Udyam Registration for MSMEs from 1st July 2020

Udyam Registration For MSMEs From 1st July 2020

The government announced on Friday new standards that will enable new companies to register online based on the self-declaration, and will make document and certificate uploading unnecessary from July 1st.

Officials said that this was made possible by integrating the Udyam registration process into income tax and GST systems, and that the details filled in could be verified using the PAN number or GSTIN details.
“A company can only be registered on the basis of the Aadhaar number. Other details can be provided on a self-declaration basis, without the need to upload or submit a paper – so it’s actually a paperless exercise,” says one official statement.
The notification also states that an MSME is referred to as Udyam in the following, as this comes closer to the word company. Accordingly, the registration process Udyam Registration will be known.

S.O.2119 (E) – In exercise of the powers of the Micro, Small and Medium Enterprises Development Act,2006, 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, (27 0f 2006), hereinafter mentioned as the said Act, and in supersession of the notifications of the Administration of India in the ministry of Micro, Small and Medium Enterprises number S.O.1702(E), dated 1.06.2020, S.O.2052(E), dated 30.06.2017, S.O.3322(E) dated 1.11.2013 and S.O.1722(E), dated 5.10.2006, issued in the Gazette of India, Extraordinary part 2, Section 3, sub-section(ii), expect as respects things done or excluded to be done before such supersession, the central government, after the recommendations are obtained by the advisory committee in this behalf, hereby notifies certain criteria for classifying the enterprises as Micro, Small and Medium Enterprises and specifies the form and process for filing the communication (notification to be known as (“Udyam Registration”), with effect from the 1st day of July 2020.      
  1. Classification of businesses- The businesses shall be classified into three categories namely Micro, Small, and Medium Enterprises based on the following criteria:

These are named below:

 

 

  • The businesses where the investment in plant and machinery or equipment does not exceed 1 crore rupees and turnover does not exceed 5 crore rupees then the business is categorized as a micro-enterprise.

  • The businesses where the investment in plant and machinery or equipment does not exceed 10 crore rupees and turnover does not exceed 50 crore rupees then the business is categorized as a small enterprise.

  • The businesses where the investment in plant and machinery or equipment does not exceed 50 crore rupees and turnover does not exceed 250 crore rupees then the business is categorized as a medium enterprise.

2. To become a micro, small or medium enterprise :

  • If an individual wants to establish a micro, small or medium enterprise then he/she needs to file Udyam Registration online in Udyam Registration Portal, based on self-declaration where it is not required for you to upload documents, certificates or any sort of proof.

  • After registration, an enterprise will be assigned a permanent identification number namely “Udyam Registration Number”.

  • An e-certificate shall be granted on completion of the registration procedure. This certificate is known as the “Udyam Registration Certificate”.

3.Composite criteria of investment and turnover for classification :

  • This shall apply for classification of business as micro, small, or medium.

  • In case an enterprise crosses the ceiling limits specified for its present category in either of the two criteria of investment or turnover, it will no longer exist in that category unless it goes below the ceiling limits specified for its present category in both the two criteria of investment and turnover.

  • All sections with GSTIN listed against the same PAN shall be treated collectively as one enterprise and the investment and turnover figuring all of such entity shall be seen together and for deciding the categories of micro, small or medium enterprise only the aggregate values will be considered.

4.Calculation of investment equipment or plant and machinery :-  

  • The calculation will be linked to the ITR i.e. Income Tax Return of the previous year’s filed under the Income Tax Act, 1961.

  • For a new enterprise where no prior ITR is available there, the investment is based on self-declaration of the promoter of the enterprise and this relaxation shall end after the 31st March of the financial year in which the enterprise files its first ITR.  

  • The statement “equipment or plant and machinery” of the enterprise shall have the same definition as assigned to the plant and machinery in the Income Tax Rules, 1962 framed under the Income Tax Act, 1961 and shall have all tangible assets (excluding land and building, furniture and fittings).

  • The purchase value of a plant and machinery or equipment, whether it is first hand or second hand, shall be taken in the account excluding GST and if the enterprise is a new one without any ITR then on self-disclosure basis.

