All About New MSME Udyam Registration Process with Penalty

Subodh Kumawat

4 years ago

After receiving the recommendations of the Advisory Committee for MSME Udyam Registration the central Government comes up with:

The government introduced some specific criteria for classifying the enterprises as micro, small and medium enterprises.
Also notified about the form and the process of filing the memorandum (Udyam Registration), w.e.f 1st day of July 2020

GST Identification Number Not Required for Udyam Registration

The Modi Government has taken another step towards a paperless, simplified process, and time-saving mechanism. Now, for Micro, Small, and Medium Enterprises (MSME) there is no requirement for a unique Goods and Services Tax Identification Number (GSTIN) during “Udyam Registration”.

A notification has been issued by the Ministry of MSME on 05.03.2021 to remove the mandatory requirement for filing Udyam Registration with those for filing GST Returns. “The exemption from the requirement of having GSTIN shall be as per the provisions of the Central Goods and Services Tax Act, 2017 (12 of 2017).” Now, the proprietor may use his or her PAN only for registering the enterprise.

“In case of any proprietorship enterprise not registered under any Act or rules of the Central Government or the State Government, the proprietor may use his or her PAN for registration of the enterprise in the Udyam Registration portal and for all other types of enterprises PAN shall be mandatory,”

As per the Notification released by the Modi Government dated 26.06.2020, GSTIN was a prerequisite for registration on the Udyam Registration Portal, with effect from 01.04.2021. However, a huge number of representations had been received by the central government from various MSME Associations.

The aforesaid association stated to the central government that “making GSTIN mandatory” is affecting the registration process. The reason is, that many enterprises have been exempted from the mandatory requirement of filing GST Returns as per the above-mentioned notification. This phenomenon can be attributed to the existence of a large number of MSMEs having an annual turnover less than the fixed limit for exemption from registration as per the GST Act. Thereafter, the matter had been examined by the central government and the aforesaid notification has been issued by the central government for relaxation.

Moreover, This relaxation shall further help various micro-enterprises (that includes skilled craftsmen and artisans, and other enterprises in an informal sector/unorganized sector) to get registration quickly and easily. The proprietor of a firm may use his or her PAN only for registration of the enterprise in the Udyam Registration Portal.

Classification of Enterprises

MCA has given a notification on 1st June 2020 by giving definitions for Micro, small and medium enterprises and applicable from 1st July 2020:

View Major Components Before UDYAM and MSME Registration

There would be no fees for filing Udyam Registration and an Aadhar number is needed during Udyam Registration
The Aadhar number would be of the owner in the case of ownership organization, of the managing partner in the term of a partnership industry. And of a Karta in the case of a Hindu entire family ( HUF)
In the case of the firm or a Limited Partnership or a Cooperative Society or Society or a trust, the entities or its legal signatory would offer ist GSTIN PAN and Aadhar number
If an organization is correctly registered as a Udyam with PAN, any lack of information for back years when PAN was not would be filled up on an auto-disclosure basis
There would be no company that can file more than one Udyam Registration: issued that any number of activities that involve manufacturing or service or both may be defined or included in one Udyam Registration
Whoever holds EM -II or UAM registration or any other registration provided by any authority within the Ministry of MSME. They have to re-register
Those who purposely misrepresent or try to suppress the auto-disclosed facts and figures showing in the Udyam Registration or enhance the procedure would be responsible for such punishment as mentioned under clause 27 of the Act
In terms of PAN and GST attached are details on investment and turnover of industries that will be bought automatically from the database of the Government

Significant Documents About MSME Registration

PAN card number
Aadhar card number
Bank account number
Business address
The basic business activity
Investment information (plant/equipment information)
NIC 2-digit code
Turnover information ( as per the new MSME definition)
Sales and buy bill duplicates
Partnership deed
Copies of license and bills of purchase machinery

( Documents and Information checklist related to MSME / UDYAN registration are linked herewith for your reference.)

