Udyam (MSME) Registration

What is Udyam Registration (MSME)? 

As already declared by the Union Ministry of Micro, Small and Medium Enterprises (MSME), vide the Notification Dated 26th June, 2020, the new process of Classification and Registration of enterprises is starting from 1st July, 2020. An enterprise for this purpose will be known as Udyam and its Registration Process will be known as Udyam Registration. 

Who Can Get Udyam Registration?  

Let’s get some things clear! The organizations which are eligible for Udyam Registration are meant to be either in manufacturing or producing or processing or preservation of goods or in providing the services. In other words, Traders who buy, sell, import, or export the goods are not even eligible for applying for Udyam Registration.

But you should know that there are a set of criteria that an entity has to meet to be classified as a medium, small, or micro-enterprise for obtaining the MSME registration. As per the current notification, 

 What are Micro, Small and Medium Enterprise? 

The existing MSME classification was based on the criteria of investment in plant and machinery or equipment. So, to enjoy the MSME benefits, the MSMEs have to limit their investment to a lower limit, as mentioned below:

These lower limits are killing the urge to grow as they are unable to scale their businesses further. Also, there has been a long-pending demand for the revision of MSME classification so that they can further expand their operations while continuing to avail the MSME benefits. Now, under the Aatmanirbhar Bharat Abhiyan (ABA), the government revised the MSME classification* by inserting composite criteria of both investment and annual turnover. Also, the distinction between the manufacturing and the services sectors under the MSME definition has been removed. This removal will create parity between the sectors. The following is the revised MSME classification*, where the investment and annual turnover, both are to be considered for deciding an MSME. 

* Further upward revision made by the government 

 Types of Enterprises (for Manufacturing or Service sector, both) 

Micro Enterprises 

Investment up to Rs 1 Cr and turnover up to Rs 5 Cr 

Small Enterprises 

Investment up to Rs 10 Cr and turnover up to Rs 50 Cr 

Medium Enterprises 

Investment upto Rs 50 Cr and turnover upto Rs250 Cr 

Who is Eligible for Udyam Registration? 

Any person who intends to establish a micro, small, medium enterprise may file online udyam registration. 

Benefits of Udyam Registration
By registering in the industry base, the business gets benefits such as:

Benefits from banks: All banks and other financial institutions give priority to MSMEs and make special plans for them. This usually includes priority sector lending, which means your business can easily get a loan and incur lower bank interest rates. You may also get a stay in case of a delay in repayment.

Tax benefits: Depending on your industry, you may get the benefit of the Excise Exemption Scheme or you may get a direct tax exemption in the initial years.

Benefits of the State Governments: The State Government gives subsidy on electricity, tax and entry to the businesses which are associated with the industry base and the State Government gives them exemption in sales tax and purchase preference for the goods left by them.

Benefit from the Central Government: The Center has introduced Credit Guarantee Scheme, Atmanirbhar Bharat, Zero Effect Zero Defect, Quality Management Standards and Quality Technology Tools, Women Entrepreneur, Hip Incubation, etc to benefit the MSME sector. Central and State Government Extended Credit Facilities.

Industrial extension support and services, availability of developed sites for warehouse construction, provision of training facilities, assistance in marketing both in and outside the country (exports), assistance for building industries in under developed areas, for technology development in MSMEs Technical consultancy, capital support, and so on.

Other Benefits of Udyam Registration Certificate

Other benefits to the industry base are as follows:

1. Quick resolution of disputes
2. Special consideration for participation in the international trade fair
3. Stamp duty and registration fee waiver
4. Several exemptions under direct tax laws
5. Barcode Registration Subsidy
6. Subsidy on NSIC performance and credit rating
7. Counter Guarantee from Government of India through CGSTI
8. Low rate of interest from banks
9. 15% subsidy under CLCSS scheme for technology up gradation
10. Waiver while applying for government tenders
11. Electricity bills rebate
12. Reimbursement of payments made for obtaining ISO certification
13. For optimum reasons, by raising the eligible loan limit from the amount of Rs. 25 lakh to Rs. 50 million
14. Increase the guarantee cover limit from 75% to 80%
15. Reservation of products for special manufacturing by MSME / SSI
16. Easy registration and approval for obtaining a license
17. Eligible for IPS subsidy  (Industrial Promotion Subsidy(IPS) : New and expanding MSME unit will be eligible for this incentive as per their taluka categorisation. Incentive subsidy will be offered on 100 per cent. Gross State GST payable by unit on sale of eligible products as detailed below).
18. Priority in allocation of government tenders
19. Excise duty exemption scheme
20. 50% subsidy for patent registration

Points for existing enterprises: 

• All existing enterprises registered under EM–Part-II or Udyog Adhaar (UAM) shall register again on the Udyam Registration portal on or after the 1st day of July 2020.
• The existing enterprises registered before 30th June 2020, shall continue to be valid only for a period up to the 31st day of March 2021.
• An enterprise registered with any other organization under the Ministry of Micro, Small and Medium Enterprises shall register itself under Udyam Registration 

Document Requirement for Udyam Registration? 

• Adhaar Card of the person.
• Valid Mobile No. of the contact person
• Email- Id of the contact person
• Annual Turnover of firm
• Having PAN Card & GST number is mandatory from 01.04.2021.
• ITR Returns filling details
• Bank details of the enterprise
• Registered office address.
• Number of employees
• Commencement date of the business
• Investment of plant & Machinery