New MSME Udyam Registration (Applicable w.e.f. 1st July 2020)

• After obtaining the recommendations of the Advisory Committee, Government of India (GOI) notified on 26^th June 2020 certain criteria for classifying the enterprises as Micro, Small and Medium Enterprises (MSME) and specifies the form and procedure for filing of Udyam Registration, w. e. f. 1^st July 2020.
• Through this notification GOI notified new definition of MSME, registration process, calculation of Investment and turnover which has been now linked with Income Tax Return (ITR), updating of information by the existing MSME Udyog Aahaar registered enterprises and other many more aspects.
• In this article we have discussed about the aforesaid notification and other practical aspects which are as follows:

1. Treatment of Existing Enterprises whose already Registered as MSME
2. New Definition of MSME
3. Calculation of Turnover
4. Calculation of Investment in Plant & Machinery or Equipment
5. Documents/ Information required for Registration
6. Registration Process

1. Treatment of Existing Enterprises whose already Registered as MSME:-

• All existing enterprises registered under EM–Part-II or UAM shall register again on the Udyam Registration portal on or after the 1st day of July, 2020.
• The existing enterprises registered up to 30^th June, 2020, shall continue to be valid only up to 31^st March, 2021.
• All enterprises registered till 30^th June, 2020, shall be re-classified in accordance with this notification.

2. New Definition of MSME:-

• An enterprise shall be classified as a Micro, Small or Medium Enterprise on the basis of the following criteria:

 Points to be noted:

• GOI is still silent on whether trader cane be registered as MSME or not.
• 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 either of the two criteria i.e. 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.
• All units registered with GSTIN on the same PAN shall be treated as one enterprise.
• In case of up-gradation, an enterprise can continue its present category till expiry of one year from the close of the year of registration.
• In case of reverse-gradation, an enterprise will be continuing its present category till the closure that financial year.
• Failure to update the relevant information within the period specified in the online Udyam Registration portal will render the enterprise liable for suspension of its status.

3. Calculation of Turnover:-

• Turnover with respect to exports will not be counted in the limits of turnover for any category of MSME’s units whether micro, small or medium.
• Turnover of immediate preceding financial year shall be considered for the purpose of calculation.
• Information as regards to turnover and exports turnover for an enterprise shall be linked to the Income Tax Act or the Central Goods and Services Act (CGST Act) and the GSTIN.
• Only till 31^st March, 2021, in the absence of PAN turnover will be considered on self-declaration basis.
• After 31^st March, 2021, PAN and GSTIN shall be mandatory.     

Points to be noted:

• GOI is still silent about what if an enterprise is not required to get GSTIN as per the GST law.

4. Calculation of Investment in Plant & Machinery or Equipment:-

• Investment in plant & machinery or equipment of immediate preceding financial year shall be considered for the purpose of calculation.
• The calculation of investment in plant and machinery or equipment will be linked to the Income Tax Return (ITR) of the previous year filed under the Income Tax Act, 1961.
• In case of a new enterprise, where no prior ITR is available, the investment will be based on self-declaration basis.

Points to be noted:

• Purchase value of plant & machinery or equipment shall be taken excluding GST.
• Both first hand or second hand plant & machinery or equipment will be considered for calculation.
• The expression plant and machinery or equipment of the enterprise, shall have the same meaning as assigned to the plant and machinery in the Income Tax Rules, 1962 framed under the Income Tax Act, 1961.
• In the plant & machinery or equipment shall include all tangible assets other than land & building, furniture & fittings.
• In case of ITR filed under presumptive income basis u/s 44AD or 44ADA of the income tax act-1961, there is no requirement to provide investment details, in such case GOI may continue to relay on self-declaration basis.

5. Documents/ Information required for Registration:-

• This is the totally self-declaration registration with no requirement to upload documents, papers, certificates or proof.
• Any person who intends to establish a micro, small or medium enterprise may file Udyam Registration online in the Udyam Registration portal on self declaration basis.
• On registration, an enterprise (referred to as Udyam in the Udyam Registration portal) will be assigned a permanent identity number to be known as Udyam Registration Number.
• An e-certificate, namely, Udyam Registration Certificate shall be issued on completion of the registration process.

Points to be noted:

• Aadhaar card must be registered with updated mobile no.
• Following are the cases where Aadhaar card required of the person:

6. Registration Process:-

• The form for registration shall be as provided in the Udyam Registration portal such as udyamregistration.gov.in .
• There will be no fee for filing Udyam Registration.
• Aadhaar number shall be required for Udyam Registration.
• 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.
• 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 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.
• Whoever intentionally misrepresents or attempts to suppress the self-declared facts and figures appearing in the Udyam Registration or updation process shall be liable to such penalty as specified under section 27 of the Act.This is the totally self-declaration registration with no requirement to upload documents, papers, certificates or proof.

 Disclaimer:-

The contents of this article are solely for informational purpose.