MSME industries are the backbone of the economy. They are also known as Small Scale Industries (SSIs). The government of India provides an MSME registration to the industries classified by the government as Micro, Small and Medium Enterprises (MSME) in India. The MSME registration helps MSMEs to obtain various benefits provided by the government for their establishment and growth.
MSME registration: Key highlights
- Your business must meet the new MSME classification criteria based on investment and annual turnover to be eligible for the registration process
- MSME registration is not mandatory but beneficial for businesses as it enables the business to avail specific tax exemptions, subsidies, credit facilities etc.
- This is an online process via the Udyam portal with basic documentation (PAN and Aadhaar)
- There are no MSME registration fees, i.e., it’s free registration for all eligible MSME businesses
Synopsis of MSME Notification
The Ministry of Micro, Small & Medium Enterprises has received several representations from MSMEs stakeholders concerning the selection of the financial year of data in respect of Investment and Turnover and the export value for the MSME classification while registering on Udyam Portal.
- MSME now clarified that details of Investment, Turnover, and Export would be taken from Income Tax Department and GSTN from the relevant Financial Year for the MSME classification.
- For filing on the Udyam Portal for the Financial Year 2020-21, the data (Investment, Turnover, and Export) for Financial Year 2018-2019 was taken from the I.T. Department and GSTN.
MSME Classification and Udyam Registration
The ministry has classified the entity as Micro, Small, and Medium based on the investment in plant, machinery, or equipment. This new method of categorizing MSME was announced vide notification No. S.O. (E) dated 26.06.2020. Any person who intends to establish an MSME must file Udyam Registration online in the Udyam Registration portal. The notification also deals with the following procedures:
- Composite criteria of investment and Turnover for classification
- Calculation of investment in plant and machinery or equipment
- Calculation of Turnover
- Udyam MSME Registration process
- Registration of existing enterprises
- Updating of information and transition period in Udyam Portal
- Facilitation and grievance redressal of enterprises
What is MSME Classification?
| Revised MSME Classification | |||
|---|---|---|---|
| Criteria | Micro | Small | Medium* |
| Investment & Annual Turnover | < Rs.1 crore & < Rs.5 crore | < Rs.10 crore & < Rs.50 crore | < Rs.50 crore & < Rs.250 crore |
GSTIN Not Mandatory for MSME Udyam Registration
The government has earlier provided that PAN and GSTIN are mandatory for MSME Udyam Registration. Vide a Notification S.O. 1055(E) dated 5th March 2021 has relaxed the condition.
Subsequently, the Notification No. S.O. (E) dated 26.06.2020 has been amended on 05.03.2021 to facilitate the exemption from the requirement of having GSTIN as per the CGST Act, 2017.
- In case of any proprietorship firm not registered under any Act or rules of the Central Government or the State Government, the proprietor may use their PAN to register the firm in the Udyam Registration portal.
- MSME also clarified that PAN is mandatory for all other types of enterprises for Udyam Registration.
What is MSME Udyam Registration?
MSME registration is also called Udyam registration. The entities that fulfil the MSME classification can apply for MSME registration from the government portal, the Udyam portal. The MSME registration is entirely online and can be obtained from the Udyam registration portal. It is not mandatory for MSMEs to obtain this registration, but it is beneficial to get one’s business registered under this because it provides a lot of benefits in terms of taxation, setting up the business, credit facilities, loans etc.
MSME Registration Eligibility
All manufacturing, service industries, wholesale, and retail trade that fulfil the revised MSME classification criteria of annual turnover and investment can apply for MSME registration. Thus, the MSME registration eligibility depends on an entity’s annual turnover and investment. The following entities are eligible for MSME registration:
- Individuals, startups, business owners, and entrepreneurs
- Private and public limited companies
- Sole proprietorship
- Partnership firm
- Limited Liability Partnerships (LLPs)
- Self Help Groups (SHGs)
- Co-operative societies
- Trusts
FAQs
What is the difference between Udyam and MSME?
Udyam registration is also known as MSME registration. Initially the government had launched the Udyog Aadhaar portal for all MSMEs. However, since 2020, Udyam is the single portal for all businesses to register for MSME recognition. As such, to answer is Udyam and MSME registration the same? Udyam and MSME registration is the same today, that is, instead of registering on Udyog Aadhar (non-existent today), businesses will need to migrate or register new on Udyam portal for MSME certificate.
How to check status on Udyam portal?
- Visit the Udyam homepage
- Login to your account using your 19 digit URN number and mobile number
- Validate using the OTP received
- View the status of your application on the new page displayed