Udyam Registration for MSMEs
A quick guide on the Udyam registration process
The Ministry of Micro, Small and Medium Enterprises has launched a new process called Udyam Registration for classification and registering of MSMEs on 1st July 2020.
In simple terms, Udyam Registration is as important to every MSME in India as an Aadhar Card is to every citizen of the country. The Udyam Portal is a platform that promotes ease of doing business in the country. It provides a quick and seamless process of registering and also makes it easier for enterprises to avail the government schemes.
Before the Udyam Portal was launched, the process of registration was tedious and time-consuming. According to the MSME Development Act of 2006, entrepreneurs had to fill the Entrepreneurs Memorandum. This came in two parts, EM- 1 was to be filled by prospective entrepreneurs who wished to set-up their business, and EM-2 was meant for existing MSMEs. As separate files were maintained for both EM- I and EM- II applications of a single enterprise, it was difficult to track the implementation of intent of investments; i.e. conversion of EM Part — I to EM Part — II. To overcome this challenge, the government launched the Udyog Aadhar Memorandum (UAM) in 2015. This was an online process and upon registering the MSMEs got a 12-digit unique identification number for their business. However, with the revised classification of MSMEs applicable from 1st July 2020, the registration process has also changed to a new one referred to as Udyam Registration.
Importance of Udyam Registration:
The registration will create a database of MSMEs in the country and will help the government in identifying the beneficiaries for the various schemes and packages.
MSMEs will also find it much easier to avail benefits like protection against delay in payments, collateral-free loans, octroi benefits, claim on stamp duty and registration charges, concession on electricity bills, subsidies, exemption on applying for government tenders, exemption in direct taxes, etc. upon Udyam Registration. Udyam Certificate will ensure that this process is hassle-free and convenient for all the businessmen.
The government has integrated the system with the Trade Receivables Electronic Discounting System (TReDS) and the Government e-Marketplace. This will save time and cost for the MSMEs as it will provide them with an automatic and free route to avail these services.
The RBI has clarified that lenders may obtain the Udyam Registration Certificate from entrepreneurs and hence it is highly that likely that financial institutions can make Udyam Registration a pre-requisite for lending in the future.
Who should apply for Udyam Registration?
All MSMEs in the country as well as any person who intends to set up a business should apply. MSMEs having EM-2 or UAM should also register because these registrations will be considered be valid only till 31st March 2021.
Application Process for Udyam Registration
The MSMEs can file the Udyam Registration online through the Udyam Registration portal. On registration, an enterprise will be assigned a permanent identification number known as Udyam Registration Number. An e-certificate, namely, Udyam Registration Certificate shall be issued on completion of the registration process. This certificate will have a dynamic QR Code from which the web page on the portal and details about the enterprise could be accessed.
The MSMEs engaged in multiple manufacturing or service activities cannot file multiple registrations and should include the details of all the activities in a single application.
Once an enterprise receives the Udyam Registration, renewal of registration is not necessary.
The MSME Ministry has also organized a single-window system at Champions Control Rooms (set up at MSME Development Institutes across India) and district industries centres for facilitating the process.
Documents for Udyam Registration:
The registration process is paperless, completely free, and based on self-declaration. No documents are to be uploaded for registering an MSME. Entrepreneurs will require their Aadhar number. The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm, and of a karta in the case of a Hindu Undivided Family (HUF).
In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organisation shall provide its GSTIN and PAN along with its Aadhaar number.
Steps for a new Udyam Registration:
1)Visit the official website at https://udyamregistration.gov.in/Government-India/Ministry-MSME-registration.htm
Click on: ‘For new Entrepreneurs who are not registered yet as MSME’
2)Enter Your Personal Information
Enter your name and your 12-digit Aadhar number. Click on ‘Validate & Generate OTP.’ An OTP will be sent to your registered mobile number. Enter the OTP.
Note: The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm, and of a karta in the case of a Hindu Undivided Family (HUF).
3) PAN Verification
In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organization or its authorized signatory shall provide its GSTIN and PAN along with its Aadhaar number.
Select the type of organization and enter the PAN no and click on validate. PAN validation takes place.
4) Correspondence Details
Fill in the complete postal address of the company/enterprise/entity and your mobile number.
5) Bank Details
Enter your enterprise’s active bank account number along with the IFSC code of the concerned branch. (The IFSC code can be obtained on the bank’s website.)
Select the activity of your enterprise from either ‘services’ or ‘manufacturing’. Submit the total number of persons employed and the National Industry Classification(NIC) Code for Activities. Enter the total amount of money (in lakhs) that you have invested in your machinery or plant.
7)Select the District Industry Centre and Accept the Declaration
Select the District Industry Centre from the provided drop-down list. Accept the declaration and click on ‘Submit and Get final OTP’
Enter the OTP received on mobile and click on the ‘Final Submit’ button.
Once you click on ‘Submit and Get Final OTP ’you will receive a registration number. Once all your information is verified by the Government, you will receive an E-registration document on your e-mail id.
Features of Udyam Registration:
1)The Udyam registration process is fully online, paperless, and based on self-declaration.
2)The registration process is free.
3)No documents or proof are required to be uploaded for registering an MSME.
4)Only the Aadhar Number will be enough for registration.
5)PAN & GST linked details on investment and turnover of enterprises will be taken automatically from Government databases.
6)The online system will be fully integrated with Income Tax and GSTIN systems.
7)There will be no need for renewal of registration.
Impact of Udyam Portal
In just 4 months, the Udyam Portal has seen over 11 lakh registrations. Till 30th October 2020, 3.72 lakh businesses have been registered under the Manufacturing category while 6.31 lakh units have been registered under the Service sector. The share of micro-enterprises is maximum at 93.17 percent while 5.62 percent are small and 1.21 percent are medium businesses respectively. Overall, employment generated by the registered MSMEs stands at 1,01,03,512. Maharashtra, Tamil Nadu, Rajasthan, Uttar Pradesh, and Gujarat are the top five states in Udyam registrations.
We have uploaded a video on Udyam Registration to MCCIA’S YouTube channel, explaining all the details in Marathi. You can watch it here https://www.youtube.com/watch?v=9jssNgoZxeQ&feature=youtu.be
(Sanika is a Youth Fellow at MCCIA)