MSME Registration Process

Introduction

Anyone planning to start a micro, small, or medium business can file Udyam Registration online through the Udyam Registration portal, based on self-declaration, with no need to upload documents, papers, certificates, or proof.
Upon registration, an enterprise (referred to as “Udyam” in the Udyam Registration portal) will be assigned a permanent identifying number known as the “‘Udyam Registration Number”. After completing the registration process, an e-certificate known as the “Udyam Registration Certificate” will be issued.

In exercise of the powers conferred by sub-section (1) read with sub-section (9) of section 7 and sub-section (2) read with sub-section (3) of section 8, of the Micro, Small and Medium Enterprises Development Act, 2006, (27 of 2006), hereinafter referred to as the said Act, and in supersession of the notifications of the Government of India in the Ministry of Micro, Small and Medium Enterprises number S.O.1702 (E), dated the 1st June, 2020, S.O. 2052 (E), dated the 30th(ii) Except for things done or omitted to be done prior to such supersession, the Central Government, after receiving the Advisory Committee’s recommendations in this regard, hereby notifies certain criteria for classifying enterprises as micro, small, and medium enterprises, as well as the form and procedure for filing the memorandum (hereinafter referred to as “Udyam Registration”), with effect from the 1st day of July, 2020.

MSME Procedure

Here’s a step-by-step guide for the procedure for registration under GST:

  • Classification of enterprises

The following criteria will determine whether an enterprise is micro, small, or medium:

(I) a micro enterprise, where the investment in plant, machinery, or equipment does not exceed one crore rupees and the turnover does not exceed five crore rupees.
(ii) a small enterprise, where the investment in plant, machinery, or equipment does not exceed ten crore rupees and the turnover does not exceed fifty crore rupees;
(iii) a medium-sized enterprise with an investment in plant and machinery or equipment of less than fifty crore rupees and a turnover of less than two hundred and fifty crore rupees.

    • Classification based on composite investment and turnover criteria
    • A composite criterion of investment and turnover shall be used to classify an enterprise as micro, small, or medium.
    • If an enterprise exceeds the ceiling limits specified for its current category in either of the two criteria of investment or turnover, it will be removed from that category and placed in the next higher category; however, no enterprise shall be placed in the lower category unless it falls below the ceiling limits specified for its current category in both investment and turnover.
    • All units with a Goods and Services Tax Identification Number (GSTIN) listed against the same Permanent Account Number (PAN) will be treated as one enterprise, and the turnover and investment figures for all such entities will be viewed together. Only the aggregate values will be considered when determining whether the entity is classified.as a micro, small, or medium enterprise.
    • To calculate investment in plant and machinery or equipment
    • To calculate investment in plant and machinery or equipment, use prior years’ Income Tax Returns (ITRs) filed under the Income Tax Act of 1961.
    • In the case of a new enterprise, where no prior ITR is available, the investment will be based on the promoter’s self-declaration, and this relaxation will expire after the 31st March of the fiscal year in which it files its first ITR.
    • The term “plant and machinery or equipment” of the firm should have the same meaning as it has in the Income Tax Rules, 1962, adopted under the Income Tax Act, 1961, and shall include all tangible assets (other than land and building, furniture  and fittings).use prior years’ Income Tax Returns (ITRs) filed under the Income Tax Act of 1961.
    • In the event that the firm is new and doesn’t have an ITR, the buy (receipt) worth of a plant, hardware, or gear, whether got first or second hand, will be considered, barring Labor and products Duty (GST), on a self-divulgence premise.
    • The expense of specific things determined in Clarification I to sub-area (1) of segment 7 of the Demonstration will be barred from the computation of how much interest in plant and hardware.
    • Calculation of Turnover
    • Exports of goods or services, or both, are excluded from the calculation of any enterprise’s turnover for classification, whether micro, small, or medium.
    • Information about an enterprise’s turnover and export turnover must be linked to the Income Tax Act, the Central Goods and Services Act (CGST Act), and the GSTIN.
    •  The turnover-related numbers of such enterprises that do not have PAN will be assessed on a self-declaration basis until March 31, 2021, at which point PAN and GSTIN will be required.

    Registration Process

    The registration form shall be as provided on the Udyam Registration portal.
    There will be no fee for filing the Udyam Registration.
    An Aadhaar number will be required for Udyam registration.
    The Aadhaar number must be that of the proprietor in the case of a sole proprietorship, the managing partner in the case of a partnership, or a karta in the case of a Hindu Undivided Family (HUF).
    In the case of a Company, Limited Liability Partnership, Cooperative Society, Society, or Trust, the organization or its authorized signatory must provide its GSTIN, PAN, and Aadhaar number.
    If an enterprise is duly registered as an Udyam with PAN, any missing information for previous years when it did not have PAN must be filled out on a self-declaration basis.
    No enterprise may file multiple Udyam Registrations, but one registration can include multiple activities, such as manufacturing or service.
    Whoever intentionally misrepresents or attempts to suppress the self-declared facts and figures appearing in the Udyam Registration or Update process shall be subject to the penalty specified in Section 27 of the Act.

    Registration of Existing Enterprise

    • All existing enterprises registered under EM-Part-II or UAM must register again on the Udyam Registration portal on or after July 1, 2020.
    • All enterprises registered until June 30, 2020, will be reclassified in accordance with this notification.
    • Existing enterprises registered prior to June 30, 2020 shall remain valid only until March 31, 2021.
    •  An enterprise registered with any other organization under the Ministry of Micro, Small, and Medium Enterprises must register with Udyam Registration.

    FAQS

    MSME registration is a voluntary process that enables small and medium enterprises to avail themselves of various benefits provided by the government, such as easier access to credit, subsidies, and other support schemes.
    Any business entity, including proprietorships, partnerships, private limited companies, and limited liability partnerships (LLPs), engaged in manufacturing or providing services can apply for MSME registration.
    MSME registration offers several benefits, including easier access to credit, lower interest rates, various tax benefits, and eligibility for government schemes and subsidies.
    No, MSME registration is not mandatory. It is a voluntary process, and businesses can choose to register or not based on their preferences.
    The application process for MSME registration can be done online on the Udyam Registration portal (https://udyamregistration.gov.in/). The required documents and information should be submitted as per the guidelines provided.
    Generally, the documents required include the business’s PAN card, Aadhaar card of the owner/partners/directors, business address proof, and details of the enterprise, such as the number of employees and investment in plant and machinery.
    The registration process on the Udyam Registration portal is free of cost. However, businesses should be cautious of third-party agencies claiming to assist with registration for a fee.
    The registration process is designed to be quick, and you can usually get your MSME Registration Certificate immediately upon successful submission of the application on the Udyam Registration portal.
    As of my last knowledge update in January 2022, MSME registration is a one-time process, and there is no renewal required. However, it’s advisable to check the latest regulations, as there might be changes in the future.
    Yes, businesses can update their information on the Udyam Registration portal. Changes in details like business address, contact information, etc., can be made as needed.