Udyam Registration New Procedure MSME

The Udyam Registration: New Procedure for MSME

“Udyam” As set out in the notification announced by the MSME Ministry on 26 June 2020. For the registration process, the user will be required to include their biometric 12-digit Aadhaar code. Also, as a business, you need to link with a CA near you.

Introduction to Udyam Registration (MSME)

So, on 26 June 2020, the central government announced new requirements. For allocating online registration of new enterprises based on self-declaration. In addition, there is no need to upload Udyam Registration documents and certificates as of 1 July 2020. People can now register online at www.udyamregistration.gov.in for their new company. GOVT of the Union. Also, the Udyam Registration technique merges with the income tax and GST schemes. Based on PAN number or GSTIN data, the filled-in business details can be easily reviewed. Only based on the Aadhaar number, can an enterprise enrol for registrations.

On a self-declaration basis, other information may be provided without the need to upload or request any file. It is thus, in the true sense, a paperless exercise. The notification also specified that after 1 July, as this is more relevant to the word enterprise, an MSME will be known as ‘Udyam’. This is how “Udyam Registration” will be the name of the registration process.

The primary criteria for the study of MSMEs are an investment in plants and machinery or facilities and turnover from the next one. The notification also explains that when assessing the turnover of any undertaking. Whether micro, small or medium-sized, exports of products or services, or both, are to be refused.

MSME Classification Udyam Registration


Composite Criteria: Investment and Yearly Turnover

Manufacturing & ServicesThe Investment is more than Rs 1Cr and the turnover and less than 5CrThe Investment is more than Rs 1Cr and turnover and less than 5CrAlso, Investment more than Rs 50Cr and turnover less than 250Cr

(Note: exports of goods and services would be omitted to measure turnover).

Udyam Registration Benefits

Udyam Registration Benefit

  •  According to the MSME Ministry, the current MSME registration process will be much simpler, seamless, and friendly to entrepreneurs.
  • It will also help set an example for the Ease of Making Business. Not only in India but also in other countries.
  • Also, it will reduce the time and cost of transactions, and entrepreneurs and businesses will be ready to focus on their real work and compete internationally.
  • Udyam registration helps to get government tenders.
  • As a result of Udyam, bank lending decreases as interest rates are lower (up to 1.5% lower than normal loan interest).
  • Also, there are several tax rebates available to Udyam.
  •  It is easy to obtain licenses, authorizations, and registrations, regardless of whether the business sector as a registered business under Udyam provides a better chance of obtaining a government license and certificate.
  •  Moreover, they get secure access to credit at low interest rates.
  • Registered Udyam receives tariff subsidies and tax and financial support.
  • So, once registered the cost of patenting has been done or the costs of setting up the industry are reduced as various discounts and permits are available.
Latest MSME description

The notification specified the form and procedure for the filing of the memorandum, with effect from 1 July 2020, for both current and existing undertakings. The new MSME meaning will be as follows: –

  • Micro-Enterprise – The enterprise where the investment in plant and machinery or equipment crosses the yearly turnover of more than Rs. 1 crore and less than Rs. 5 crores is referred to as Micro Enterprise.
  • Small Enterprise – The enterprise where the investment in plant and machinery or equipment crosses the yearly turnover of more than Rs. 10 crores and does not cross Rs. 50 crores infer as Small Enterprise.
  • Medium Enterprise – The enterprise where the investment in plant and machinery or equipment exceeds a yearly turnover of more than Rs. 50 crore and less than Rs. 250 crores infer as Medium Enterprise.
MSME Ministry Facilitation Mechanism for Entrepreneurs

The MSME Ministry has also developed a specific facilitation mechanism at the community and regional level for MSMEs in the form of single-window systems. This single window scheme also benefits those entrepreneurs for whom the Udyam Registration can not be filed for any cause.

The District Industry Centres (DIC) are responsible for aiding entrepreneurs at the district level. Similarly, the MSME Ministry’s latest nationwide Champions Control Rooms program. That was made legally responsible for helping register those entrepreneurs.

