The Ministry of Micro, Small and Medium Enterprises, commonly referred to as MSME, is the primary governmental authority responsible for formulating and managing regulations, guidelines and laws pertaining to MSME registration in India. Established on October 2, 2006, the MSME plays an important role in incentivising, facilitating and enhancing the competitiveness of small and medium sized industries across the nation.
Understanding MSME Classification
The classification of Micro, Small and Medium Enterprises (MSMEs) has undergone changes since its introduction in 2006. Initially, the criteria for MSME classification were as per the investment in plant and the machinery or equipment. Over time, the government revised these criteria by introducing annual investment and annual turnover considerations. Additionally, the distinction between the manufacturing and services sectors under the MSME definition was eliminated.
Revised MSME Classification Criteria
The current MSME classification takes into account both investment and annual turnover to determine an entity's MSME status. The revised criteria are as follows:
Criteria
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Micro
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Small
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Medium*
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Investment & Annual Turnover
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< Rs.1 crore & < Rs.5 crore
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< Rs.10 crore & < Rs.50 crore
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< Rs.50 crore & < Rs.250 crore
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Understanding MSME Udyam Registration
MSME Udyam Registration, also known as MSME registration, is a process specifically designed for entities falling under the Micro, Small and Medium Enterprises classification. This registration is facilitated through the government portal known as the Udyam portal. The entire process of MSME registration is conducted online and eligible entities can conveniently apply for it on the Udyam registration portal.
Key Features of MSME Udyam Registration
While obtaining MSME Udyam Registration is not mandatory for businesses falling under the MSME category, it offers numerous advantages. This registration proves beneficial in various aspects such as taxation, business establishment, access to credit facilities and obtaining loans.
The MSME Udyam Registration process is updated and user-friendly, allowing entities to complete the registration seamlessly on the Udyam portal.
Obtaining MSME Udyam Registration opens the door to a range of benefits for businesses. These advantages include favourable tax considerations, simplified processes for setting up and running the business and improved access to credit facilities and loans. Businesses are encouraged to utilise the opportunities provided by MSME Udyam Registration to enhance their overall operational efficiency and competitiveness in the market.
Benefits of MSME Registration in India
The major benefits of MSME Udyam registration include:
- Cost-Effective Bank Loans:
Bank loans for MSMEs become more affordable, with lower interest rates (around 1-1.5%) compared to regular loans.
- Extended MAT Credit Period:
MSME registration allows the carrying forward of Minimum Alternate Tax credit for up to 15 years, as opposed to the standard 10 years.
- Cost Reduction for Patents and Industry Setup:
Reduced costs for patent applications and industry setup due to available rebates and concessions after MSME registration.
- Easy Access to Government Tenders:
Facilitates easy access to government tenders through integration with the Udyam Registration Portal and platforms like Government e-Marketplace and State Government portals.
- One-Time Settlement Fee:
Provision of a One-Time Settlement Fee for unpaid amounts by MSMEs.
- Availment of Government Scheme Benefits:
MSMEs can benefit from government schemes such as Credit Guarantee Scheme and the Public Procurement Policy, Credit Linked Capital Subsidy Scheme and Protection against delayed payments.
- Priority Sector Lending:
Eligibility for priority sector lending from banks.
- Government Security Deposit Waiver:
MSMEs enjoy a waiver of government security deposits, particularly useful for participating in e-tenders.
- Diversified Business Activities:
Multiple activities, including service or manufacturing, can be specified under one MSME registration.
- Barcode Registration Subsidy
- Exemption Scheme from Direct Taxes
- ISO Certification Fees Reimbursement
- Electricity Bills Concession
- Special Consideration in International Trade Fairs
By obtaining MSME registration, businesses can find a range of benefits, promoting growth, competitiveness and financial advantages in various aspects of their operations.
Eligibility Criteria for MSME Udyam Registration
Entities seeking MSME Udyam registration must meet specific eligibility criteria based on the revised MSME classification. The eligibility hinges on the annual turnover and investment of the entity. The following categories of businesses and organisations are eligible for MSME Udyam registration:
- Individuals, Startups, Business Owners and Entrepreneurs:
This includes individuals engaged in business activities, startups operating within the defined criteria and business owners and entrepreneurs meeting the specified conditions.
- Private and Public Limited Companies:
Private limited companies and Public limited companies adhering to the stipulated criteria.
