MSME-New Classification and UDYAM Registration

What are Micro, Small and Medium Enterprises

The Government of India has recently revised the classification of Micro, Small, and Medium Enterprises (MSME) based on the criteria of investment and turnover. The new classification came into effect on July 1, 2020.

According to the new classification, the MSMEs are divided into three categories:

  1. Micro Enterprises: Firms with an investment of up to Rs. 1 crore and turnover of up to Rs. 5 crore
  2. Small Enterprises: Firms with an investment of up to Rs. 10 crore and turnover of up to Rs. 50 crore
  3. Medium Enterprises: Firms with an investment of up to Rs. 50 crore and turnover of up to Rs. 250 crore

The Udyam Registration portal is an online registration portal for MSMEs, which was launched on July 1, 2020. It replaced the earlier Udyog Aadhaar Memorandum (UAM) registration process. The registration on this portal is mandatory for all MSMEs to avail the benefits provided under various government schemes.

The registration process on the Udyam Registration portal is simple and requires basic details of the enterprise, including Aadhaar number, PAN number, and GSTIN. The portal also provides an option to update the registration details in case of any changes in the future.

MSMEs registered on the Udyam Registration portal are eligible for various benefits such as credit guarantee scheme, collateral-free loans, and subsidy on patent registration, among others. The portal also helps in the promotion and development of MSMEs in the country.

Do existing enterprise require new registration?

Yes, existing enterprises are required to register themselves under the new classification and Udyam Registration portal. The Government of India had announced a one-time registration process for existing MSMEs to update their registration details as per the new classification and to obtain a new Udyam Registration number.

The deadline for registration was initially set as March 31, 2021, but it has been extended to December 31, 2021, due to the Covid-19 pandemic. Therefore, all existing MSMEs are required to register themselves on the Udyam Registration portal before December 31, 2021, to avail the benefits provided under various government schemes for MSMEs.

It is important to note that the Udyam Registration is a one-time registration process and no renewal is required. However, in case of any changes in the details provided during registration, the same can be updated on the portal.

How to determine category of classification on the basis of investment and turnover?

To determine the category of classification for MSMEs in India, based on the new criteria of investment and turnover, the following steps can be followed:

  1. Calculate the total investment made in plant and machinery or equipment for the enterprise. This should include all the investments made till date, including the ones made for the purchase of second-hand machinery or equipment.
  2. Calculate the turnover of the enterprise for the previous financial year. This should include the sales made by the enterprise during the year from all its products and services.
  3. Compare the investment and turnover with the criteria mentioned in the new classification of MSMEs.

Based on the comparison, the enterprise can be classified into one of the following categories:

  1. Micro Enterprises: If the total investment made in plant and machinery or equipment is up to Rs. 1 crore and the turnover of the previous financial year is up to Rs. 5 crore.
  2. Small Enterprises: If the total investment made in plant and machinery or equipment is up to Rs. 10 crore and the turnover of the previous financial year is up to Rs. 50 crore.
  3. Medium Enterprises: If the total investment made in plant and machinery or equipment is up to Rs. 50 crore and the turnover of the previous financial year is up to Rs. 250 crore.
  4. Once the enterprise is classified into a particular category, it can proceed with the Udyam Registration process on the portal to obtain the Udyam Registration Number and avail the benefits provided by the government for MSMEs.

MSME Registration Procedure on Udyam Registration portal

The registration process on the Udyam Registration portal for MSMEs in India is simple and can be completed in a few easy steps. Here is the step-by-step procedure for MSME registration on the Udyam Registration portal:

Step 1: Visit the Udyam Registration portal .

Step 2: Click on the “For New Entrepreneurs who are not Registered yet as MSME” tab on the homepage.

Step 3: Enter the Aadhaar number of the authorized signatory and click on the “Validate and Generate OTP” button. An OTP will be sent to the registered mobile number linked with the Aadhaar card.

Step 4: Enter the OTP received on the registered mobile number and click on the “Validate OTP” button.

Step 5: Fill in the necessary details such as name of the enterprise, PAN number, location, and other relevant information.

Step 6: Choose the appropriate classification of the enterprise based on the investment made in plant and machinery or equipment and the annual turnover.

Step 7: Upload the relevant documents such as Aadhaar card, PAN card, and bank account details.

Step 8: Click on the “Submit and Get Final OTP” button to complete the registration process. An OTP will be sent to the registered mobile number and email ID.

Step 9: Enter the OTP received on the registered mobile number and email ID to obtain the Udyam Registration Number.

Once the registration is complete, the enterprise will receive the Udyam Registration Certificate with the Udyam Registration Number. The certificate can be downloaded from the Udyam Registration portal. The Udyam Registration Number will be used for all future purposes related to MSME registration and availing of government schemes and benefits. It is important to note that the Udyam Registration is a one-time registration process and no renewal is required. However, any changes in the details provided during registration can be updated on the portal.

Suggested Read- Update Udyam Certificate

conclusion

In conclusion, the Micro, Small, and Medium Enterprises (MSME) sector is an important contributor to the Indian economy. The Government of India has recently announced a new classification for MSMEs based on the investment and turnover criteria, and has also introduced the Udyam Registration portal for MSME registration. It is important for existing enterprises to register themselves on the portal before December 31, 2021, to avail the benefits provided under various government schemes for MSMEs. The registration process is simple and can be completed in a few easy steps. Once registered, the enterprise will receive the Udyam Registration Number, which will be used for all future purposes related to MSME registration and availing of government schemes and benefits.

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