New process of MSME Registration: Udyam Portal
The Latest Definition of MSME as Per the Notification is as Follows-
The Indian government has been taking variety of measures to tackle the disruptions caused by the pandemic, giving special concentrate on tiny businesses. the small and medium size businesses type the backbone of any economy, specially developing economies like India, hence, the Micro, small and Medium Enterprises (MSME) are seen as a key player in promoting momentum in economy once movement restrictions and social distancing norms are raised. so as to stimulate the post-Covid economic scenarios, it’s crucial to target the growth and development of the MSME sector.
The definition of MSME comes from section 7 of the micro, small and Medium Enterprises Development Act, 2006 (‘Act’). Based on the proposal of the finance minister, he Ministry of micro, small and Medium Enterprises on first June 2020 via notification, amended the definition of MSME so as to increase the scope and therefore bringing larger variety of firms inside the ambit of MSME. As per the revised definition, the classification is based on the investment and turnover of the entity.
|Revised Classification applicable w.e.f 1st July 2020|
|Composite Criteria: Investment in Plant & Machinery/equipment and Annual Turnover|
|Manufacturing Enterprises and Enterprises rendering Services||Investment in Plant and Machinery or Equipment:
Not more than Rs.1 crore and Annual Turnover; not more than Rs. 5 Crores
|Investment in Plant and Machinery or Equipment:
Not more than Rs.10 crore and Annual Turnover; not more than Rs. 50 cores
|Investment in Plant and Machinery or Equipment:
Not more than Rs.50 crore and Annual Turnover; not more than Rs. 250 cores
The Process of Registration
The aforesaid definition removes the bifurcation of investment limits for manufacturing and service business that were previously existent. Hence, it’s expected that large variety of service providers would be covered as they tend to have lesser investment in plant and machinery or instrumentation and turnover as compared to manufacturing entity with similar profits.
As the changes in classification are to be applicable from first July 2020, the Ministry of micro, small and Medium Enterprises have come back up with a Notification dated 26-06-2020 which give for a completely unique methodology of registration for MSME (‘Udyam Registration’).
The aforementioned notification provides for process for registration of MSME that shall become applicable from first July 2020, the requirement of Udyam Registration shall also be applicable on existing MSME’s.
Pursuant to the modification within the definition of MSME and therefore the introduction of procedure for filing the memorandum under the Udyam Registration, it looks that registration as an MSME shall be a necessity and accordingly be thought-about as a pre-requisite for availing profit under the various schemes introduced by the Ministry.
Registration on the Basis of Self-Declaration
As per the Udyam Registration demand it’s evident that Udyam Registration are often done on the idea of filing a self-declaration. The relevant extract of the notification states as follows-
On review of the registration process on the Udyam Registration portal, it’s been discovered that the list of major activities contains a specific head for trading activities, land transport moreover as associate degree option for selecting ‘Others’. Thus, it’s going to be concluded that trading, transportation and such different activities are included under activities of a service enterprise and shall be required to be registered as an MSME on the Udyam Registration portal.
Requirement of Aadhar
The Aadhar of following persons shall be required for registration as an MSME.
|Type of Entity||Aadhar of|
|Partnership Firm||Managing Partner|
|Company / LLP / Co-operatives / Trust / Organisations*||Authorised Signatory|
*PAN and GSTIN of Enterprise Shall Also Be Required
Non-Availability of Aadhar
In case the person does not have Aadhar, he/she can approach MSME-Development Institutes or District Industries Centres (Single Window Systems) with his Aadhar enrolment identity slip or copy of Aadhaar enrolment request or bank photo pass book or voter identity card or passport or driving licence and the Single Window Systems will facilitate the process including getting an Aadhar number and thereafter in the further process of Udyam Registration
Calculation of Investment in Plant, Machinery and Equipment, and Annual Turnover
In order to determine whether the enterprise falls within the limits of MSME and under which category Calculation of amount for Investment in Plant, Machinery and Equipment, and Annual Turnover is required to be calculated.
Plant, Machinery and Equipment.
The Plant, Machinery and equipment shall have same meaning as under income tax Rules, 1962 therefore not include land, building and article of furniture and fittings. Further it shall not include things mentioned in rationalization 1 to Section 7(1) of MSME Act 2006 shall be excluded.