  • The number of certain products specified in the Explanation I to sub-section (10 of section 7 of the Act shall be excluded from the calculation of the amount of investment in plant and machinery.

5.Turnover Calculation:-

  • While calculating the turnover of any enterprise whether micro, small or medium, for classification, exports of goods or services or both shall be excluded.

  • Turnover and export turnover for an enterprise shall be linked to the Income Tax Act or the Central Goods and Services Act and the GSTIN.

  • The turnover of such enterprises that do not have PAN will be considered on a self-declaration basis for a period up to 31st March 2021 and then PAN and GSTIN shall be compulsory.

6.Procedure for registration:-  

The registration form will be provided in the Udyam Registration portal. No fee shall be taken from an individual filing for Udyam Registration. For the registration process, the Aadhaar number is required. In the case of a proprietorship firm, the Aadhaar number shall be of the proprietor, in the case of a partnership firm the Aadhaar number of the managing partner and in the case of Hindu Undivided Family (HUF) the karats’ Aadhaar number is required. For a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organization or its authorized signatory shall provide the GSTIN and PAN along with the Aadhaar number. If an enterprise is duly registered under Udyam with PAN, any insufficiency of details for previous years when it did not have PAN shall be filled up n a self-declaration basis. No enterprise is allowed to file more than one Udyam Registration, provided the number of activities including manufacture and service or both that may be specified or added in one Udyam Registration. The penalty is granted under Section 27 of the Act if an individual intentionally presents or attempts to suppress the self-declared facts and figures appearing in the Udyam Registration or updating process.

7.Registration of existing enterprises:-  

  • The existing enterprises who are registered under EM- PART-II or UAM shall register again on the portal on or after the 1st day of July 2020. All enterprises registered shall re-classify per this notification till 30.06.2020. Registered enterprises prior 30.06.2020 shall continue to be valid until 31.03.2021. An enterprise registered under any other organization shall register under Udyam Registration.

8.Updating of transition period and information:-

  • The enterprises registered must update their information online in the Udyam Registration portal with the details of the ITR and the GST Return for the preceding financial; year and other details as per requirement on a self-declaration basis.

  • The classification of the enterprises is updated o the basis of the details furnished from Government sources including ITR or GST Return.

  • Communication is usually sent to the enterprise about the changes made in the status, in case of graduation or reverse graduation.

  • For reverse graduation of an enterprise, whether as a result of re-classification or due to actual changes in investment in machinery or equipment or turnover or both and if the enterprise is registered under the Act, the enterprise will continue in its present category till the financial year is closed and it will be given the advantage of the changed status only with effect from 1st April of the financial year on the day the change took place.

  • If an enterprise fails to update the relevant details within the given time frame in the portal, it will render the enterprise liable for suspension of its status.

  • For an upward change in terms of turnover or investment in plant and machinery or both and consequent re-classification, an enterprise will maintain its status it expires.

9.Facilitation and resentment redressal of enterprises:-

  • For facilitating the registration procedure and further handholding the micro, small and medium enterprises, the Champions Control Rooms functioning in various institutions and offices of the ministry of the three kinds of enterprises including the Development Institutes 9MSME-DI) shall act as Single Window Systems.

  • The DICs (District Industries Centers) will also act as Single Window Systems in their respective districts.

  • If an individual is unable to register under Udyam Registration for any reason including the absence of Aadhaar number, then they can approach any of the above mentioned Single Window Systems for Udyam Registration purpose. The things required for him/her to take is Aadhaar enrolment slip or a copy of Aadhaar enrolment request or bank photo passbook or voter identity card or passport or driving license and the Single Window System will help by facilitating the procedure including getting an Aadhaar number and then followed by other procedures required for registration.

  • In case of any sort of complaint, the General Manager of the District Industries Centre of the concerned District shall undertake an inquiry to verify the details of Udyam Registration submitted and then would forward the matter with required remarks to the Director or Commissioner or Industry Secretary concerned of the State Government who after granting notice to the enterprise and after providing an opportunity to present its case and based on the findings, may amend the information or recommend to the Ministry of Micro, Small and Medium Enterprises, Government of India for canceling the Udyam Registration Certificate.

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