MSME Registration

A clear definition and process of Registration is imperative for MSMEs to draw the benefits of government schemes/policies, nationally or internationally; especially, when relaxations/rebates are designed for a certain category of enterprises

MINISTRY OF MICRO, SMALL AND MEDIUM ENTERPRISES issued a consolidated notification dated the 26th June 2020 notifies certain criteria for classifying the enterprises as micro, small and medium enterprises and specifies the form and procedure for filing the memorandum known as Udyam Registration.

The key aspect of the Notification is as under 

1.   All existing MSME must register/convert after 15 July 2020 and before 31 March 2021 to enjoy the benefits as MSME unit under the MSME Development Act, 2006

2.   Udyog Aadhar registration for MSMEs will be called now Udyam Registration. Udyam Parichay Portal (Http:/enterpriseindia.gov.in) will assign a permanent identification number and the existing number will get replaced with the new one. and will be reclassified based on revised threshold limits For manufacturing and service activities under one PAN, only one Udyam number will be allotted

3.   Any person who intends to establish a micro, small or medium enterprise may file Udyam Registration online in the Udyam Registration portal, based on self-declaration with no requirement to upload documents, papers, certificates or proof.

4.   On Completion of registration Process, enterprises will be assigned a permanent identification number known as Udyam Registration Number, and an e certificate is issued namely Udyam Registration Certificate.

5.   If an enterprise exceeds any one of the present category’s ceiling limits, it will be registered in next higher category. However, no enterprise shall be placed in the lower category unless it fails to fulfill both the ceiling limits speci?ed in its present category.

6. Registered Enterprises shall update information on the Udyam Registration portal, including details of lTR and GST, and accordingly, the classi?cation of the enterprise shall be updated; In case of upward graduation or reverse-graduation of an enterprise, a communication will be sent to the enterprise about the change in the status.

7. Classification of an enterprises.- the enterprise shall be classified as a micro, small or   medium enterprise based on the criteria, given in the following table

8.   All the units with GSTIN listed against the same PAN will be collectively treated as one unit and for classification, investment & turnover figures of all such units will be aggregated in deciding the category as micro, small or medium enterprise

9.   Calculation of investment in plant and machinery or equipment-

·      The calculation of investment in plant and machinery or equipment will be linked to the Income Tax Return (ITR) of the previous years filed under the Income Tax Act, 1961

·      In case of a new enterprise, where no prior ITR is available, the investment will be based on self-declaration of the promoter of the enterprise and such relaxation shall end after the 31st March of the financial year in which it files its first ITR.

·      The purchase (invoice) value of a plant and machinery or equipment, whether purchased first hand or second hand, shall be taken into account excluding Goods and Services Tax (GST), on self-disclosure basis, if the enterprise is a new one without any ITR

·      Definition of plant & machinery or equipment shall have the same definition as per Income Tax and shall include all tangible assets excluding land, building, furniture, fixtures.

10.   Calculation of turnover

·      Exports of goods or services or both shall be excluded while calculating the turnover of any enterprise whether micro, small or medium, for classification

·      Information as regards turnover and export 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.

11.     Registration process

·      Registration shall be as provided in the Udyam Registration portal

·      No fee for filing Udyam Registration.

·      Aadhar number of Proprietor/ Partner/ Kata of HUF will be required. In case of Companies, LLP, Trusts, Societies, PAN, GSTIN also required along with Aadhar number of authorized signatories

·      Whoever intentionally misrepresents or attempts to suppress the self-declared facts and figures appearing in the Udyam Registration or update process shall be liable to such penalty as specified under section 27 of the Act.

·      And according to 27 of the act on first conviction fine will be up to Rs. 1000.00 and subsequent conviction fine will be not less than Rs. 1000.00 may extend to Rs. 10000.00

·      The District Industries Centres (DICs) will also act as Single Window facilitation Systems in their Districts and helps any enterprises in case of any difficulties including not having aadhar 

With revised guidelines, the process of registration under the MSME Act made more transparent. Figures declared under Income Tax and GST will be critical now to avail benefits under the MSME act. Previously, self-declaration was sufficient and there was no check aver the figures declared under Income Tax and GST.