Udyam Registration introduced by the Government of India for the enterprises which are engaged in the production or manufacturing or processing or preservation of goods or in the provision or rendering of services. In other words, which are engaging in only trading i.e., buying, selling, importing, or exporting goods are not even eligible for the Udyam Registration.
The Ministry of Micro, Small, and Medium Enterprises has made the announcement regarding the new classification of MSME Enterprises launched on July 1, 2020, under the name of Udyam Registration by the notification on June 26, 2020. The Ministry also launched the new portal for Udyam Registration which is www.udyamregistration.gov.in. The portal established is in a very simplified form where the entrepreneur can know all the details of the registration step of what should know and what they should do.
While establishing the new portal the Central Government has set up the advisory board for the recommendations of a new classification of enterprises as micro, small, medium and after having recommendations the CG has clarified new classification of MSME which shall come into effect from July 1, 2020.
New Classification of Micro, Small and Medium Enterprises:-
A micro-enterprise, where the investment in plant and machinery or equipment does not exceed 1 crore rupees and turnover does not exceed 5 crore rupees.
A small enterprise, where the investment in plant and machinery or equipment does not exceed 10 crore rupees and turnover does not exceed 50 crore rupees.
A medium enterprise, where the investment in plant and machinery or equipment does not exceed 50 crore rupees and turnover does not exceed 250 crores respectively.
Basis Of Calculation:-
A.Investment in Plant, machinery, and equipment
The calculation of investment of plant and machinery or equipment must be linked to the Income Tax Return of the previous years filed under the Income Tax Act, 1961.
In case of a new enterprise where no Income Tax Return is filed, the investment shall be based on the self-declaration of the promoter of the enterprise and it shall be ended after the 31 Mar of the Financial Year that is, on the filing of First ITR.
The Plant and Machinery have the same meaning as given in the Income Tax Act, 1961.
The invoice value shall be considered as the purchase price whether it is the first or second-hand goods, shall be taken into account excluding the Goods and Service Tax Act on a self-disclosure basis if the enterprise is a new one.
Exports of goods or services or both shall be excluded while calculating the turnover of the enterprise whether it is micro, small or medium, for the purposes of classification.
Information as regards to turnover and export turnover of the enterprise shall be linked with the Income Tax Act or the Central Goods and Service Tax Act and the GSTIN.
The turnover related figures of such enterprises that do not have PAN will be considered on a self-declaration basis for the period up to 31 March 2021 and afterward, it shall be mandatory to have the PAN.
Benefits on getting registered as Udyam:
- Udyam registration helps in getting government tenders
- Due to the Udyam, bank loans become cheaper as the interest rate is very low. There are various tax rebates available for Udyam.
- Become very easy to get licenses, approvals, and registrations, irrespective of the nature of business as a business registered under Udyam are given higher preference for government license and certification.
- They get easily permission for credit at very lower interest rates.
- Registered Udyam gets tariff subsidies and capital subsidies.
- Once it is registered the cost getting a patent done, or the cost of setting up the industry reduces as many tax rebates by the Income Tax are available.
Process and Documentation of getting Registration as Udyam:-
The form of registration shall be available on the Udyam portal.
There shall no fee for the filing of registration at the portal.
The Aadhar number will be required for registration.
The Aadhar number shall be of the proprietor in case of proprietorship firm, of the managing partner of the partnership firm, and of the Karta in case of Hindu Undivided Family.
In the case of a company or a Limited Liability Partnership or a cooperative society or society or trust, the organization or the authorized signatory shall provide its GSTIN and PAN number along with Aadhar number.
In case of deficiency of information of previous years when it did not have PAN shall be filled up on a self-declaration basis.
No enterprise shall not take more than two registration in case the entrepreneur supplies both goods and services he shall be registered under only on registration.
Whoever knowingly misrepresents or attempts to suppress the self-declared facts and figures in the self-declaration form shall be liable for penalty under section 27 of the Act which is for first conviction fine of 1000 rupees shall be charged and subsequent conviction it shall be extended to 10000 rupees.
On registration, an enterprise shall be assigned a permanent identification number to be known as- Udyam Registration Number.
An e-certificate shall be generated on the completion of the registration process.
Updation of information and transition period in classification:-
- The entity already has the Udyam Registration Number will update the information online at the Udyam Registration portal, including the details of the ITR and the GST Return for the previous financial years.
- Failure to update the relevant information within the period specified in the online Udyam Registration portal will result in the suspension of its status.
- Based on the information furnished or gathered from Government’s sources including ITR or GST return, the classification of the enterprise is updated which is in effect from July 1, 2020.
- In case of graduation or reverse-graduation of an enterprise, communication will be sent to the enterprise about the change in the status.
- In case of an upward change in terms of investment in plant and machinery or equipment or turnover or both, and consequent reclassification, an enterprise will maintain its prevailing status till the expiry of one year from the closure of the year of registration.
- If the present category of the enterprise is changed due to reverse graduation or as a result of re-classification or due to actual changes in investment in plant and machinery or equipment or turnover or both whether it is registered or not under the act, the new classification shall be applied from the April 1 of the following year, not from the day the change has occurred and also the entity can take the privileges in the current year like tax rebates, deductions subsidies and so on.
In case of any discrepancy or grievances, the General Manager of the District Industries Centre of the concerned district shall undertake the inquiry for verification of details of Udyam Registration submitted by the enterprise and thereafter forward the matter with necessary remarks to him who after issuing of notice to the enterprise and giving an opportunity to present the case and based on the findings may amend the details and recommend to the ministry of Micro, Small or Medium Enterprises for cancellation of the Udyam Registration Certificate.