Government issues detailed procedure of registration for new and existing MSMEs in accordance with the new criteria of classification; to be effective from 1st July, 2020

In a Gazette Notification dated 26th June, 2020, the Ministry of Micro, Small and Medium Enterprises (“Ministry”) has notified certain criteria for classifying the enterprises as micro, small and medium enterprises and has further specified the form and procedure for filing the memorandum (”Udyam Registration”).
The said notification will become effective from 1st July, 2020.

Key Highlights:

1. Classification of enterprises:
a. Micro Enterprise: Where the investment in Plant and Machinery or Equipment does not exceed 1 crore rupees and turnover does not exceed 5 crore rupees;
b. Small Enterprise: Where the investment in Plant and Machinery or Equipment does not exceed 10 crore rupees and turnover does not exceed 50 crore rupees;
c. Medium Enterprise: Where the investment in Plant and Machinery or Equipment does not exceed 50 crore rupees and turnover does not exceed 250 crore rupees.

2. Becoming a micro, small or medium enterprise:
a. Any person who intends to establish a micro, small or medium enterprise has to file Udyam Registration online in the Udyam Registration portal, based on self-declaration. There is no requirement to upload documents, papers, certificates or proof.
b. On registration, an enterprise will be assigned a permanent identity number to be known as the Udyam Registration Number.
c. An e-certificate, namely, Udyam Registration Certificate shall be issued on completion of the registration process.

3. Registration Process:
a. The form for registration will be as provided in the Udyam Registration portal. There will be no fee for filing Udyam Registration. The Aadhaar number will be required for Udyam Registration. The said Aadhaar number must 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).
e. In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organisation or its authorised signatory shall provide its GSTIN and PAN along with its Aadhaar number.
f. 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 must be filled up on self-declaration basis.
g. No enterprise should file more than one Udyam Registration. However, any number of activities including manufacturing or service or both may be specified or added in one Udyam Registration.
h. Whoever intentionally misrepresents or attempts to suppress the self-declared facts and figures appearing in the Udyam Registration or updation process will be liable to be penalised under the relevant provisions of the Micro, Small and Medium Enterprises Development Act, 2006.

4. Registration of existing enterprises:
a. All existing enterprises registered under EM–Part-II or UAM must register again on the Udyam Registration portal on or after 1st July, 2020
b. All enterprises registered till 30th June, 2020, will be re-classified in accordance with this notification.
c. The existing enterprises registered prior to 30th June, 2020, will continue to be valid only for a period up to 31st March, 2021.
d. An enterprise registered with any other organisation under the Ministry has register itself under Udyam Registration.

5. Facilitation and grievance redressal of enterprises:
a. The Champions Control Rooms functioning in various institutions and offices of the Ministry including the Development Institutes (MSME-DI) will act as Single Window Systems for facilitating the registration process and further handholding the micro, small and medium enterprises in all possible manner.
b. The District Industries Centres (DICs) will also act as Single Window facilitation Systems in their Districts.
c. Any person who is not able to file the Udyam Registration for any reason 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 pass book or voter identity card or passport or driving licence and the Single Window Systems will facilitate the process including getting an Aadhaar number and thereafter in the further process of Udyam Registration.

6. The Notification further lays down the :
a. Composite criteria of investment and turnover for classification
b. Manner of calculation of investment in plant and machinery or equipment
c. Manner of calculation of turnover.


Source: Ministry pf Micro, Small and Medium Enterprises

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