Government announces for "Udyam Registration" for MSMEs w.e.f. 1st July 2020

The Central Government, after obtaining the recommendations of the Advisory Committee, has notified certain criteria for classifying the enterprises as micro, small and medium enterprises (MSME). Further, it has specified the form and procedure for filing the memorandum (known as - Udyam Registration) with effect from 1st July, 2020.

The following are the criteria discussed as under:-

I. Classification of Enterprises:

An enterprise shall be classified as a micro, small or medium enterprises (MSME) on the basis of the following criteria, namely:

If an enterprise crosses the ceiling limits as specified for its present category in either of the two criteria of investment or turnover, it will cease to exist in that category and be placed in the next higher category but no enterprise shall be placed in the lower category unless it goes below the ceiling limits specified for its present category in both the criteria of investment as well as turnover.
Further, all units with GSTIN listed against the same PAN shall be collectively treated as one enterprise and the turnover and investment figures for all of such entities shall be seen together and only the aggregate values will be considered for deciding the category as micro, small or medium enterprise.

II. Manner of calculation of investment in plant & machinery or equipment:-

• The expression "Plant and machinery or Equipment" shall have the same meaning as assigned to plant and machinery under Income Tax and shall include all tangible assets (other than land and building, furniture and fittings).
• The cost of following items shall be excluded for calculation of the amount of investment in plant and machinery:-
  (a) Pollution Control Equipments
  (b) Research & Develpment Devices
  (c) Industrial Safety Devices
  (d) Other Notified Items
• In case of a new entity, where no previous ITR is available, the investment will be based on self-declaration of the promoter of the enterprise and such relaxation shall end after 31st March of the financial year in which it files its first ITR. The purchase (invoice) value of plant and machinery or equipment excluding GST shall be taken into account on self disclosure basis, if the enterprise is a new one without any ITR.
• In case of an existing enterprise, calculation of investment in plant and machinery or equipment will be linked to ITR of the previous years as filed by it.

III. Manner of calculation of Turnover:-

• Export of goods or services or both, shall be excluded while calculating the turnover.
• In case of a new entity which does not have PAN, the turnover related figures will be considered on a self declaration basis.
• In case of an existing entity, information regarding turnover and export turnover shall be linked to Income Tax Act or CGST Act and the GSTIN.

IV. Registration Process:-

• The form for registration shall be provided on "Udyam Registration Portal" and there will be no fees for registration.

• No papers, documents or certificates need to be uploaded on portal for "Udyam Registration". Registration is based on self-declaration.

•  Only Aadhar Number is required for "Udyam Registration" as follows:
  (a) In case of a proprietorship firm:- Aadhar number of proprietor
  (b) In case of a partnership firm:- Aadhar number of managing partner
  (c) In case of HUF:- Aadhar number of karta
  (d) In case of a company or LLP or society or Trust:- GSTIN and PAN of organization and Aadhar number of authorized signatory

• In case an enterprise is duly registered as an Udyam with PAN, any deficiency of information for previous years when it did not have PAN shall be filled up on a self declaration basis.

• No enterprise shall file more than one Udyam Registration. Provided that any number of activities including manufacturing or service or both may be specified or added in one Udyam Registration.

• Any mis-representation or suppression of facts shall lead to penalty under section 27 of MSMED Act.

• On registration, an enterprise shall be assigned a permanent identification number to be known as "Udyam Registration Number". An e-certificate namely "Udyam Registration Certificate" shall be issued on completion of registration process.

V. Provisions for existing enterprises:

• All existing enterprises (MSME) registered under EM-Part-II or UAM shall register again on the Udyam Registration Portal on or after 1st day of July 2020.

• All enterprises registered till 30th June 2020 shall be re-classified in accordance with this notification.
• The existing enterprises registered prior to 30th June, 2020 shall continue to be valid only up to 31st March, 2021. Thus, they need to obtain "Udyam Registration" thereafter.

VI. Updation of information and transition period in classification:-

• An enterprise having Udyam Registration Number shall update its information online in the Udyam Registration Portal, including the details of ITR and GST Return for the previous financial year and such other additional information as may be required, on self-declaration basis. Failure to update relevant information may result in suspension of its status.
• Based on the information furnished or gathered from Government's sources including ITR or GST return, the classification of the enterprise will be updated.
• In case of change in status of enterprise, a communication will be sent to the enterprise about the change in the status.
• In case of an upward change in terms of investment or turnover or both, and consequent re-classification, an enterprise will maintain its prevailing status till expiry of one year from the close of the year of registration.
• In case of reverse-graduation (downward change) of an enterprise, whether as a result of re-classification or due to actual changes in investment in plant and machinery or equipment or turnover or both, and whether the enterprise is registered under the Act or not, the enterprise shall continue in its present category till the closure of the financial year and it will be given the benefit of the changed status only with effect from 1st April of the financial year following the year in which such change took place.

VI. Facilitation and grievance redressal:-

• The Champions Control Rooms functioning in various institutions and offices of the Ministry of Micro, Small and Medium Enterprises including the Development Institutes (MSME-DI) shall act as Single Window Systems for facilitating the registration process and further handholding the micro, small and medium enterprises in all possible manner.
• The District Industries Centres (DICs) will also act as Single Window Facilitation Systems in their Districts.
• Any person who is not able to file the Udyam Registration for any reaosn including for lack of Aadhaar number, may approach any of the above Single Window Systems for Udyam Registration purposes with his Aadhaar Enrolment Identity Slip or copy of Aadhaar Enrolment Request or bank photo passbook or voter identity card or driving license and the Single Window Systems will facilitate the process including getting an Aadhaar number and thereafter in the further process of Udyam Registration.
• In case of any discrepancy or complaint, the General manager of the DIC of the concerned district shall undertake an enquiry for verification of the details of Udyam Registration submitted by the enterprise and thereafter forward the matter with necessary remarks to the Director or Commissioner or Industry Secretary of the State Government who after issuing a notice to the enterprise and after giving an opportunity of being heard and based on the findings, may amend the details or recommend to the Ministry of Micro, Small or Medium Enterprises, Govt. of India, for cancellation of the Udyam Registration Certificate.

You may access the Notification at: http://egazette.nic.in/WriteReadData/2020/220191.pdf