systems, and government e-marketplace. This integration streamlines various administrative processes, making it easier for MSMEs to manage their financial and tax-related affairs efficiently.
• Priority Sector Lending: With Udyam registration, MSMEs become eligible for priority sector lending from banks. This special lending consideration enables them to access credit facilities more efficiently and at favorable terms, further supporting their business expansion and investment plans.
• Extended MAT Credit: MSMEs with Udyam registration are entitled to carry forward Minimum Alternate Tax (MAT) credit for 15 years instead of the previous ten years. This extension provides them additional tax benefits, facilitating better financial planning and stability for their long-term growth.
• Lower Interest Rates: One of the most significant advantages of Udyam registration is the ability to secure bank loans at lower interest rates. Typically, MSMEs with Udyam registration can avail of loans as low as 1% to 1.5%, reducing their financial burden and enhancing their capacity to invest in business expansion and innovation.

In conclusion, Udyam Registration serves as a gateway for MSMEs to unlock a host of benefits and support the government provides.  

When to Apply for MSME Registration?

While Udyam Registration is not obligatory and remains at the entrepreneur’s discretion, most businesses should apply for MSME registration soon after establishment. Registering early allows entrepreneurs to access a range of benefits provided by the government.  

Documents Required for Udyam Registration/MSME Registration

To apply for Udyam Registration, an entrepreneur needs the following documents:

• PAN Card Number: The enterprise’s Permanent Account (PAN) card number.
• Aadhaar Number: The Aadhaar card number of the individual associated with the enterprise, depending on the type of organisation:
• Proprietorship Firm: Aadhaar card number of the proprietor.
• Partnership Firm: Aadhaar card number of the managing partner.
• Hindu Undivided Family (HUF): Aadhaar card number of the Karta.
• Limited Liability Partnership (LLP), Company, Cooperative Society, or Trust: Aadhaar card number of the authorised signatory.
• GST Number: The enterprise’s Goods and Services Tax (GST) identification number.

  Note: Not all enterprises must provide their GST number during the Udyam registration. Only those enterprises that necessitate GST registration under the GST law are required to furnish their GST number.  

How to Get Udyam Registration/MSME Registration Online?

To obtain Udyam Registration online, MSMEs can follow these simple steps on the Udyam registration portal:

• Step 1: Visit the Udyam registration portal.
• Step 2: On the homepage, click the option ‘For new entrepreneurs who are not registered yet as MSME or those with EM-II.’
• Step 3: Enter the ‘Aadhaar Number’ and the ‘Name of Entrepreneur,’ then click the ‘Validate & Generate OTP’ button.
• Step 4: An OTP will be sent to the mobile number linked with the Aadhaar card. Enter the OTP and click on the ‘Validate’ button.
• Step 5: Once the Aadhaar is validated, proceed to the PAN verification page. Enter the ‘Type of Organization’ ‘PAN’ number, and click the ‘Validate’ button. Also, indicate whether you have filed the previous year’s ITR and if you have a GSTIN.
• Step 6: The Udyam registration application form will appear. Fill in all required details, including the name of the entrepreneur, mobile number, and name of the enterprise, location of the plant/unit, address of the enterprise, status of enterprise, bank details, and activity of the unit, NIC code, and number of persons employed.
• Step 7: Provide the following Details. Click the Submit button and Get the Final OTP.

o Investment in plant and machinery details and turnover details. o Select the declaration.

• Step 8: Enter the final OTP received and submit the form. You will receive the Udyam e-registration certificate in your email.

By following these steps, MSMEs can efficiently complete the Udyam Registration process and access the benefits and support provided to registered enterprises under the MSME category. .  MSME – Micro, Small, and Medium Enterprises can apply for MSME registration in India. Proprietorships, Hindu Undivided Family, Partnership Firm, One Person Company, Limited Liability Partnership, Private Limited Company, Limited Company, Producer Company, any association of persons, co-operative societies or any other undertaking can obtain MSME registration. Moreover, In accordance with the Micro, Small, and Medium Enterprises Development (MSMED) Act in 2006, the enterprises are classified into two divisions.