- Sole Proprietorship:
Sole proprietors managing business operations independently.
- Partnership Firm:
Partnerships meeting the criteria for turnover and investment.
- Limited Liability Partnerships:
LLPs that fulfil the prescribed annual turnover and investment conditions.
- Self Help Groups:
Self-help groups involved in economic activities.
- Co-operative Societies:
Co-operative societies meeting the defined criteria.
- Trusts:
Trusts engaged in economic activities within the specified parameters.
It's essential for entities falling under any of these categories to assess their annual turnover and investment against the revised MSME classification criteria to determine their eligibility for MSME Udyam registration. Meeting these eligibility requirements allows businesses to avail themselves of the various benefits associated with MSME status.
Documents Required for MSME Udyam Registration
The documents needed for MSME Udyam registration are as given below:
Notably, there are no MSME Udyam registration fees and proof of documents is not required. The Udyam Registration Portal automatically retrieves PAN and GST-linked details on investment and turnover from government databases, given its integration with Income Tax and GSTIN systems.
Further, the following documents are usually required:
- Proof of Ownership:
Documentation proving ownership, such as an agreement, utility bills, leased document or property documents of the premises.
- Proof of Rent Payment:
For rented premises, proof of payment of utility bills and a No Objection Certificate (NOC) must be provided.
- Purchase Bills:
Copies of purchase bills for all capital goods and raw materials purchased.
- Sale Bills:
Copies of sale bills for all products sold.
- Partnership Deed:
Copy of the partnership deed if the entity is a partnership or limited liability partnership.
- Memorandum of Association:
MoA of the company.
- Articles of Association:
AoA of the company.
- Resolutions Copy:
Copies of resolutions undertaken in shareholder and board meetings.
- Permits and Licences:
Copies of any permits or industrial licences required under relevant acts.
- Affidavit:
An affidavit on Rs. 10 non-judicial stamp paper, attested and notarised by a judicial officer.
- Purchase Bill of Machinery:
Purchase bill for the machinery installed.
- Bills for Plant and Machinery:
Bills related to the purchasing and installation of plant and machinery.
- Accounting Information:
Information related to accounting and bank account statements.
Ensuring the completeness and accuracy of these documents is important for a smooth MSME Udyam registration process. It's recommended to check the specific requirements and guidelines provided by the Udyam Registration Portal or the relevant authorities.
Process for MSME Registration on Udyam Registration Portal
The process of obtaining MSME Udyam registration is entirely conducted online through the government's Udyam Registration Portal (udyamregistration.gov.in). There is no registration fee associated with this process. The MSME online registration is categorised into two sections on the portal:
Steps for New Entrepreneurs or Those with EM-II Registration
Step 1: Go to the Udyam Registration Portal
New entrepreneurs and those with EM-II registration should click on the "For New Entrepreneurs who are not Registered yet as MSME or those with EM-II" button displayed on the Udyam Registration Portal's home page.
Step 2: Aadhaar Validation
On the subsequent page, enter the Aadhaar number and the entrepreneur's name. Click on the "Validate and Generate OTP" button. Once the OTP is received and entered, the PAN Verification page will open.
Step 3: PAN Verification
Enter the "Type of Organisation" and the PAN Number, then click on the "Validate PAN" button. The portal fetches PAN details from government databases and validates the entrepreneur's PAN number.
Step 4: Udyam Registration Form
After PAN verification, the Udyam Registration form will appear. Entrepreneurs must fill in their personal details and details of their enterprise.
Step 5: Enter Investment and Turnover Details
Enter investment and turnover details, select the declaration and click on the "Submit and Get Final OTP" button. An OTP will be sent and after entering it and submitting the form, the Udyam Registration Certificate will be sent via email. Entrepreneurs can also check the MSME Udyam registration status on the Udyam Registration Portal.
For Entrepreneurs Already Having UAM
Entrepreneurs who already possess Udyog Aadhaar Memorandum (UAM) registration can efficiently complete the MSME Udyam registration process on the government portal. To initiate the process, follow these steps:
- Go to the Udyam Registration Portal:
Entrepreneurs with existing UAM registration should click on the relevant buttons, such as "For those having registration as UAM" or "For those already having registration as UAM through Assisted filing," visible on the home page of the government portal.
