India has the world’s largest MSMEs after China (Micro, Small, and Medium Enterprises). MSMEs contribute significantly to the economic and social development of the country by stimulating innovation, entrepreneurship, job creation, exports, and inclusive growth.
The MSME sector generated 30.3 percent of the country’s overall GDP in 2018-19, according to the National Statistical Office. The Government of India has always placed a great emphasis on the sector’s growth and development, and a recent step was the implementation of Udyam Registration for MSME’s, which will go into effect on July 1, 2020, and will streamline the process of MSME registration from UAM and EM-II (old process).
With effect from July 1, 2020, all businesses will be classified as MSME
The Micro, Small, and Medium Enterprises Development (MSMED) Act, which was notified in 2006, establishes the legal framework for an enterprise to be classed as an MSME. This act attempts to foster the development of these enterprises as well as boost their competitiveness through a variety of schemes, privileges, and other incentives provided by the Government of India.
While delivering the economic package as part of the Aatmanirbhar Bharat Abhiyaan, Finance Minister Nirmala Sitaraman announced revisions to the idea of Micro, Small, and Medium Enterprises (MSME). These modifications were initially announced in June 2020 and will take effect on July 1, 2020. MSMEs were previously characterized primarily by the amount of money invested; however, the new criteria now include the company’s turnover as well. Furthermore, under the new definition, both manufacturing and service enterprises would be included in the same statistic.
An Enterprise (Udyam) must register by completing the following steps:
- Anyone who wants to start a micro, small, or medium business can apply for Udyam Registration online through the Udyam Registration portal, which is self-declaration-based and does not require the upload of any paperwork, papers, certifications, or proof.
- In contrast to the UAM / EM-II, which required annual renewals, the new Udyam Registration is a one-time registration for an MSME.
- A simplified registration form is available on the Udyam Registration webpage. When a company receives a GSTIN, the GST site obtains the company’s name, address, and bank information.
- Udyam Registration will necessitate the use of an Aadhaar number. In the case of a proprietorship firm, the proprietor’s Aadhaar number, in the case of a partnership firm, and a Karta’s Aadhaar number in the case of a Hindu Undivided Family’s Aadhaar number in the case of a Hindu Undivided Family’s Aadhaar number in the case of a Hindu Undivided Family’s Aadhaar number in the case of a Hindu Undivided (HUF). The GSTIN and PAN, as well as the Aad, must be filed by the organization or its authorized signatory if it is a corporation, a limited liability partnership, a cooperative society, a society, or a trust.
If an entity has been correctly registered as an Udyam and has a PAN, any information gaps from previous years when it did not have a PAN must be filled out on a self-declaration basis. There may be no more than one Udyam Registration per business, but any number of operations, including production, service, or both, maybe included or added to a single Udyam Registration. Control Rooms located at various institutions and offices of the Ministry of Micro, Small, and Medium Enterprises, such as Development Institutes (MSME-DIs) and District Industries Centres (DICs), would act as Single Window Systems to facilitate the registration process.
By July 1, 2020, all current EM–Part-II or UAM-registered firms must re-register on the Udyam Registration portal. All businesses registered before June 30, 2020, would be reclassified, according to a notification issued on June 26, 2020. Existing enterprises established before to June 30, 2020, will be valid only until March 31, 2021. Companies that are already registered with another Ministry of Micro, Small, and Medium Enterprises agency must also register with Udyam Registration.
After acquiring the Udyam Registration Number, the business must self-declare its information online in the Udyam Registration site, including the contents of the previous fiscal year’s ITR and GST Return, as well as any other information that may be required. The enterprise’s status will be stopped if the critical information is not updated within the term specified on the Udyam Registration portal. The business classification will be changed based on data submitted or received from government sources such as ITRs or GST returns.