Udyam Registration- All You Need To Know To Register Your Small Business
A business needs to register itself in order to be recognised as a micro, small or medium enterprise but often the lack of comprehensive and easy to understand information regarding the necessary registrations processes confounds entrepreneurs and puts them off from an otherwise relatively simple and necessary process.
What Is Udyam Registration?
Udyam Registration is a government registration or a recognition-certification provided to businesses to recognise and certify them as micro, small and medium enterprises (MSMEs) and is also referred to as MSME Registration, previously known as Udyog Aadhaar.
Since 1st July 2020 “Udyog Aadhaar” has been replaced by “Udyam Registration”, and therefore, businesses now need to apply for “Udyam Registration” for MSME recognition.
The registration is given in the form of a certificate along with a unique number. The Udyam certificate is issued by the Government of India’s Ministry of MSMEs. The aim of Udyam Registration is to facilitate the development and promotion of enterprises through the Government’s various schemes and benefits.
Why Was Udyam Registration Introduced?
The advantages of Udyam Registration for a business need to be recognised. Prior to Udyam Registration, the EM-I/II (Entrepreneur Memorandum) system was in place for the registration of businesses as medium, small or micro-enterprises. The procedural format for applying for registration under the EM system was quite tedious, bureaucratic and time-consuming as it involved a lot of paperwork. Additionally, for some States this process was centralised via a national portal while for other States, they had their own registration portals, thus causing confusion due to a lack of uniformity in the registration process too.
With the introduction of Udyam Registration, these problems were solved as Udyam Registration process is an easy to understand and follow, online registration process.
What Is The Eligibility To Apply For Udyam Registration?
The main criteria for businesses to apply for the Udyam Registration process is that they must be an existing business. Also, businesses that are eligible for Udyam Registration must either be associated with manufacturing or processing or producing or preserving goods and providing services related to these processes. This implies that entrepreneurs or traders that deal in buying, selling, importing or exporting goods are not eligible for Udyam Registration.
What Is The Classification Criteria For Udyam Registration?
For a manufacturing or a manufacturing-related service business to be classified either as a micro, small or medium enterprise and get Udyam recognition, it needs to fulfil the requisite criteria. As per the Micro, Small and Medium Enterprises Development Act and the notification dated 26th June 2020, an enterprise or business can be classified as an MSME if their turnover and investment are within the limits specified as below:
- A business is classified as Micro if the investment is less than Rs. 1 crore and turnover less than Rs. 5 crores.
- A business is classified as Small if the investment is less than Rs. 10 crores and turnover less than Rs. 50 crores.
- A business is classified as Medium if the investment is less than Rs. 50 crores and turnover less than Rs. 250 crores.
These are the current classification criteria specified by the MSME Act for the Udyam Registration process.
What Are The Documents Required For Udyam Registration?
The Udyam Registration process is online and therefore does not require documents to be submitted in person. However, information and details from certain documents are required while filling out the form. Therefore the documents to keep handy before the Udyam Registration process include-
- The applicant’s 12 digit Aadhaar card number
- The businesses’ PAN card or in case of proprietorship the proprietor’s PAN card
- The address proof of the business
- The bank passbook or cheque or the statement of account from the bank account opened in the name of the business
- The latest Income Tax Return or ITR and other financials are required to fill out the investment details and the turnover of the business (based on which the business is further classified as micro, small or medium)
What Is The Procedure To Procure Udyam Registration?
The Udyam Registration process is quite simple, especially when compared to how tedious the process was previously.
The main steps involved in the process include-
- Visiting the official website to register- https://udyamregistration.gov.in/
- Verifying the Aadhaar details
- Verifying the PAN details
- Entering the GST and ITR details
- Filling out the application form
- Printing the Udyam Registration certificate
This is the registration process in brief, and for detailed steps highlighting the process of applying for Udyam Registration MSME, entrepreneurs can download the Udyam Registration checklist.
Entrepreneurs and business owners can get a little confused, especially since Udyam Registration MSME is a relatively new term, replaced by the previous, Udyog Aadhaar, and might have doubts and queries while applying for the same. They can always get Udyam Registration done by availing the services offered by deAsra Foundation without having to themselves go through any hassles.
What Are Some Of The Important Facts Regarding Udyam Registration?
- One of the main facts is that Udyam Registration process is for existing manufacturing businesses.
- Also, a business can have only one Udyam Registration
- Another important necessity for businesses that have previously registered under Udyog Aadhar Registration is to re-register themselves under Udyam Registration before 31st March 2021.
- Additionally, it is not mandatory for businesses to apply for Udyam Registration but they can avail the benefits of the schemes announced and launched by the Government for MSMEs only if they are registered.
This is all that businesses must know about Udyam Registration in order to register themselves and avail the benefits. For further information and assistance regarding registration for Udyam, businesses can always get in touch with deAsra.