- Enter Udyog Aadhaar Number and Choose OTP Option:
On the designated page, enter the Udyog Aadhaar Number and select the preferred OTP option. The options typically include obtaining OTP on mobile as filled in UAM or receiving OTP on email as filled in UAM.
- Validate and Generate OTP:
After selecting the OTP options, click on "Validate and Generate OTP." This step triggers the generation of the OTP, which will be sent to the chosen mode of communication (mobile or email).
- Fill Registration Details on MSME Form:
Enter the received OTP to validate the process. Subsequently, fill in the necessary registration details on the MSME registration form. This includes personal and enterprise-related information.
- Completion of Udyam Registration:
After entering all required details and submitting the form, the Udyam registration process for entrepreneurs with existing UAM is considered complete. A confirmation or Udyam Registration Certificate may be sent through email.
By following these steps, entrepreneurs can transition from their UAM registration to MSME Udyam registration, ensuring they continue to enjoy the benefits provided by the government for their business growth and establishment.
MSME Registration Fees
The process of obtaining MSME Udyam registration is entirely cost-free. The government does not impose any fees for MSME Udyam registration. Entrepreneurs can complete the registration process without incurring any charges through the official website, specifically the Udyam Portal.
MSME Registration Number
An enterprise that has undergone MSME Udyam registration is referred to as Udyam and it is assigned a permanent identity number by the Ministry of MSME. This unique identifier is known as the 'Udyam/MSME Registration Number.' The MSME Udyam Registration Certificate will prominently display this 19-digit registration number, serving as the distinctive identity for the registered enterprise.
By availing themselves of MSME Udyam registration, businesses not only enjoy the benefits provided by the government but also gain a recognisable identity through the assigned registration number and certificate.
Checking MSME Udyam Registration Status
To verify the status of your MSME Registration, follow these steps:
- Visit the Udyam Registration Portal:
Access the Udyam registration portal through the official website.
- Go to 'Print/Verify' Option:
Click on the 'Print/Verify' option available on the portal.
- Select 'Verify Udyam Registration Number':
Within the 'Print/Verify' section, choose the 'Verify Udyam Registration Number' option.
- Enter Details and Verify:
Input the 'Reference Number,' enter the captcha code and click on the 'Verify' button to confirm the MSME Registration status.
Downloading MSME Udyam Registration Certificate
To download your MSME Udyam Registration Certificate, follow these steps:
- Visit the Udyam Registration Portal:
Access the Udyam registration portal through the official website.
- Go to 'Print/Verify' Option:
Click on the 'Print/Verify' option available on the portal.
- Select 'Print Udyam Certificate':
Within the 'Print/Verify' section, choose the 'Print Udyam Certificate' option.
- Enter Details and Generate OTP:
Enter the 'Udyam Registration Number,' 'Mobile' number, choose the OTP option and click on the 'Validate & Generate OTP' button.
- Validate OTP and Login:
Enter the OTP received on your mobile/email and click on the 'Validate OTP and Login' button.
- Print the Certificate:
Once logged in, you can download and print your Udyam Registration Certificate for your records.
By following these steps, you can conveniently check the status of your MSME Udyam registration and download the registration certificate for your business.
How to check MSME Udyam Registration by Name?
While checking the MSME Udyam registration number directly by name is not possible, you can retrieve your MSME registration number through the following process:
- Visit the Udyam Registration Portal:
Access the Udyam Registration Portal through the official website.
- Go to 'Print/Verify' Option:
Click on the 'Print/Verify' option available on the homepage.
- Choose 'Forgot Udyam/UAM No.':
Under the 'Print/Verify' section, select the 'Forgot Udyam/UAM No.' option.
- Select Registration Option:
Choose the appropriate registration option based on your circumstances.
- Choose OTP Option:
Opt for the OTP option for verification.
- Enter Mobile/Email Address:
Provide the mobile number or email address associated with your registration.
- Validate & Generate OTP:
Click on the 'Validate & Generate OTP' button.
- Enter OTP:
Enter the OTP received on your mobile/email.
- Retrieve MSME Registration Number:
After successfully entering the OTP, your MSME registration number will be displayed.
By following these steps, you can retrieve your MSME Udyam registration number in case you have forgotten or misplaced it. This ensures that you can access and utilise the benefits associated with your MSME Udyam registration.