Simple Steps for MSME and UDYAM Registration

Here are the following steps to follow for the Registration process for MSME :

Step 1: Fill in the MSME registration form online with detailed information by visiting the official website
Step 2: Later complying with the application form along with documents, the applicant would get a registration number
Step 3: Later on, the administration would register the applicant’s business as MSME within 1- 2 working days
Step 4: The MSME registration certificate will be reached instantly and hassle-free on a registered email – addresses

The procedure of MSME registration is instant and undisturbed for businesses to get registered as MSME within the Ministry of MSME.

Prime Advantages of MSME Registration for Business in India

Tax refund availability
Businesses can aid cheaper bank loans with lower interest rates ( approx 1 to 1.5 %) contrary to regular loans.
Main government tenders catering to MSMEs specifically.
Far from the regular Minimum Alternate Tax ( MAT) time span of 10 years for credit, MSMEs are enabled to move further this limit to 15 years for credit against MAT.
More preference from the government in the case of licensing and certification.
Simple credit availability is low-cost for industry set – up, patents, and therefore not due to certain tax rebates and other benefits.
There would be a one-time settlement option in terms of unpaid charges.

MSME Udyam Registration Process

Furnish Udyam Registration Online
- Based on Self-declaration.
- No need to upload documents, certificates, papers and proof.
After successful Registration, a Udyam Registration Number (URN) will be allotted.
Udyam Registration certificate (E-Certificate) will be provided on completion.

Composite criteria of investment and turnover for classification

Shifting from one category to another:

Will be placed in the next Higher Category if an enterprise surpasses the ceiling limits of its present category in Investment or T/o criteria.
Will be placed in the lower category if the enterprise failed to keep within the ceiling limits specified in its current category in both categories Investment and T/o.

# It needs to be considered that All units having GST Numbers against PAN will be collectively treated as 1 Enterprise.

The T/o and Investment will be clustered for all the units and only then the category will be decided.

Enterprise	Existing	ITR of Last year	–
–	New	Self Declaration of the promoter	Up to it files its 1 st ITR

Plant & Machinery:

Includes all TANGIBLE Assets
Excluding
- Land & Building
- Furniture & Fixture
Purchase value of P & M:
- First-hand or second hand
- Excluding GST
- Self-disclosure basis – If the enterprise is NEW

Calculation of turnover

Excluded:
- Export of Goods/Services
Definition of T/o & Export T/o according to the Income Tax Act/CGST Act and GSTIN
Turnover based on Self Declaration if “NO PAN”
- Up to 31/03/2021
- Thereafter PAN & GST mandatory

Udyam Registration Process:

For proper registration, fill out the Udyam Registration Portal
Application Without any fee.
Mandatory Aadhar of:
- Proprietor
- Partnership – Managing Partner
- HUF- Karta
- Company/LLP/Co-op Society/Society/Trust – Authorised Signatory and GST & PAN of the organization
Only 1 application – On which all activities of manufacturing or even services will be included

MSME Udyam Registration Penalty:

Will be applied for incorrect facts or even for attempts to suppress the self-declared facts and figures:

Conviction
First	Second or Subsequent
Fine Up to 1K	Min 1k	Max 10K

The registration process for Existing Enterprises:

All existing registered under:
- EM – Part II OR (Entrepreneurs Memorandum)
- UAM (Udyog Aadhar Memorandum Portal)
- Again register on the Udyam Registration Portal w.e.f 01/07/20
All enterprises registered till 30/06/2020 will be classified again
An existing enterprise registered up to 30/03/2020 – valid till 31/03/2021

Updation of information:

Update the following information online:
- Details of GST Return and ITR
- For the Previous Year
- On Self Declaration Basis
Failure to update within the predefined time– Registration will be suspended.
As per the latest information – The classification will be updated
Enterprise will be communicated for:
- Graduation – From lower to Higher Category
- Reverse graduation – From Higher to Lower Category

Facilitation and grievance redressal of enterprises

The Champions Control Rooms
District Industries Centres (DIC)
If the Aadhar is not available or there is some difficulty in the Registration then the above two offices can facilitate the registration on
- Aadhaar enrolment identity slip or
- Copy of Aadhaar enrolment request or
- Bank photo passbook or
- Voter identity card/ passport/driving licence.