1. Manufacturing enterprises – engaged in the manufacturing or production of goods in any industry
2. Service enterprises – engaged in providing or rendering services

Further, the earlier definition of MSMEs was based on investments in plants and machinery or equipment. However, MSMEs will now be defined in a composite manner, taking both investments as well as turnover into account. Moreover, this new definition will bring about many benefits that will aid MSMEs to grow in size.  

Udyam Registration/MSME Online Registration Process

1.       Go to the Udyog Aadhaar website
2.       Click on “For new Entrepreneurs who are not registered yet as MSME” option
3.       Enter the details of your Aadhaar and click on the option “Validate & Generate OTP”
4.       Enter the OTP sent to the registered mobile number to verify the details of the Aadhaar.
5.       Select the type of organisation and enter your PAN number and click on validate

 

6.       Enter the following details: 1. Mobile number and Email ID 2. Social Category and Gender 3. Name of Enterprise and Address of office 4. Date of Incorporation 5. Select whether in production or not 6. Date of commencement of business 7. Bank details of the entity 8. The major activity of the business unit i.e. Manufacturer or service unit 9. National Industry Classification (NIC) Code for Activities (One or more activities can be added) 10. The number of persons employed 11. Amount invested in plant or machinery 12. Check yes or no if you are interested to get registered on Government e-Market (GeM) Portal 13. Check yes or no if you are interested to get registered on TReDS Portal

 

7.       After filling out the important details, select the checkbox “Agree Terms and Conditions” and finally submit the form and validate with OTP.

  Points to be noted:

1. To do the registration the small and medium scale industry owner can file form in both manners, i.e., whether online or offline.
2. Secondly, there are no registration fees required to be paid for this process.

   

MSME Registration without Aadhaar Card

  In case the applicant doesn’t have an Aadhaar card then he/she must visit the nearest Aadhaar enrollment centre for enrollment. Till the time Aadhaar is issued to the individual the below documents can be used to continue the registration process: Further, a Copy of Aadhaar enrollment slip or copy of Aadhaar slip for Aadhaar enrollment can be used. For Aadhaar enrollment process below documents are required:

•         Employee photo identity card
•         Driving licence copy
•         Passport copy
•         Copy of voter ID card
•       PAN card copy

Then, after completing the above process you can continue your business with an MSME/SSI certificate.      

Documents Required For Udyam Registration/MSME Registration

•         Aadhar cards of Proprietor / Partners/ Directors
•         Copy of PAN Card business
•         P&M as well as equipment investment details. (Amount of Investment)
•         Likewise, Turnover Details
•         Valid Mobile number as per Aadharcard as well as valid email address
•         Proof of date of commencement of business
•         Copy of Bank statement with IFSC code
•         Name of Business as well as address proof of business
•         Partnership deed or MOA/AOA
•         Sales as well as purchase bill copies 
•         Copies of licenses as well as bills of purchased machinery

 

Benefits of MSME

The Finance Minister listed various benefits for MSMEs which included easier credit and equity infusion as well as various other benefits like redefining these units under Atma Nirbhar Bharat Scheme. New Benefits under “Atma Nirbhar Bharat Scheme”

•         Collateral Free Automation loan will be given by banks and NBFCs for an amount up to 20% of the MSME’s entire outstanding credit as on 29th February 2020. Moreover, Borrowers with a turnover of up to rupees 100 crores and an outstanding credit of up to rupees 25 crores are eligible for obtaining credit under this scheme. Also, this Loan will be for a 4 year tenor with a Moratorium of 12 Months on principal repayment. Also, 100% credit guarantee cover to banks and NBFCs on principal and interest

 

•         Further, to meet liquidity requirements for such companies, the Government of India will facilitate the provision of Rs 20,000 crores Subordinate Debt for Functioning MSMEs which are NPA or are stressed. Also, this benefit is towards the loans which are standard having the timely repayments in the past. Moreover, the stimulus package has rightly considered credit facilities even for the borrowers where there were few delays or the loans were classified as NPAs.

