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All about Udyam Registration

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ALL ABOUT THE UDYAM REGISTRATION

In its continuous endeavour to strengthen the MSME sector, the Government of India has reclassified the definition of Micro, Small and Medium Enterprises and also proposed various loan schemes. To avail the low interest rate loans / collateral free loans / subsidies, etc. the MSME shall have to be registered under the “Udyam Registration” with effect from 1st July 2020.

Classification of MSME

The Enterprises have been classified on the basis of the Investment in Plant and Machinery or Equipment and Turnover, which are as follows:-

  1. Micro Enterprises – Investment in plant and machinery or equipment does not exceed Rs. 1 Crore and T.O. does not exceed Rs. 5 Crores.
  2. Small Enterprises – Investment in plant and machinery or equipment does not exceed Rs. 10 Crores and T.O. does not exceed Rs. 50 Crores
  3. Medium Enterprises – Investment in plant and machinery or equipment does not exceed 50 Crores and T.O. does not exceed Rs. 250 Crores.

Procedure of Registration

 Likewise the previous regime of Udyog Aadhar, the Udyam Registration is also online and free of charge in which there will be no payment of any fee to the Government.

For Proprietor / Partnership firm / Hindu Undivided Family (HUF) – The Aadhar of the Proprietor / Authorised partner / Karta is required for the registration along with the Trade name.

For Company / LLP / Society / Trust – The Aadhar of the Authorised signatory and PAN and GST of the Organization shall be provided for the registration.

Even those Entities shall have to apply for the Udyam Registration who earlier have enrolled under the Udyog Aadhar. This scheme is a roll out for even those entities who are earlier enrolled in the Udyog Aadhar Mechanism.

An entity who is earlier registered under the Udyog Aadhar and who do not get registered under the Udyam Registration shall continue to valid under this scheme till 31st March 2021.

Investment and Turnover criteria

For Investment in Plant & Machinery or Equipments

  • To calculate the Investment in Plant & Machinery or Equipment, the figures will be linked to the Income tax return of the previous year filed under the Income Tax Act.
  • In the case of new enterprises where there is no previous ITR, the self declaration by the Authorised signatory is sufficient and after the first year, the relaxation for the self declaration shall end and the criteria will meet on the basis of Income Tax Return.
  • For the calculation of the value of plant & machinery or equipment the invoice value shall be taken excluding the GST portion.

For Turnover criteria

  • For the calculation of the Turnover, the export of goods or services shall be excluded from the turnover.
  • For calculating the Turnover, the PAN of the Entity shall be taken into consideration and the turnover for all the GSTIN shall be accumulated.

Re-classification criteria

The classification of the Entity shall be done on the basis of the information supplied in the ITR and GST data. The new rules relating to the Udyam Registration has the rules regarding the re-classification of Entity  from Lower to Higher category or vice versa, which are as follows:-

  1. From Lower to Higher category

In case of the re-classification from Micro to Small or Small to Medium enterprise, there shall be either change in the investment or turnover part. i.e. there shall be either change in the investment in the plant and machinery or there is a change in the turnover of the enterprises or both.

  1. From Higher to Lower category

In case of the reverse classification, i.e. from Medium to Small, Small to Micro or Medium to Micro. The changes in both the Investment in plant& machinery or equipment and turnover shall cumulatively be taken into consideration while classifying the category.

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