MSME – Micro, Small and Medium Enterprises
MSME is an important Sector for the Indian Economy and have hugely contributed towards the Country’s Socio-Economic Development. It does not only generate Employment opportunities but also develops the nation’s backward and rural areas. Let’s discuss about MSME Registration in India, its Procedure, Benefits, etc.
Brief discussion about Old and New Registration process of MSMEs
Earlier, process of obtaining MSME registration was through Udyog Aadhaar Registration.
Briefly Speaking Udyog Aadhaar Registration and MSME registration both are similar but quite different.
Udyog Aadhaar was an easy way of acquiring MSME registration.
Udyog Aadhaar Registration was an online method by which MSMEs can get 12-digit Udyog Aadhaar Number. Later on it can go for MSME registration.
Vide notification dated 26th June 2020; Ministry of MSMEs has specified “New Form” and Procedure for filing memorandum known as ‘UDYAM REGISTRATION’.
This was made applicable with effect from 1st day of July 2020.
Udyam Registration is an updated version of the old process of Udyog Aadhaar registration for registering under MSMEs. It is the new way of getting MSME registration. As Udyog Aadhaar registration process was time consuming and confusing as well. Earlier lots of paperwork and documents were required on the portal. However, Udyam is the single window, paperless process and no additional documents or certificate is required to register under MSME.
The main objective of ministry to introduce the Udyam registration is to simplify Registration process and reduce the Time consumption.
When we talk about MSMEs registration, first thing comes in mind is, Who can apply for MSMEs Registration??
Answer to this question is, any type of business organization can obtain MSME registration. Provided, such business organization is either manufacturing or service Industry. Any Trading company is not covered under this scheme. Type of business organization who can obtain MSMEs registration is as under:
2. Partnership Firm,
3. Private Limited Company
4. Public Limited Company,
5. Limited Liability Partnership,
6. Hindu Undivided Family (HUF),
7. Society / Co-Operative Society
However, there is an Eligibility Criteria for MSME Registration, which is discussed as under.
Manufacturing and Service Rendering Enterprises under MSME:
How to register MSME online in India?
Registration Process of MSME is quite simple; Get your MSMEs registration now.
Process of MSMEs registration: –
- At UAM Portal, Enter 12 digits Aadhaar Number. (Mobile Number should be Linked With Aadhaar Card, because it is Mandatory for OTP Verification)
- After the Verification is done, a registration form will appear.
- Following details should be filled in such registration Form.
- Name of the Owner
- Category of Business Sector (Manufacturing or Service Sector)
- PAN Details
- GSTN Number
- Address of the business
- Mobile Number and Email ID.
- Commencement date of business
- Bank account details
- Type of organization and number of workers employed
- Annual Turnover of the business.
- NIC Code (National Industrial Classification).
- Click on ‘Submit’ to generate OTP. The OTP will be received on “Mobile” and “E-mail ID”.
- Enter Aadhaar OTP and Click on ‘Final Submit‘
- Acknowledgement number via E-mail will be received after the registration is completed.
- After verifying the details mentioned in the form, Udyam Registration Number will be allotted.
- Subsequently, Udyam Registration Certificate will be issued after successful registration of MSME under such portal.
For reference, the Registration form of MSME is attached as under-
Important Point regarding MSME Registration
- In terms of document “Aadhaar Card” is the only document required for MSME registration.
- MSME registration is fully Online
- PAN and GST linked details on investment and turnover of organizations will be taken automatically by the Udyam Registration Portal from the Government databases.
- The Udyam Registration Portal is completely incorporated with Income Tax and GSTIN systems.
- PAN and GSTIN is mandatory from 1st April 2021 for registration.
- As of now, Registration can be done without PAN and GSTIN. It has to be updated with PAN number and GSTIN number by 1st April 2021.
- Organizations who have UAM registration or EM-II or other registration issued by any authority under the Ministry of MSME, will require re-registering themselves Udyam Registration Portal.
When to obtain MSME Registration?
MSME registration is not mandatory and it is totally optional at the discretion of business organization. However, it is always advisable for every business organization to obtain MSME registration. MSME registration should be obtained as soon as MSMEs starts the business. It will allow them to avail the benefits under the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006.
What are the benefits of MSME Registration?
- Collateral free Loan- The Government has introduced various advantages for MSMEs that allow them to avail credit without collateral. It is one of the best benefits of MSMEs registration.
- Interest rate on over draft- Enterprises registered under MSME can avail a benefit of 1% on the Over Draft as mentioned in a scheme that differs from bank to bank.
- Minimum Alternate Tax (MAT)- Organizations registered as MSMEs are allowed to carry forward MAT credit up to 15 years instead of 10 years.
- Subsidy, Rebates and Concessions- After registration, cost for setting up the industry reduces, as there are many subsidies, rebates and concession available for MSMEs. For Example, any organization registered under the MSME Act are given a heavy subsidy of 50% for patent registration.
- Protection against Delayed Payments- As one of the MSME registration’s benefits, a buyer is required to make payment for the goods/services within 15 days of the purchase from MSMEs. If the buyer delays, the payment for more than 45 days, then registered MSME is eligible to charge compound interest, which is 3 times the rate notified by RBI.
- Reimbursement of ISO Certification Charges – A registered MSME has option to claim reimbursement of the expenses spent on ISO Certification.
- Easy access to the Marketplace- Registration of MSME helps organization, to acquire government tenders easily. The registration portal is integrated with government E-Marketplace and several other state government portals.
Who has the authority to issue the certificate for MSME Registration in India?
Each state of India owns an independent department for MSMEs. As we are already aware that MSME Registration is done online in India. For the Registration of MSMEs in India, the District Industries Centre is responsible. The District Industries Centre department has power to issue the certificate for MSME Registration.
The District Industries Centre department also issues a MSME Number with the certificate of MSME Registration.
Whose Aadhaar Number is to be used in case of Firm or Body Cooperatives or other types of business?
The Aadhaar number shall be of proprietor in case of a proprietorship firm, managing partner in case of partnership firm and Karta in the case of Hindu Undivided Family (HUF)
In case of a company or a Limited Liability Partnership or a Cooperative Society or a trust, the organization or its authorized signatory shall provide its GSTIN and PAN along with its Aadhaar number.
So, now we are aware about so many benefits of registering an organization Under MSMEs Act. Tough MSMEs registration is free of cost and it can be obtained online, but is it always advisable to take assistance of Expertise. Should you require any assistance in taking MSMEs Registration or in any related matter, Manthan Experts is available for assistance. Feel free to contact your Trustworthy Advisor at firstname.lastname@example.org.