For facilitation, individuals who do not possess a legitimate Aadhaar number may approach the Single Window Systems. These individuals would have to bring with them their application or identification for Aadhaar registration, bank photo passbook, voter ID card, passport, or driving license. The Single Window Systems can then assist them in registering as an enterprise after the Adhaar number is obtained.

An enterprise holding the Udyam Registration Number (URN) must update its Udyam Registration Number information online. On a self-declaration basis, it will add specifics of the ITR and the GST Return for the past financial year and any other information as may be required. This is as per the notification regarding the information update and the time of progress.

Procedure to get udyam registration
Procedure to get Udyam Registration 
  • The registration form is available on the Udyam Registration Portal. 
  • No charge will be requested for Udyam Registration enrollment. You must have an Aadhaar number for Udyam Registration. 
  • In the case of a proprietorship company, the Aadhaar number must be from the proprietor. In the case of a partnership firm and a Karta in the State of a Hindu Undivided Family, the leading partner (HUF). 
  • The association or its authorized signatory shall provide its GSTIN – Goods and Service Tax and PAN along with its Aadhaar number in the case of a corporation a Limited Liability Partnership a Cooperative Society or a Society or Trust. 
  • If a company registers properly with a PAN Card as a Udyam, any lack of details for previous years when it did not have a PAN must be filled in on a self-declaration basis. 
  • No company must file more than one registration for Udyam. Provided that, in one Udyam Registration, any number of activities involving production or service or both may be called or added. 
  • Anyone who purposely misleads or tries to suppress the self-declared facts and figures that emerge in the process of Udyam Registration or update must be liable for a penalty as specified in section 27 of the Act.

Calculation in the process of Udyam registration:

 Investment in Plant & Machinery or Equipment

  1. Investment in plant and machinery or facilities calculations compares to the ITR of the previous years submitted under the Income Tax Act, of 1961.
  2. In the case of a new undertaking, where no previous ITR is possible. The expenditure would be dependent on the undertaking’s self-declaration. The relaxation must therefore end after 31 March of the fiscal year in which the undertaking’s first ITR is filed.
  3. The company’s term “plant and machinery or equipment” should have the same definition as that given to the plant and machinery. That too in the 1962 Income Tax Rules, formulated under the 1961 Income Tax Act. And must include all tangible assets that include other than land & building, furniture, and fittings etc.
  4. The value of the purchase (invoice) of a plant and machinery or equipment, whether purchased first-hand or second-hand. The removal of GST on a self-disclosure basis should be taken into account if the company is a separate enterprise without any ITR.
  5. The cost of such products is specified in sub-section (1) of Explanation I of section 7 of the Act. That infers deduction from the calculation of the sum of investment in plants and machinery.
  • Exports of products or services, or both, must be eliminated by assessing the turnover of each micro, small or medium-sized enterprise for classification purposes. 
  • An organization must be related to the Income Tax Act or the Central Goods and Services Act (CGST Act). And the GSTIN for details relating to turnover and export turnover. 
  • The reported turnover figures of such enterprises that do not have a PAN will be kept on a self-declaration. That too on the basis for a period up to 31 March 2021, and PAN and GSTIN must be needed thereafter.

Composite measures of investment & Turnover for classification

  • For the classification of an enterprise as micro, small, or medium, a composite criterion of investment and turnover must apply. 
  • If an organization meets the roof ends listed in one of the two investment or turnover principles for its current category. It ceases to exist in that category and is put in the next larger category. But unless it goes below the cover ends specified for its current category. No company fits in the following category. In both the investing and turnover parameters.
  • All units filed against the same PAN with GSTIN must be handled collectively as one enterprise. Together, the terms of turnover and expenditure for all such organizations must be seen. To describe the category as a micro, small, or medium business, only the aggregate values will be counted. 
Penalty under udyam registration
Penalty under Udyam registration

Whoever deliberately misrepresents or tries to conceal the facts and figures that are self-declared that appear in the Udyam Registration or updating process shall be liable for the penalty provided for in section 27 of the Act. Punishment as provided for in the MSME Act, Section 27: 

(a) In the case of the first punishment, with fine which may enlarge to rupees one thousand. 

