Udyam Registration- A Complete guide

According to a statement published by the Ministry of MSME on June 26, 2020, a micro, small, and medium enterprise (MSME) would henceforth be called Udyam. The ministry has also developed comprehensive criteria for classifying MSMEs, as well as the udyam registration method and the ministry's provisions to make the process easier.

Exports of products or services, or both, are to be omitted when calculating the turnover of any business, whether micro, small, or medium, according to the announcement. The registration procedure would be known as Udyam Registration, according to the document. Udyam Registration portal may now be submitted online based on self-declaration, with no need to upload paperwork, papers, certifications, or evidence, according to the MSME Ministry. An Aadhaar number is all that is required to register a business. From July 1, 2020, the new online registration will be available.

The following criteria will be used to classify a company as a micro, small, or medium business:

• a micro-enterprise with a turnover of less than five crore rupees and an investment in plant and machinery or equipment of less than one crore rupees.

• a small business with a revenue of less than fifty crore rupees and an investment in plant and machinery or equipment of less than ten crore rupees; and

• a medium-sized business with a capital investment of less than fifty crore rupees and a turnover of less than 250 crore rupees.

Becoming a micro, small or medium enterprise :

• Anyone interested in starting a micro, small, or medium business may fill out a self-declaration form on the Udyam Registration site without having to submit any documentation, papers, certifications, or evidence.

• An enterprise (referred to as - Udyam on the Udyam Registration site) will be issued a permanent identifying number known as - Udyam Registration Number after it has been registered.

• Upon completion of the registration procedure, an e-certificate, titled Udyam Registration Certificate, will be issued.

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Investment and turnover combined as a categorization criterion:

• For the categorization of an enterprise as micro, small, or medium, a composite criterion of investment and turnover will be used.

• If an enterprise exceeds the ceiling limits specified for its current category in either the investment or turnover criteria, it will cease to exist in that category and be placed in the next higher category; however, no enterprise will be placed in the lower category unless it falls below the ceiling limits specified for its current category in both the investment and turnover criteria.

• All units with the same 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 of these entities will be viewed together, with only the aggregate values being used to determine whether the entity is classified as micro, small, or medium.

Calculation of plant and machinery or equipment investment:

1. Investment in plant and machinery or equipment shall be calculated using the previous year's Income Tax Return (ITR) submitted under the Income Tax Act of 1961.

2. In the event of a new business with no prior ITR, the investment will be based on the promoter's self-declaration, and this relaxation will expire after the 31st March of the financial year in which the business files its first ITR.

3. The term "plant and machinery or equipment of the firm" has the same meaning as "plant and machinery" in the Income Tax Rules, 1962, which were enacted under the Income Tax Act, 1961, and includes all physical assets (other than land and building, furniture and fittings).

4. If the business is a new one without an ITR, the purchase (invoice) value of a plant and machinery or equipment, whether acquired first hand or second hand, should be taken into account on a self-disclosure basis, excluding Goods and Services Tax (GST).

Turnover calculation :

• Exports of products or services, or both, should be omitted from the calculation of any enterprise's turnover for categorization purposes, whether micro, small, or medium.

• The Income Tax Act or the Central Goods and Services Act (CGST Act) and the GSTIN must be connected to information about an enterprise's turnover and export turnover.

• The turnover-related data of such businesses that do not have a PAN will be accepted on a self-declaration basis until March 31, 2021, after which PAN and GSTIN will be required.

Process of Registration:

1. The registration form must be found on the Udyam Registration online.

2. For Udyam Registration, an Aadhaar number will be required.

3. In the case of a proprietorship company, the Aadhaar number shall be that of the owner, of the controlling partner in the case of a partnership firm, and of a Karta in the case of a Hindu Undivided Family (HUF).

4. A company, a limited liability partnership, a cooperative society, a society, or trust must submit their GSTIN and PAN, as well as their Aadhaar number if they are a company, a limited liability partnership, a cooperative society, a society, or a trust.

5. Any missing information from prior years when the organization did not have a PAN must be self-declared if the organization is legally registered as an Udyam with a PAN.

6. No business may submit more than one Udyam Registration, however, any number of operations, including manufacturing, service, or both, may be indicated or added to a single Udyam Registration.

Existing business registrations:

1. On or after July 1, 2020, all current companies registered under EM–Part-II or UAM must re-register on the Udyam Registration site.

2. All firms registered before June 30, 2020, will be reclassified in accordance with this notification.

3. Existing firms that were established before June 30, 2020, will only be valid until December 31, 2021.

4. A business must register with Udyam Registration if it is already registered with another Ministry of Micro, Small, and Medium Enterprises entity.

Information update and categorization changeover period:

1. On a self-declaration basis, a company with an Udyam Registration Number must update its information online on the Udyam Registration form, including the contents of the preceding financial year's ITR and GST Return, as well as any other supplementary information that may be necessary.

2. If the required information is not updated within the time frame indicated in the online Udyam Registration site, the enterprise's status will be suspended.

3. The enterprise's categorization will be updated based on information provided or obtained from government sources, such as ITRs or GST returns.

4. In the event of a business's graduation (from a lower to a higher category) or reverse-graduation (sliding down to a lower category), the enterprise will be notified of the change in status.

5. If a business's investment in plant and machinery or equipment, or its turnover, or both, increases and it is reclassified, the enterprise will keep its current status until the end of the year in which it was registered.

6. In the event of an enterprise's reverse-graduation, whether as a result of re-classification or actual changes in investment in plant and machinery or equipment or turnover or both, and whether or not the enterprise is registered under the Act, the enterprise will remain in its current category until the end of the financial year and will be given the benefit of the

changed status on that date.

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CONCLUSION:

Udyam registration provides great benefits to entrepreneurs under the Indian government's existing MSME plan. One of the most significant benefits of registering is that the company may participate in both federal and state government business programs. If you wish to take advantage of these government programs, you must first complete the registration process.