MSMEs are the heart and soul of India’s economy, generating crores of jobs every year, and contributing immensely to India’s growth and progress.
Three inspiring facts about MSMEs in India are:
- MSMEs and small businesses will give employment to 16 crore Indians by 2023
- MSMEs generate India’s 30% of India’s GDP
- 40% of exports generated from India happen due to MSMEs
This clearly shows that small businesses, small enterprises spread across the length and breadth of India have tremendous potential, and have a great, fascinating future. If you run a small enterprise, but still haven’t registered the same, then it’s a big miss of business & subsidy opportunity. MSME Udyam registration in India is beneficial and required for several legal and tax-related purposes.
We will show the entire online process of MSME Udyam registration and explain what are the benefits of MSME registration, along with MSME Udyam registration fees.
But before, let’s understand what is the meaning of MSME.
Definition of MSME – What is MSME?
A registered Micro-Small & Medium Enterprises (MSME) is a small business, which has been registered under the Ministry of Micro, Small & Medium Enterprises. It’s classified under two categories: Manufacturing Enterprises and Services enterprises.
As per the latest Govt rules (May 2020), here are the definitions:
- A microenterprise is a company with investment under Rs 1 crore and turnover under Rs 5 crore
- A small enterprise is a company with investment under Rs 10 crore, and turnover under Rs 50 crore
- A medium enterprise is a company with investment under Rs 20 crore and turnover under Rs 100 crore
How can an Enterprise be Classified as a Micro, Small or Medium Enterprise?
The calculation of Investment in plant and machinery or equipment (including all tangible assets excluding land and building, furniture, and fixture) will be ascertained through the Income Tax Return of the previous year.
For the calculation of turnover, exports of goods or services or both shall not be considered.
How to do MSME Udyam Registration Online?
MSME Udyam registration can be done online here, which is a Govt website under the Ministry of Micro, Small and Medium Enterprises. Besides, more information on the various schemes for MSMEs in India, credit and loan schemes, subsidy schemes, etc can be availed here, which is the official website of the Ministry of Micro, Small and Medium Enterprises.
An Aadhaar card is mandatory now for initiating the MSME Udyam registration process, along with the registered phone number.
List of Other Documents which are Required for MSME Udyam Registration
- Rent agreement or ownership documents
- Cancelled cheque
- PAN Card
- Company registration documents (sale/purchase bill)
- For self-owned premises, documents such as lease deed, property tax receipt, etc.
- For rented premises, NOC from the owner, rent receipts, utility bills, etc.
- Partnership deed (if exists)
- Memorandum of Association (MoA)
- Articles of Association (AoA)
- Copy of the Licenses and Bills of Machinery Purchased
Learn more about – What Is MOA And AOA? Know the Objectives & Difference Between MOA And AOA
Steps to follow for MSME Udyam Registrations if not Registered Yet as MSME
Step 1: Go to https://udyamregistration.gov.in, click on the “For new Entrepreneurs who are not registered yet as MSME” option.
Step 2: Fill in your Aadhaar no, name as per Aadhaar and click on “Validate & Generate OTP”. Enter the OTP number that you have received in your mobile number and select Validate. Your Aadhaar no will be validated successfully.
Step 3: PAN Verification. Select the type of organization and enter your PAN no and click on validate. Your PAN will be validated. Your PAN will be validated.
Step 4: Filling of UDYAM registration form. Fill in the following details:
- Mobile no. and E-mail id
- Social Category and Gender
- Name of Enterprise and Address of office
- Date of incorporation
- Select, whether production is commenced or not
- Date of commencement of business
- Bank details of the entity
- The major activity of the business unit
- National Industry Classification (NIC) Code for Activities
- The number of persons employed
- Amount invested in plant or machinery
- Check yes or no if you are interested to get registered on Government e-Market (GeM) Portal
- Check yes or no if you are interested to get registered on the TReDS Portal
- select the District Industry center from the drop-down
Step 5: After filing the details select on agree on terms and conditions check box and click on “Submit and Get final OTP”. Enter the OTP received on mobile and click on the “Final Submit” button. Once you click on ‘Submit and Get Final OTP’ you will receive a registration number. Once all your information is verified by the Government, you will receive an E-registration document on your e-mail id
Steps to follow for MSME Udyam Registrations if Already Registered as EM-II or UAM
Step 1: Go to https://udyamregistration.gov.in, click on the “For those already having registration as EM-II or UAM” option.