General FAQs for MSME Udyam Registration Process

Q.1 What are the Micro, Small & Medium Companies?

Beneath article 7, the Micro, Small, and Medium companies are defined under the Micro, Small and Medium Enterprises Development Act, 2006 (Act) which has been changed in the notification on June/1/2020 as per the notification on June/26/2020 given by the ministry of micro, small and medium companies. The investment limit and the turnover rises as per the prescribed revision in the context to have a huge number of companies as defined for the Micro, small and medium companies. The amended class of Micro, small, and Medium companies notified on June/1/2020 as per the date notified on June/26/2020.

S.No.	Enterprise	Investment in Plant and Machinery or Equipment	Turnover
1	Micro	One Crore	Five Crore
2	Small	Ten Crore	Fifty Crore
3	Medium	Fifty Crore	Two Hundred and Fifty Crore

Both the principles are composite and require to be settled concurrently.

Q.2 – What is the method to determine the investment for plants as well as Machinery or the equipment?

Under the income tax act 1961, the investment in plant and machinery or equipment is associated with the income tax returns furnished in the previous year. If a new company whose past ITR is not present their investment value relies on self-declaration and this exemption will be finished post 31st March of the fiscal year where it furnishes its 1st ITR. The investment’s calculation for the plant and machinery or equipment will be according to the notification given by the ministry of small scale industries in October/5/2006.

Q.3 – What is the technique to measure the turnover of Goods and Services?

The details of the turnover are associated with the Income-tax Act or the central goods and Services Act (CGST Act) as well as the GSTIN notified in June/26/2020 and in this turnover calculation both the goods and services are not included. If the companies do not have PAN and GSTN then turnover is not been given on self-declaration and the same declaration is valid till March/31/2020.

Q.4 Is it important for the company to register in the section?

The notice is given by the council of Micro, Small and Medium company on 26th June 2020, Udyam registration can be furnished by the micro, small and medium companies. From the circular, it states that the registration under the Micro, Small & Medium Enterprise is self-taken and at the suggestions of Micro, small and medium companies.

Q.5 Who are qualified for registration for the Micro, Small & Medium Enterprise?

Section 7 clarifies that under the Notification on June 26, 2020, allotted by council acknowledge the proprietorships, Hindu Undivided Families, Association of persons, Co-operative Societies, Trust or Partnership Firms, Companies, or Undertakings, through any name is suitable for registration as Micro, Small & Medium companies. Beneath this section, declares that the advantage given by the government ended to a huge part for the society and is the only intention so to include various categories of the companies for the registration.

Q.6 – What is the time limit for the Udyam Registration Certificate?

In this new registration portal, it has not been declared both in the act and in the notification given via council that the validity for the Udyam registration certificate is valid for a period like 5year, 10 years, etc. Thus it is not good to assume that the registration will be considered valid till the enterprise is in existence and hence the renewal will be not required. Although the companies are obliged to update the details on the new portal which consists of PAN as well as GST on or before March 31, 2021.

Q.7 – What type of credential is needed for Udyam Registration?

Under the section the ordinary information for the registration is needed are stated below:

PAN of Entity and its Authorised Signatory(ies)
Aadhaar number
Proprietors – Proprietorship Firm
Hindu Undivided Family (HUF)– Karta
Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust – Authorised signatory
E-mail ID and Mobile No. of Enterprise and person mentioned above
Plant Address and Office Address
Bank Details viz. Account Number, IFSC code
Miscellaneous Information viz. Social Category, Business Activity code, No. of employees etc

Q.8 – What are the advantages of registering the MSME act 2006?

