MSME Classification

MSME CLASSIFICATION W.E.F. 01ST JULY 2020

Udyam Registration is prior requirement to be MSME

Ministry of Micro, Small and Medium Enterprises vide its notification dated 26th June 2020 has introduced "Udyam Registration". It covers classification of enterprises as micro, small and medium enterprises, specific form & procedure for filing memorandum. 

 

Udyam Registration will be effective from 01st July, 2020 & any person who intends to establish a micro, small or medium enterprises as per classification defined under this notification will be required to file online for Udyam Registration.

 

Some important points of Udyam Registration.

1. Any person who intends to establish a micro, small or medium enterprise may file Udyam Registration online on the Udyam Registration portal.
2. No documents, papers, certificate or proof required to upload.
3. On successful registration enterprise will be "Udyam".
4. All registered Udyam will be assigned a permanent identity number "Udyam Registration Number".
5. "Udyam Registration Certificate" shall be issued on successful completion of the registration process.

 

Classification of MSME enterprises:

An enterprise shall be classified as micro, small or medium enterprise on the basis of following criteria:

 

Micro	Where the investment in plant & machinery or equipment  does not exceed ONE Crore rupees AND turnover doesn't  exceed FIVE Crore rupees.
Small	Where the investment in plant & machinery or equipment  does not exceed TEN Crore rupees AND turnover doesn't  exceed FIFTY Crore rupees.
Medium	Where the investment in plant & machinery  or equipment does not exceed FIFTY Crore rupees AND turnover doesn't  exceed TWO HUNDRED & FIFTY Crore rupees.

 

A composite criteria of investment and turnover shall apply for classification of an enterprise as micro, small or medium.

 

If an enterprise crosses the ceiling limits 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 shall not be placed in lower category unless it goes below the ceiling limits in both criteria.

 

All units registered under GST portal for same PAN shall be collectively treated as one enterprises and turnover and investment for all such entities shall be seen together and only the aggregate values will be considered for deciding the category.

Calculation of investment in plant and machinery or equipment: 

1. Calculation of investment will be linked to the ITR of the previous years filed under Income Taxt Act, 1961.
2. If new enterprise & no ITR filed till date then investment will be based on self declaration and such relaxation shall end after 31st March of F. Y. first ITR filed.
3. The purchase value of plants & machinery shall be taken excluding GST.
4. The cost of certain items specified in the Explanation I to sub-section (1) of section 7 of the Act shall be excluded from the calculation of the amount of investment in plant and machinery.  

 

Calculation of turnover:

1. Export of goods or services or both, shall be excluded for turnover calculation.
2. Turnover shall be linked to the Income Tax or CGST and the GSTIN.
3. If enterprise doesn't have PAN then turnover will be on self-declaration bass for period upto 31st March 2021, after that PAN & GSTIN shall be mandatory.

 

Process of Udyam Registration:

1. First visit Udyam Registratin Portal.
2. Aadhaar number shall be mandatory for Udyam Registration.
3. Aadhaar for proprietor in case of proprietorship, for managing partner in case of partnership firm and for Karta in case of a HUF.
4. If Company or LLP or other organisation then its authorised signatory shall provide its GSTIN and PAN along with his Aadhaar number.
5. No enterprise shall file more than one Udyam Registration.
6. Any number of activities can be added in one Udyam Registration.
7. If wrong information or misrepresents provided in Udyam Registration shall be liable to such penalty as specified under section 27 of the Act.

 

Registration requirements for existing enterprises: 

1. All existing enterprises registered till 30th June 2020 shall be required to register again on the Udyam Registration portal on or after the 01st day of July, 2020. 
2. All enterprises registered till 30th June 2020 shall be re-classified in accordance with this notification.
3. All existing enterprise registered prior to 30th June 2020 shall continue to be valid only for a period upto 31st day of March, 2021.

 

Update of information & filing of return: 

1. Any enterprise registered under Udyam shall update its information online on the portal including the details of ITR and GST return for the previous F.Y. & other information as required.
2. If enterprise not update relevant information online on Udyam Registration portal within time then its status will be suspended.
3. On the basis of information furnished & from ITR or GST return, status of enterprise will be updated accordingly.
4. If any change in status of an enterprise that will be communicated for the same.

 

Grievance Redressal and facilitation:

The Champion control room.

Office of the Ministry of MSME. 

District industries centers (DICs).

All will act as single window facilitation systems. 

 

Reference The gazette of India no CG-DL-E-26062020-220191.

                  

Glovia Beauty Zone

             

DISCLAIMER:- THE ARTICLE HAS BEEN WRITTEN BY SUDHIR ARYA, COMPANY SECRETARY IN PRACTICE & STARTUP CONSULTANT. DUE CARE HAS BEEN TAKEN TO ENSURE THE CORRECTNESS OF INFORMATION. IT'S BASED ON THE RELEVANT INFORMATION AVAILABLE AT THE TIME OF WRITING IT. HOWEVER, THIS ARTICLE CAN'T BE CONSTRUCTED AS LEGAL OPINION AND WRITER WILL NOT BE LIABLE FOR ANY DIRECT OR INDIRECT RESULT FROM THIS ARTICLE. THIS ARTICLE IS ONLY FOR KNOWLEDGE SHARING INITIATIVE.

ANY SUGGESTIONS ARE WELCOME TO INCREASE THE EFFECTIVENESS OF THE ARTICLE. FOR ANY QUERY OR SUGGESTION WRITER CAN BE REACHED AT MAILTOSUDHIRARYA@GMAIL.COM OR WWW.SUDHIRARYA.COM