Step 2: Fill your Udyog Aadhaar no and click on “Validate & Generate OTP”. Enter the OTP number that you have received in your mobile number/E-mail ID and select Validate. It then asks to re-visit the website after few days to complete the details.
Step 3: You can also print your Udyam registration certificate. Enter Udyam Registration no. Enter the OTP number that you have received in your mobile number/E-mail ID and select Validate. You will be redirected to print the certificate.
The MSME registration process is entirely free.
Here is an excellent booklet in pdf from MSME Ministry regarding all the legal necessities and documents required for MSME registration in India.
Key Points to Note for MSME Udyam Registration
- All existing enterprises registered under EM -II or UAM shall register again on Udyam Registration Portal on or after July 1, 2020.
- For classification as Micro, Small, and Medium Enterprise, composite criteria of Investment and Turnover will be considered.
- The calculation of Investment in plant and machinery or equipment (including all tangible assets excluding land and building, furniture, and fixture) will be ascertained through the Income Tax Return of the previous year. In the case of a new enterprise, not having prior ITR, the investment will be based on the self-declaration of the promoter.
- For the calculation of turnover, exports of goods or services or both shall not be considered.
- All the enterprises registered till June 30, 2020, shall be reclassified.
- On completion of registration an e-certificate called “Udyam Registration Certificate” will be issued.
- Norms for Reclassification between categories defined
Benefits of MSME Udyam Registration in India
An unregistered MSME misses out on several subsidies, benefits and Govt schemes that are periodically announced and updated.
Here are the 10 benefits of MSME Udyam registration in India:
1. Get Collateral Free Loans
Registered MSMEs are eligible to get bank loans, without any collateral or security. Not every loan for MSMEs is collateral-free, but there exist several small businesses and MSME loan schemes, which require no collateral.
For example, The Credit Guarantee Trust Fund Scheme provides instant bank loans, without any security, if the conditions are met.
Learn more about – 5 Government Loan Schemes For MSMEs & Startups In India
2. 50% Subsidy on Patent Registration
Registered MSMEs can get up to 50% subsidy for patent registration for their business idea and process. Certificate of registered MSME is mandatory for availing this Govt scheme.
3. Exemption on Overdraft Interest Fee
Registered MSMEs can avail 1% discount on the interest paid on their overdraft, if any, from any bank or financial institution.
4. Industrial Promotion Subsidy Eligibility
Registered MSMEs can get Industrial Promotion subsidies under various Govt schemes and programs, for creating awareness and information about their business, across the world.
This can include a subsidy for participating in business fairs, promotional campaigns and more.
5. Protection Against Delayed Payments
In case any registered MSME has provided goods/services to another business, if the payment hasn’t been received within 45 days, then Govt empowers those MSMEs to charge compound interest on the delayed payments, every month. And this interest to be paid is three times that of approved RBI interest rates.
This help on delayed payments is only applicable for registered MSMEs in India.
6. Subsidy on Electricity Bills
Registered MSMEs are also eligible for subsidies on electricity bills, especially in the case of manufacturing units, under special cases.
7. Free ISO Certification
In case a registered MSME can get ISO certification, then the Govt of India promises to reimburse the entire fees of ISO registration.
Unregistered MSMEs cannot avail themselves of this reimbursement.
8. Extended Tax Benefits
Only for registered MSMEs, credit for minimum alternate tax (MAT) can be extended up to 15 years, instead of 10 years, which is the norm for other entities.
9. Boost In Getting Govt Tenders
Registered MSMEs can get additional help and boost in getting Govt tenders, since the Udyam Registration Portal, is directly linked with various Govt e-marketplaces and State Govt’s portals for issuing tenders.
This is one big advantage of registered MSMEs, compared to non-registered MSMEs.
10. One-Time Settlement Fees for Non-Payments
In case a registered MSME is not able to make any past due payment, then Govt offers a one-time settlement fee, to clear all past dues.
Learn more about – Benefits Of MSME Registration In India
Still, confused about the MSME registration process and its benefits? Don’t worry!
Consult with top business experts & advisors of Govt schemes for MSMEs in India at MSMEx, and clear all your doubts and queries in no time.
MSMEx offers an education platform for MSMEs and business owners, wherein they can book an online session with India’s leading business advisors from diversified domains. Besides getting help on Govt schemes and MSME Udyam registration, you can seek assistance related to Business Process Optimization, Sales and Marketing, Fund Raising, IPO and more.
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