Ministry of Micro, Small & Medium Enterprises (MSME) has issued Notification No. S.O. 2119(E) dated 26.06.2020 regarding criteria for the classification of enterprises as Micro, Small & Medium Enterprises, and their registration in Udyam Portal.
An Enterprise is classified into 3 different aspects.
- Those 3 Enterprises are
The defining criteria for above 3 Enterprises are
|Type of Enterprise||Investment in Plant and Machinery or equipment||Turnover Criteria|
|MICRO||Up to Rs.1 Crore||Upto Rs.5 Crore|
|SMALL||Rs.1 Crore to10 Crore||Rs.5 Crore to 50 Crore|
|MEDIUM||Rs.10 Crore to 50 Crore||Rs.50 Crore to 250 Crore|
Note:-Both criteria are required to be fulfilled to be classified as Micro, Small, or Medium. It means that even if one criterion is fulfilled of a higher category then the enterprise will not be reclassified. Reclassification will be done only after the fulfillment of both criteria.
What are the benefits of Udyam Registration?
The Benefits of Udyam Registration are as follows:-
- Exemption of 1% interest rate on Overdraft.
- Entities will be eligible to take benefits provided by the state in Industrial Promotion Subsidy Schemes.
- State Laws allow the MSME owners to claim the expenses of Octroi & Tax concession.
- Avail the benefits of the excise Exemption Scheme.
- ISO certificate’s charges will be reimbursed.
- There will be ease in bank mortgages & bank loans, bank interest will be cheaper and less up to 1.5% as compared to other business loans.
- Obtaining License/Registration/Approvals will be very easy & fast.
- Tax and Capital subsidy along with Tariff subsidies will also be given.
- Delayed payments against the material or services supplied will be protected by charging the interest rate 3times the bank rate notified by RBI.
- On registration of a patent 50% subsidy will be provided.
- The registered entity of the MSME will get the eligibility of the CLCSS (Credit Linked Capital Subsidy).
- Registered Udyam can avail 100% Collateral free loans from all banks and also a special preference on the International Trade Affairs.
- The registered udyam will get subsidy in the Bar Code Registration and concessions in electricity bills. (Only for Manufacturing Entities)
- EMD amount as Security Deposit for Government Tenders will not be required to be paid.
Which entities required to apply for Udyam Registration?
- All entities having UdyogAadhar or EM-2 registration are required to take a registration in Udyam on or before 31-03-2021 and registration is started from 01-07-2020.
- If an Individual/Company/LLP/Partnership Firms/are having manufacturing or service providers and such entity wants to avail the benefits provided by the Government to MSME.
- While registration, an enterprise will be known as a Udyam in udyam registration portal and permanent identification number will be given which will be known as a ‘’Udyam Registration Number’’.
- On completion of the registration process, an e-certificate will be issued that is ‘’Udyam Registration Certificate’’.
- All enterprises registered before30thJune 2020will continue to be valid till 31-03-2021.
- If an organization has registered in any other ministry of micro, small, medium ministry, then such entity will also be required to register itself under Udyam registration.
What are the documents required for Udyam Registration?
- Aadhar Card (Mobile Number should be linked)
- PAN Card
- Bank Details (Passbook Photo)
- Name of Bank
- Account Number
- IFSC Code
- Business Activities List – All Manufacturing and Service Activities.
- Mobile number
- Email Id
- The Official address of the business
- Incorporation Date and Commencement Date
- The Number of Persons Employed.
What are the points to be kept in mind before making an application for Udyam Registration?
- The MSME online system will be fully integrated with the income tax as well as the GSTIN systems. Investment and Turnover amount will be auto-populated from Income Tax
- PAN and GST number will be mandatory from the 01-04-2021.
- As stated above the individuals who are registered in EM-2or UAM registration will need to get registered themselves.
- Only 1 registration should be filed with udyam registration, not more than one registration. The manufacturing as well as the service will need to specify or shall be added in one registration.
- Aadhar number is mandatory for registration.
- The Aadhar number Proprietor will be taken in case of a proprietorship firm, managing partner in case of the partnership firm, Karta in case of HUF.
- In case of any deficiency of information in previous years when it did not have PAN shall be filled up on self –declaration by duly registered udyam enterprise with PAN.
- An intentional misrepresentation and attemp to suppress the seif-declared facts & figures which appeared in udyam registration or process for change in registration particulars shall be liable to a penalty as specified under section 27 of the act which will be Rs.1000 for the first conviction and in case of second or subsequent more than Rs.1000 but may extend to Rs.10000.
- The government is also providing free registration of the GEM portal, the government E-marketplace where online procurement of consumer goods & services that are needed by various government departments, organizations & PSU’s takes place.
- The government is also providing free registration at the TReDs portal, TReDS is an electronic platform for facilitating the financing/ discounting of trade receivables of MSME through multiple financiers. These receivables can be due from corporates and other buyers including government departments and PSU’s.