(b)The next punishment is an arrest, a fine of not less than one thousand rupees, but can enlarge to Rs.10,000.

Important services offered under Udyam


Creation and Harmonious Application of Modern Processes for Increasing the Output and National Strength. Assisting MSMEs in this difficult financial situation, equipment, staff, permits, etc. Helping MSMEs embrace new opportunities includes the production of medical equipment and services. Recognizing benefits, that is, it is now possible to survive bright MSMEs and become national and international champions.

MSME SAMADHAAN- Delayed Payments to MSMED Act, 2006

The Ministry of MSME took the initiative to file an online application by the supplier MSE unit against the purchaser of goods/services before the MSEFC of its State/UT concerned.

The purchaser shall be liable to pay to the supplier compound interest with monthly instalments in the amount of three times the bank rate notified by RBI if, within 45 days of receipt of the products/services provided, he fails to make payment to the supplier for his supplies of goods or services.

All States/UTs have notified the Filing Entrepreneur’s Memorandum Authority, 33 States/UTs (i.e. except Arunachal Pradesh, Assam, and Manipur) have notified the MSEFC laws, and all 36 States/UTs have established MSEFCs in compliance with the provisions of the MSMED Act 2006.

Any referral credits to the MSEFC must be decided within ninety days from the date of making such a reference, by the provisions of the Act.

If the appellant (not the supplier) wishes to file an appeal, no request to set aside any decree or award by the MSEFC shall be received by any court unless the appellant (not the supplier) has deposited 75% of the value of the award.

MSME SAMBANDH – Public Procurement Policy Monitoring Portal

Order 2012 of the Public Procurement Policy for Micro and Small Enterprises (MSME) Per Central Ministry/Department/PSU shall set an annual MSE procurement target at the beginning of the year to achieve an overall procurement target of at least 25% of the total annual purchases of MSE products or services. A 25 per cent target for annual MSE procurement.

On 8 December 2017, the ‘MSME SAMBANDH public procurement portal was launched to make the public procurement policy more successful. The Portal monitors quarterly the procurement of CPSEs from MSEs. Including SC-ST MSEs, and contains the required details relating to the CPSE requirement in terms of the products ordered, quantity, requirements, last purchase price, etc. The platform, therefore, contributes to successful monitoring while allowing MSEs to develop their capacity and participate in the market for public procurement.

MSME SAMPARK- MSME Technology Centre Trainee Placement Portal

As the name suggests it is an online portal where all the people search for jobs with all types of recruiters. Those are the students or graduates from 18 MSME Technology Centres who have passed out. Different reputable national & multinational companies are registered to get jobs and to get the right kind of workforce, respectively.

While major companies have well-defined national recruiting processes, it remains a challenge for small businesses and entrepreneurs to find the right person with the appropriate expertise and skills for the job. On the other hand, job seekers struggle to fit their skill sets with the function, place, experience needed, monetary expectation, vertical location & industry leaving too many parameters to be matched in a limited chance chart. The MSME ministry has launched MSME SAMPARK to bridge this gap between recruiters and job seekers.

Entrepreneurship and Skill Development Programme
Entrepreneurship and Skill Development Programme

The program aims to encourage young people to represent various parts of society. That includes SC, ST or Women, otherwise eligible, ex-servicemen and BPL individuals. To consider self-employment or entrepreneurship as one of the career choices. The ultimate objective is to encourage new enterprises, develop the capacity of existing MSMEs, and instil in the country an entrepreneurial culture. There should be a total of 40 per cent involvement of women in the EAP and E-SDP, as per scheme guidelines.

The list of plans and programs includes the following:-

  1.  IMCs: Industrial Motivation Campaigns 
  2.  EAPs: Entrepreneurship Awareness Programmes 
  3. E-SDP: Entrepreneurship-cum-Skill Development Programme 
  4. MDPs: Management Development Programmes 

Enterprises that are either in the manufacture or production/processing/preservation of products OR in the provision of services are deemed liable for Udyam Registration. Any person who is unable to register for any reason can approach the Udyam Registration today.

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