Overview of MSME
What is MSME?
In India, MSME, an acronym for Micro, Small, and Medium Enterprises, was established by the Government in accordance with the Micro, Small and Medium Enterprises Development (MSMED) Act of 2006. These enterprises primarily engage in the production, manufacturing, processing, or preservation of goods and commodities. Undoubtedly, the MSME sector holds immense importance in India’s economy, playing a pivotal role in job creation and fostering overall economic progress.
What is MSME Registration/ Udyam Registration?
Udyam Registration serves as an electronic certification bestowed by the Indian government upon Micro, Small and Medium-sized Enterprises (MSMEs) functioning within the nation. This system has superseded the former Udyog Aadhaar Memorandum (UAM) registration procedure. Although not mandatory, obtaining Udyam registration presents significant benefits to MSMEs, making it a favorable option for them to pursue.
- Obtaining Udyam registration allows MSMEs to take advantage of numerous government benefits and incentives designed specifically for businesses classified as MSME.
- What sets the Udyam registration process apart is its reliance solely on self-declaration, doing away with the necessity of uploading any documents, papers, certificates, or proofs.
Eligibility for MSME Registration
Udyam registration extends its reach to enterprises falling within specified threshold limits, spanning across trading, manufacturing, and service sectors. To qualify for Udyam registration, enterprises must adhere to the following criteria based on their category:
- Micro Enterprises: These are entities with an investment in machinery, a plant, or an annual turnover below Rs. 5 crores and equipment not exceeding Rs. 1 crore.
- Medium Enterprises: Entities categorized as medium enterprises have machinery, plants, or an annual turnover not exceeding Rs. 250 crores and equipment investments not exceeding Rs. 50 crores.
- Small Enterprises: Falling into this category are businesses with investments in machinery, plants, or equipment below Rs. 10 crores, as well as an annual turnover less than Rs. 50 crores.
Documents Required to Apply for Udyam Registration
- GST Number: The enterprise’s Goods and Services Tax (GST) identification number needs to be provided as well.
- PAN Card Number: This entails providing the enterprise’s Permanent Account Number (PAN) card details.
- Aadhaar Number: Depending on the type of organization, the associated individual’s Aadhaar card number is required.
- Partnership Firm: The managing partner’s Aadhaar card number.
- Proprietorship Firm: The proprietor’s Aadhaar card number.
- Limited Liability Partnership (LLP), Cooperative Society, Company or Trust: Aadhaar card number of the authorized signatory.
- Hindu Undivided Family (HUF): Aadhaar card number of the Karta.
Online Process for Obtaining Udyam Registration
Here’s a streamlined version of the steps to apply for Udyam Registration:
- Step 1: Start by visiting the Udyam registration portal.
- Step 2: Click on the option ‘For new entrepreneurs who are not registered yet as MSME or those with EM-II on the homepage.’
- Step 3: Enter the ‘Aadhaar Number’ as well as the ‘Name of Entrepreneur,’ then click the ‘Validate & Generate OTP’ button.
- Step 4: Validate the Aadhaar by entering the OTP sent to the linked mobile number.
- Step 5: Proceed to PAN verification. Enter the ‘Type of Organization,’ ‘PAN’ number, and relevant details. Indicate the previous year’s ITR filing and GSTIN status.
- Step 6: Fill in the Udyam registration application form with essential details such as the entrepreneur’s name, enterprise name, location, address, bank details, activity, NIC code, and employment count.
- Step 7: Provide investment in plant and machinery details, turnover details, and select the declaration. Click the Submit button to receive the Final OTP.
- Step 8: Type in the final OTP received and submit the form. You will receive the Udyam e-registration certificate via email.
Benefits of Udyam Registration
Udyam Registration presents a host of enticing advantages for Micro, Small, and Medium-sized Enterprises (MSMEs) that choose to register. These benefits play a pivotal role in nurturing their expansion and progress:
- Access to Government Schemes: Udyam registration stands as a crucial gateway for MSMEs seeking to leverage an array of government schemes and initiatives provided by the Ministry of MSME. These encompass diverse programs such as the Credit Linked Capital Subsidy, Credit Guarantee, Public Procurement Policy, and beyond. By enrolling with Udyam, MSMEs secure the opportunity to access these schemes, unlocking vital financial support and incentives.
- Seamless Integration: The Udyam portal boasts seamless integration with essential government platforms, including the income tax portal, GST identification systems, and government e-marketplace. This integration streamlines a multitude of administrative tasks, simplifying the management of financial and tax-related matters for MSMEs and ensuring greater efficiency.
- Priority Sector Lending: Upon Udyam registration, MSMEs gain eligibility for priority sector lending from banks. This designation grants them expedited access to credit facilities under more favorable terms, bolstering their capacity for business expansion and investment initiatives.
- Extended MAT Credit: MSMEs registered under Udyam can now carry forward Minimum Alternate Tax (MAT) credit for up to 15 years, compared to the previous ten years. This extension provides them with additional tax benefits, fostering better financial planning and long-term stability that are critical for sustained growth.
- Lower Interest Rates: Udyam registration is the opportunity to secure bank loans at reduced interest rates. Typically, MSMEs enrolled in Udyam can access loans with interest rates as low as 1% to 1.5%, alleviating their financial strain and empowering them to invest more confidently in business expansion and innovative ventures.
