Ministry of Micro, Small and Medium Enterprises vide notification No. S. O. 2119(E) dated 26th June 2020 has brought in certain changes in the classification of enterprises as MSME and has specified new form and procedure for registrations of the enterprises, known as “Udyam Registration”. This registration will replace the earlier registration under Udyog registration. This is applicable with effect from 1st July 2020.

Udyam registration does away with the requirement of uploading certificates and documents. As per officials, the norm could be allowed as the Udyam registration process is well-integrated with the income tax and GST. Additionally, the details fed in can be checked upon using PAN and GSTIN details.

CLASSIFICATION OF ENTERPRISE:

An enterprise shall be classified as Micro, Small or Medium enterprise based on twin criteria of investment in plant & machinery or equipment and Turnover.

• Enterprise shall be classified under a category by considering both the investment and turnover ceiling limit criteria.

• If enterprise crosses the ceiling limits specified above for its present category in either of the two criteria of investment or turnover, it will cease to exist in that category and be placed in the next higher category.

• Enterprise shall be placed in the lower category only if both the criteria of investment as well as turnover goes below the ceiling limits specified for its present category.

• All units with GSTIN listed against same PAN shall be considered as one enterprise. Aggregate Turnover and aggregate investment figures for all units of such enterprise shall be considered while deciding the category of enterprise.

• Definition of Investment in plant and machinery or equipment:
  • Investment is linked to Income Tax Return (ITR) of previous years.

• The term Plant and Machinery or Equipment shall have same meaning as defined under Income Tax Act, 1961 and it includes all tangible assets other than land & building, furniture & fittings.

• In case of new enterprise, where no ITR is available, investment will be considered based on self-declaration. This relaxation will end after 31st March of the financial year in which it files the first ITR.

• If the enterprise is new one without ITR, the purchase value (excluding GST) of such investments whether purchased first hand or second hand shall be considered on self-declaration basis.

• Definition of Turnover:

·       Export of goods or services shall be excluded while calculating turnover

• Turnover and export turnover information shall be linked to Income Tax Act and Central Goods and Services Act and the GSTIN

• In case enterprise do not have PAN, turnover information will be considered on the basis of self-declaration upto 31st March 2021. Thereafter PAN and GSTIN is mandatory.

HOW TO BECOME MSME?

• File Form: File Udyam registration form online in Udyam registration portal on self- declaration mode without uploading any documents, proof, etc.

• Assign URN: Upon registration permanent identity number called Udyam Registration Number (URN) will be assigned.

• Get URC: e-Certificate called “Udyam Registration Certificate” shall be issued after completing the registration.

UDYAM REGISTRATION FOR EXISITING ENTERPRISES

Ø  Existing enterprise registered under EM-Part-II or UAM shall be replaced with Udyam Registration.

• All enterprise to register again in Udyam Registration portal on or after 1st July 2020

• Enterprise shall be re-classified post Udyam registration

• Existing registration shall be valid upto 31st  March 2021.

REGISTRATION PROCEDURE

• Registration is through online Udyam Registration portal
• No Fee for registration
• Aadhaar number required for registration
  • Proprietor’s Aadhaar in case of proprietorship firm
  • Managing partner’s Aadhaar in case of partnership firm,
  • Karta’s Aadhaar in case of HUF
• GSTIN and PAN alongwith Aadhaar number of organisation or authorized signatory in case
  • Company
  • LLP
  • Trust
  • Cooperative society
  • Society
• One Enterprise One Registration.
• Manufacturing or service or both may be added in one Udyam Registration itself.

UPDATION OF INFORMATION

• Enterprise having URN to update ITR and GST return information for previous financial year and such other additional information as required, on self-declaration basis.

• In case of failure to update within specified period, Udyam registration will be suspended.

• Based on the information updated the classification of enterprise will be updated.

• In case of graduation (from lower to higher category) or reverse-graduation (sliding down to lower category), communication shall be sent to enterprise about the change in the status.

Disclaimer

The information contained herein is of general nature and is not intended to address the any particular individual or entity. The views expressed here are solely those of the author in private capacity.