1	MSME SAMADHAAN-Delayed Payment Monitoring System	To settle the clashes the state government initiates the Micro and Small enterprise facilitation control MSEFC. MSEFC of the State post analyzing the case furnished by MSE unit will circulate ways to the buyer section for return of payable amount along with interest stated under the procurements beneath the MSMED Act 2006. Those Micro and small enterprises that have valid Udyog Aadhar UAM can apply. As per the RBI declaration, the buyer is entitled to pay the compound interest and the monthly rests to the supplier at 3 times the dignified rate. If he does not furnish the same to the supplier for goods and services in 45 days of the approval of the goods and services provided. The Ministry of MSME has taken an initiative for filing online applications by the supplier MSE unit against the buyer of goods/services before the concerned MSEFC of his/her State/UT.
2	Numerous Scheme of Government of India	Credit Linked Capital Subsidy – Technology Upgradation Scheme (CLCS-TUS) Support for Entrepreneurial and Managerial Development of MSMEs through Incubators Digital MSMEs IPR Lean Manufacturing Competitiveness for MSMEs Design SME Division Schemes Development Commissioner (DC-MSME) Schemes Micro Finance Programme Credit Linked Capital Subsidy for Technology 5 Upgradation
3	Reserve Bank of India Support	Micro, Small and Medium Enterprises (MSME) sector Restructuring of Advances Priority sector advances Expertise MSME branches Loans up to INR 10 lakh requires no collateral Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) concerning flow of the credit excluding the requirement for the collateral to the MSE division. One Time Settlement Scheme (OTS) for MSEs for settlement of their NPAs Rural Self-Employment Training Institutes
4	Trade Receivables Discounting System	TReDS is used to run the trade through financing and discounting taken on the Micro, Small, Medium enterprises MSMEs via several financiers and is driven by the electronic system. Benefits to MSME viz. the following: Timely receipt of funds Helpful in Business growth due to improved liquidity Efficient capital deployment Improved cash flows Reduced cost of funds
5	Goods and Services Tax	Rs 1 cr to Rs 1.5 cr is to be taken so for the threshold limit of turnover for choosing the composition policy. Furnishing Nil returns have been clarified with a one-step rule.

Q.9 – Is there any restoration of procurement for the MSME registration?

There is no requirement to renew the registration because the Udyam Registration number is a permanent identification number as declared under the notification on June/06/2020.

Q.10 – Does more than one Udyam Registration Number can exist for the enterprise?

There should not be more than 1 Udyam Registration Number, as notified on June/06/2020 if the company engages in both production as well as servicing activity as duly comes under one Udyam Registration.

Q.11 – Is PAN and GSTIN important for every entity?

According to the declaration notified on June/26/2020 it is necessary to have PAN and GSTIN for every enterprise to get registered with, under the section on and post April/1/2021. According to the Central Goods and Services Tax Act, 2017, along with respective GST Laws, the companies are required to register once the threshold crosses as per the act stated under the procurement. While the declaration looks the irregularity of GST laws procurement and then it is important to have GSTIN and PAN for the enrollment under the act for every companies regardless of turnover. If the company does not take PAN and GSTIN, then its status is entitled as delay for Micro, Small and Medium Enterprise on and after April 01, 2021.

Q.12 – Is there any requirement to give up the Certificate to MSME Authority for the case an Enterprises ceases to Medium Enterprise?

As stated in notification on 26th June 2020 given via council of Micro, Small and Medium Enterprises there is no declaration in the section that if the company end to be an MSME organization then the organization needs to give up its certificate while status shows delay if the entity unables to update the related details at the portal.

Q.13 – Are Small Retail Shops like grocery Shops, Hawkers, Peddlers are liable to get registered?

The council which mentioned the Office Memorandum , F.No. UAM/MC/01l2017-SME for the Wholesale Trade and Retail Trade as well as serving the motor vehicle along with the motorcycles and Wholesale Trade rather than motor vehicle and motorcycles will not comes under making or producing of goods and services thus the small retail shops such as grocery shops, peddlers, hawkers etc are not liable for the enrollment under MSME Act, 2006.

Q.14 – If an owner of the Company is owner of more than 1 Company whether his Aadhar can be utilized duly for Udyam Registration?

The department who has given the FAQs upon Udhyog Aadhar Memorandum there is no limitation on furnishing more than 1 Udyog Aadhaar Memorandum by utilising the similar Aadhaar Number. Thus we can explain the procurement for Udyog Aadhar Memorandum will mutatis mutanis shall be inserted to Udyam Registration Certificate, indeed for more than a Udyam Registration Certificate a single Aadhaar can be used.