Udyog Aadhaar Registration Online: New Procedure for MSME Registration

A micro, small and medium enterprise (MSME) is presently named “Udyam“. As per the notification announced by the Ministry of MSME on 26 June 2020. The user will require to give their 12-digit biometric Aadhaar number for the registration procedure. As enterprises, you must connect to CA near you.

Introduction to Udyam Registration (MSME)

The central government on 26 June 2020 notified new norms to allot Online Registration of New Enterprises based on self-declaration. From 1 July 2020, there is no necessity to upload documents and certificates for Udyog Aadhaar Registration Online. People can now register their New Enterprise Online at Udyam Registration portal.

The Union govt. has combined the Udyam Registration method with the Systems of Income Tax and GST. The filled-in enterprise details can be quickly checked on the basis of PAN number or GSTIN details.

An enterprise can be enrolled just on the basis of the Aadhaar number. Other details can be given on a self-declaration basis without any need of uploading or submitting any paper. Thus it is a paperless exercise in the actual sense. The notification also stated that after 1 July, an MSME will be known as “Udyam” as this is more related to the word enterprise. That’s how the registration procedure will be named as “Udyam Registration”.

From the next onward, investment in Plant and Machinery or Equipment and Turnover is the primary criterion for the analysis of MSMEs. The notification also explains that exports of goods or services or both shall be dismissed while determining the turnover of any enterprise whether micro, small, or medium.

Udyog Aadhaar Registration Benefit 

• According to the MSME Ministry, the current MSME registration method will be very simple, seamless, and entrepreneur-friendly.
• It will also assist set an example in Ease of Doing Business, not only in India but abroad as well.
• It will also decrease transaction time and costs and the entrepreneurs and enterprises will be ready to focus on their real work and become globally competing.
• Udyam registration assists in getting government tenders
• Due to the Udyam, the bank loans become cheaper as the interest rate is very moderate (Upto 1.5% lower than interest on regular loans)
• There are several tax rebates accessible for Udyam
• Becomes simple to get licenses, approvals, and registrations, irrespective of the track of business as a business registered under Udyam are given a greater choice for government license and certification.
• They get secure access to credit in lower interest rates
• Registered Udyam receives tariff subsidies and tax and capital subsidies
• Once registered the cost of obtaining a patent done or the cost of setting up the industry decreases as various rebates and concessions are accessible.

New Definition of Udyog Aadhaar Registration

The notification defined the form and procedure for filing the memorandum, for both current and existing enterprises with impact from 1st July 2020. The new definition of MSMEs will be as follows: –

• Micro-Enterprise – The enterprise where the investment in plant and machinery or equipment does not pass Rs. 1 crore and turnover do not exceed Rs. 5 crores will be considered as Micro Enterprise.
• Small Enterprise – The enterprise where the investment in plant and machinery or equipment does not surpass Rs. 10 crores and turnover does not pass Rs. 50 crores will be known as Small Enterprise.
• Medium Enterprise – The enterprise where the investment in plant and machinery or equipment does not cross about ₹ 50 crore and turnover do not cross ₹ 250 crores will be held as Medium Enterprise.

MSME Ministry Facilitation Mechanism for Entrepreneurs

The MSME ministry has also set a clear facilitation mechanism for MSMEs in the form of Single Window Systems at the community level and regional level. This single window system will assist those entrepreneurs who are not able to file the Udyog Aadhaar Registration for any reason. At the district level, the District Industry Centres (DIC) have been declared liable for helping the entrepreneurs. Similar to this, the MSME ministry’s new initiative of Champions Control Rooms over the country. That has been made lawfully liable for helping such Entrepreneurs in registration.

People who do not possess a valid Aadhaar number can approach the Single Window Systems for facilitation. Such people will have to carry their Aadhaar registration request or identity, bank photo passbook, voter ID card, passport, or driving license with them.

Therefore, the Single Window Systems will help them in registering as enterprise after getting the Adhaar number.

An enterprise having Udyam Registration Number (URN) must update their information online in the Udyam Registration portal. It will add details of the ITR and the GST Return for the past financial year and such other extra information as may be needed on a self- declaration basis. This is as per the notification in regard to updating of information and development period.

Process for Udyog Aadhaar Registration

 The form for registration is provided in the Udyam Registration portal.

• There will be no fee is asked in enrolment for Udyam Registration. Aadhaar number must for Udyog Aadhaar Registration.
• The Aadhaar number must be of the proprietor in the case of a proprietorship firm. The leading partner in the case of a partnership firm and of a Karta in the state of a Hindu Undivided Family (HUF).
• In the case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organization or its approved signatory must provide its Goods and Service Tax Identification Number (GSTIN) and PAN along with its Aadhaar number.
•  In case an enterprise properly registers as an Udyam with PAN, any lack of information for past years when it did not have PAN must be filled up on a self-declaration basis.
•  No enterprise must file more than one Udyam Registration. Given that any number of activities involving manufacturing or service or both may be named or added in one Udyam Registration.
• Whoever deliberately misleads or attempts to suppress the self-declared facts and figures emerging in the udyog aadhaar registration online or update process must be responsible for a penalty as defined under section 27 of the Act.

Calculation in Udyog Aadhaar Registration:

 Investment in Plant & Machinery or Equipment

1. The calculation of investment in plant and machinery or equipment will be connected to the Income Tax Return (ITR) of the past years filed under the Income Tax Act, 1961.
2. In the case of a new enterprise, where no previous ITR is possible, the investment will be based on self-declaration of the promoter of the enterprise and so relaxation must end after the 31st March of the fiscal year in which it files its first ITR.
3. The word “plant and machinery or equipment” of the enterprise, must have the same meaning as ascribed to the plant and machinery in the Income Tax Rules,

1962 composed under the Income Tax Act, 1961 and must include all tangible assets (other than land and building, furniture, and fittings).

4. The buying (invoice) value of a plant and machinery or equipment, whether bought first hand or second hand.  Must be taken into account eliminating GST, on a self-disclosure basis, if the enterprise is a different one without any ITR.
5. The cost of some items defined in the Explanation I to sub-section (1) of section 7 of the Act must be eliminated from the calculation of the amount of investment in plant and machinery.

Turnover

1. Exports of goods or services or both must be eliminated while determining the turnover of any enterprise whether micro, small or medium, for the purposes of classification.
2. Information as concerns turnover and export turnover for an enterprise must be linked to the Income Tax Act or the Central Goods and Services Act (CGST Act) and the GSTIN.
3. The turnover recorded figures of such enterprise which do not have PAN will be held on a self-declaration basis for a time up to 31st March 2021 and thereafter, PAN and GSTIN must be necessary.

Composite criteria of investment & Turnover for classification

1. A composite criterion of investment and turnover must apply for classification of an enterprise as micro, small, or medium.
2. If an enterprise meets the roof ends defined for its present category in either of the two principles of investment or turnover. It will stop to exist in that category and be put in the next larger category but no enterprise must be placed in the below category unless it goes below the cover ends defined for its present category. In both the criteria of investment and turnover.
3. All units with GSTIN filed against the same PAN must be collectively managed as one enterprise. The turnover and investment terms for all of such entities must be seen together. And only the aggregate values will be counted for determining the category as a micro, small, or medium enterprise.

Conclusion

The enterprises are considered eligible for Udyam Registration which is either in manufacturing or production/processing/ preservation of Goods OR in the giving of services.

Any person who is not able to register the Udyog Aadhaar Registration for any purpose including for lack of Aadhaar number may approach today. The Legalpillers is there to help all the enterprises. We have great Online CA Services in India. If you want to connect ca near you, we are here to help.

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