The Government of India has announced many relief packages after the spread of pandemic ‘COVID-19’ for the MSME sector to give a helping hand to industry and economy of the country. Those are helping hands (Aatam Nirbhar Bharat), which include ease of doing business, start-ups, Digital India, secure loans, subsidies, Make in India, a moratorium for loans, simple tax compliances, reduced rate of interest & clearness in working.
To allow online MSME registration of new enterprises based on self-declaration, the Central Government notified new norms-on Friday, which will be applicable from July 1, 2020. It will highlight to keep away the obligation to upload loads of certificates and documents. The requirement of uploading certificates and documents makes it away from the previous regular needs; the norm could be allowed as the Udyam registration process as per officials, which is well-integrated with ‘GST’ and the ‘income tax.’
Requirements and Obligations of the New Enterprise
- PAN & GSTIN: As well, by using PAN and GSTIN details, the details served in can be checked for the enterprise registration. An enterprise can be registered just based on Aadhaar number as per the official statement.
- Self-Declaration: Other details can be given on a self-declaration basis, deprived of any prerequisites of uploading or submitting any documents. Therefore, it is known to be a paperless exercise in true insight. MSMEs will be referred to as Udyam, which has also been made a centric emphasis. It is now that the registration process will be called Udyam, which is also means the term ‘enterprise.’
- ITR & GST Return: “An enterprise shall update its information having Udyam Registration Number in the Udyam Registration online-portal. It should include the details on the self- declaration basis of the GST Return & ITR filing, and such other additional information as may be required for the preceding financial year. This information and transition period in respect for updating-has been pronounced by the said notification.
- Equipment’s: Investment in plant and machinery or equipment, as well as turnover, is taken into account for classifying an enterprise into an MSME. Similarly, the exports of goods or services shall not be accounted for computing the turnover, whether the enterprise is small, medium, or micro.
- Registration Procedure: Through the portal, the process of registration can be done online too. The statement said that it would be made known to the public before July 1, 2020 (the date from which this new planning will be operative). MSMEs will be categorized based on investment and turnover from July 1, 2020, as per the earlier clarification.
- Udyam Registration Number: Any enterprise (referred to as ―Udyam) in the Udyam Registration portal on registration, will be assigned Udyam Registration Number (URN) known as permanent identity number. An e-certificate, namely, Udyam Registration Certificate shall be issued on completion of the registration process.
- Verification of the details: The ‘General Manager of the District Industries Centre’ of the concerned District shall undertake an inquiry for verification in case of any discrepancy or complaint, of the particulars of Udyam Registration submitted by the ‘enterprise.’ The matter with necessary remarks after that gets forward to the Director or Commissioner or Industry Secretary concerned of the State Government.
According to the notification, this person may amend the details or recommend to the Ministry of Micro, Small or Medium Enterprises of Government of India after issuing a notice to the enterprise and after giving a chance to present its case based on the findings, for cancellation of the Udyam Registration Certificate.
- New laws: The Government is also working on several initiatives amid the corona virus-triggered turbulence, such as grounding of huge land pools, to appeal potential investors to India, etc. Indian Government has relaxed many provisions MSME law & re-defined accordingly so that many enterprises can get benefits obtainable.
What are the Classifications of MSME Enterprises mentioned as ‘Udyam’?
A composite criterion shall apply for classification of an enterprise as micro, small, or medium of investment and turnover, i.e., both Turnover & Investment. They are to be considered jointly for enterprise to be enclosed in one of ‘Micro, small or medium.’
It will get cease to exist in that category and be placed in the next higher group if an enterprise crosses the ceiling limits stated for its present classification in either of the two criteria of investment or turnover.
An enterprise shall be classified as a micro, small or medium enterprise based on (Turnover & Investment in plant and machinery or equipment) the following criteria:-
| Enterprise | Turnover | Investment |
| Micro | Not more than 5 Cr | Not more than 1 Cr. |
| Small | Not more than 50 Cr. | Not more than 10 Cr. |
| Medium | Not more than 250 Cr. | Not more than 50 Cr. |
No enterprise should be placed in the lower category once registered, until and unless it goes below the ceiling limits detailed for its present class in both the criteria of turnover as well as investment.
All units shall be collectively treated with (GSTIN) Goods and Services Tax Identification Number listed against the same (PAN) Permanent Account Number. It is because one enterprise and the investment and turnover facts for all of such entities must be seen composed. It must be noted that only the aggregate values will be considered for deciding the category as “micro, small or medium enterprise.”
Read our article:Can Startups Benefit From MSME Registration For Better Govt Support?
What is the procedure to get Udyam Registration Number?
The form for registration must be as provided in the Udyam Registration portal.
New Enterprise Registration
As per the notification, there will be no fees for the filling of Udyam Registration. Moreover, Aadhaar number, GST, PAN (Self-declaration) shall be required for Udyam Registration.
Not a single enterprise (Udyam) should file more than one Udyam Registration; on condition that any number of actions including manufacturing/service or both may be specified or further in one ‘Udyam Registration.’ Any person shall be liable to such penalty as specified under section 27 of the Act, whoever intentionally misrepresents or attempts to suppress the self-declared facts and figures performing in the Udyam Registration or updating procedure.
Existing Enterprises Registration
All the existing enterprises registered shall register again on the Udyam Registration portal on or after the 1st day of July, 2020 under EM–Part-II or UAM. Moreover, all enterprises shall be re-classified in accordance with new notification registered till 30th June 2020.
Channel for Udyam Registration classification from updating of information to the transition period
- An enterprise shall update its information online in the Udyam Registration portal with Udyam Registration Number comprising the ITR, the GST Return, and other additional information as may be required for the preceding financial year, on self-declaration basis.
- It will render the enterprise liable for suspension of its status if failed to update the relevant information within the period stated in the online Udyam Registration portal.
- The enterprise classification will be updated based on the information furnished or gathered from Government’s sources, including ITR or GST return filing.
- Communication will get sent to the enterprise for change in status in case of graduation (from lower to higher group), or reverse-graduation (to the lower group).
- An enterprise will maintain its prevailing status until the expiry of one year from the close of the registration year. It should comply with upward change in terms of investment in ‘plant and machinery or equipment’ or ‘turnover’ or both and consequent re-classification.
- The enterprise shall continue in its present category until the financial year’s closure-in case of reverse-graduation of an enterprise.
The chief concern should be following these two issues:-
- Whether the enterprise is registered under the Act or not?
- Whether it is due to actual changes in investment in plant and machinery or equipment or turnover or both or as a result of re-classification?
Moreover, it will benefit the changed status following the year in which such change took place only with effect from ‘1st April’ of the financial year.
Conclusion
These are just an evaluation & do not constitute advice or a legal opinion. We always inspire our readers to observe the issue in-depth based on the mentioned case laws and amended rules/decided judicial decisions consequently. With this, our group of Corpbiz has experienced professionals to help you with the process of New Enterprise under with Udyam Registration along with full compliance assistance. Our expert will ensure the successful and favorable completion of your inquiry.
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