 

•         Likewise, rupees 50,000 crores Equity infusion for MSMEs through Funds. Since the Government has observed the inability of raising debt by MSMEs beyond a particular level. Also, the MSMEs which are having growth potential and viability will get the support of equity infusion from this corpus.

 

•         Further, apart from liquidity enhancement measures, the government has taken a step towards increasing the market for MSME in India. Moreover, Indian MSMEs and other companies have often faced unfair competition from foreign companies. Therefore, Global tenders will be disallowed in Government procurement tenders up to rupees 200 crores

    There are various other benefits of MSME Registration and some of them are listed below:

•         A discount of 50% will be available on Trademark Registrations.
•         MSME Registration helps to open the current account easily.
•         Concession one electricity bill can be enjoyed by making an application to the electricity department along with an MSME Registration Certificate.
•         An enterprise can avail protection if payment is delayed from the buyer’s side and also it can seek help under the arbitration and reconciliation.
•         It can take credit for minimum alternate tax (MAT) to be carry forward for up to 15 years instead of 10 years
•         There are many government tenders that are only open to MSME Industries.
•         MSME certificate allows 1% exemption on the interest rate on overdraft.
•         The enterprises can easily get the approvals, licences, as well as registrations once they acquire the MSME certificate.
•         Customers can recognize an enterprise easily due to the MSME registration.
•         Enterprises that have MSME registration can enjoy Direct Tax Exemption in the initial year of business, as mentioned in the scheme by the Government and depending on business activity.

 

Activities specifically excluded from Coverage under MSME

  Ministry of Micro, Small, and Medium Enterprises (MSME) has clarified via notifications that the following activities would be specifically not included in the manufacturing or production of commodities or rendering of services as per Section 7 of the said Act.  

1. Forest and Logging
2. Fishing and aquaculture
3. Wholesale, retail trade as well as repair of motor vehicle and motorcycles
4. Wholesale trade except for motor vehicles as well as motorcycles.
5. Retail Trade Except for Motor Vehicles as well as motorcycles
6. Activities of households as employees for domestic personnel
7. Undifferentiated goods as well as services-producing activities of private households for own
8. Activities of extraterritorial organisations and bodies

    Important Points Related to Udyam Registration  

•         Udyam Registration Certificate

o    It will have a dynamic QR code from which the web page of the portal and details about the enterprise can be accessed.  

•         Income tax, GST and PAN department

o    Information verification process takes place due to the association of above departments.

•         Criteria of the classification

o    Investment and turnover of enterprises are now composite for both the manufacturing and service sector.  

•         Existing registered enterprises have to re-register with the new portal before 31.03.2021.

 

•         PAN and GSTIN are mandatory for registration

o    In the case of a Company, LLP, Cooperative Society, Trust, Society, GSTIN, and PAN along with its Aadhaar number are mandatory. o    In the case of the proprietor, you can continue with Aadhar only on a self-disclosure basis but before 03-2021 you must apply for PAN & GST number and must update the same on the portal.  

•         The registration of the following two portals are also integrated with Udyam Registration Portal for the facilitation of MSME and ease of doing business –

o    Government e-Market (GeM) portal, and o    TReDS portal  

•         Reclassification of existing registered enterprises following the new definition

o    For ascertaining an enterprise as micro, small or medium, an enterprise must fulfill both the criteria i.e., investment and turnover. If the enterprise crosses the ceiling limit of even one criterion, then it will cease to exist in that category and be placed in the next higher category. o    But the enterprise cannot 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. o    In case of an upward change (from a lower to a higher category i.e. Micro to small), an enterprise will maintain its prevailing status till the expiry of one year from the close of the year of registration. o    In case of reverse-graduation (sliding down to lower category i.e. Small to Micro) of an enterprise, 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.