All units with product and Services Tax identification number (GSTIN) listed against the same Permanent Account variety (PAN) shall be collectively treated collectively enterprise and investment figures for all of such entities shall be seen together and solely the mixture values are thought of for deciding the category as micro, small or medium enterprise.
The calculation of investment in plant and machinery or equipment are linked to the income tax come back (ITR) of the previous years. Just in case of a replacement enterprise, wherever no previous ITR is on the market, the investment are based on self-declaration of the promoter of the enterprise and such relaxation shall finish when the 31st} March of the financial year in which it files its first ITR.
However, it shall be noted that just in case of latest enterprise without any ITR, wherever calculation is made on self-declaration basis, the purchase (invoice) value of a plant and machinery or equipment, whether purchased first hand or second hand, shall be taken into account excluding goods and Services Tax (GST).
On the similar grounds as investment the turnover shall even be calculated on collective basis for all units with goods and Services Tax identification number (GSTIN) listed against the same Permanent Account variety (PAN) and every one such units shall be treated as one enterprise and turnover figures for all of such entities shall be seen together and solely the aggregate values are going to be thought-about for deciding the category as micro, small or medium enterprise.
Further it shall be noted that the Exports of goods or services or each, shall be excluded whereas hard the turnover of any enterprise.
Information as regards turnover and exports turnover for an enterprise shall be joined to the income tax Act or the Central goods and Services Act and therefore the GSTIN. The figures of enterprise that do not have PAN are going to be thought of on self-declaration basis for a period up to 31st March, 2021 and thenceforth, PAN and GSTIN shall be mandatory.
Registration by existing MSMEs
In case of existing MSMEs, the registration shall be valid till March 2021. They are required to register themselves under the Udyam Registration portal before the expiry of their registration under Udyog Aadhaar or EM-II.
Pupation of information
The registration as an MSME may be obtained based on a self-declaration by the applicant, while not submitting any other documents, certificates or proofs of investment in plant and machinery or instrumentality or turnover. However, once the URM is granted, the MSME is required to update details on the portal, as well as details of the ITR and therefore the GST return for the previous financial year and such other extra information as could also be required, on self-declaration basis.
Failure to update the relevant information inside the period specified [to be specified] in the online Udyam Registration portal can render the enterprise liable for suspension of its status.
Changes in Classification
On the idea of information furnished and updated from time to time similarly as information from Government sources as well as ITR/GSTR the classification of enterprise could also be modified to a lower to higher category (graduation) or from higher to lower category (reverse-graduation).
In case of graduation an enterprise can maintain its prevailing status until expiry of 1 year from the close of the year of registration. Just in case of reverse-graduation of an enterprise, the enterprise will continue in its present category until the closure of the financial year and it will be the advantage of the modified status only with impact from 1st April of the financial year following the year during which change happened.
Accordingly, it are often inferred that the boundaries of investment and turnover shall be reckoned on the idea of the ITR and GST returns filed for the previous financial year.
The Champions management Rooms functioning in various institutions and offices of the MSME-Development Institutes along with District Industries Centres in their respective districts shall act as Single Window Systems for facilitating the registration process and further handholding the micro, small and medium enterprises altogether possible manner.
In case of any discrepancy or complaint, the overall Manager of the District Industries Centre shall undertake an enquiry for verification of the details of Udyam Registration and thereafter forward the concern the Director or Commissioner or business Secretary concerned of the state government who after giving an opportunity to present its case and based on the findings, could amend the details or recommend to the Ministry of MSME’s, Government of india, for cancellation of the Udyam Registration Certificate.
Further it shall be noted that, if provision for registration beneath MSME Act, 2006, is violated Section 27 of the Act, provides for a fine which can extend upto one thousand rupees for first conviction and a fine ranging from one thousand to ten thousand rupees for second and subsequent conviction.
The new process provides an easy, fast and simple methodology for registration that will be joined to information submitted under tax and GST, hence being user friendly as well as keeping a check on reliability of information. The move is intending to promote ease of doing business in lieu of the introduction of Atmanirbhar Bharat scheme.
This process and amended definition would facilitate a lot of MSME to take advantage of government schemes for MSME therefore providing them an elevated pedestal to provide a push to kick-start economy after the Covid restrictions are raised.
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