Written by : DG Gupta
A financial professional, qualified Chartered Accountants and Company Secretary examinations and enriched with experience of all types of accounting, taxation and compliance of Manufacturing as well as Service Industries
A strong economy is truly the source of national strength, and with the MSME industry growing rapidly, it acts as the backbone of India's economy. MSME denotes Micro, Small, and Medium enterprises.
As per msme.gov.in, the MSME sector drives the economy by contributing 45% of overall industrial employment in India, 50 % of total exports in India, and 95 percentile (%) of the industrial units in the country. Furthermore, these firms produce around 6000 different types of industrial products and are commonly referred to as Small scale industries (SSI). Therefore, our economy accelerates forward as a result of the growth in those industries.
Through its national and international trade, the Indian MSMEs sector contributes about 29% towards the GDP.
MSMEs became functional on October 2, 2006, after the Government of India (GOI) brought into effect the Micro, Small, and Medium Enterprises Development (MSMED) Act. This government established this legislation to encourage, develop and accelerate the competitive environment of the Micro, Small and the Medium enterprises providing them with a platform to flourish.
The MSMED Act 2006, enacted by the Government of India, categorizes firms in three categories based on their investment and yearly turnover.
The revised limits for defining the manufacturing and service sector enterprises into the three categories of Micro, Small, and Medium Entities is as follows:
Low budgets were limiting growth, and industries were unable to grow up their operations. Therefore, the government decided to revise the MSME categorization while enabling them to profit from the MSME Act. Under the amended Bill, 2018, both yearly turnover and investment are considered for determining an MSME. The differences between manufacturing and service enterprises is also eliminated.
MSMEs play an important role in the nation's socio-economic growth; further, MSME registration offers various advantages. Let's get started.
The table categorizes the MSMEs' eligibility criteria.
|Enterprise Type||Act of 2006||Act of 2006||Bill of 2018|
|Investment in Plant 7 machinery||Investment in Equipment||Annual Turnover|
|Micro||25 lakhs||10 lakhs||5 crore|
|Small||25 lakhs to 5 crores||10 lakhs to 2 crore||5 crore to 75 crore|
|Medium||5 crores to 10 crores||2 crore to 5 core||75 crore to 250 crore|
Any firm that falls under the MSME category must be registered. The registration for MSME can be completed online at the government of India portal udyamregistration.gov.in.
Before we begin, let's go with the documents that one shall need to submit for registration. The relevant documents include:
The registration process are performed under three optional categories on the web portal -
Click the "For New startup or Business Entrepreneurs who are not yet Registered as MSME" action button, the registration page will ask for an Aadhar number. Enter the details and click the "Validate & Generate OTP action Button." After filling in the details, click the "Validate and Generate OTP Button."
An OTP will be generated. Enter the OTP on the Verification page of the PAN.
If the entrepreneur holds a PAN Card (as identity), the portal pulls the PAN information from government resources databases and prepares and fills in the page's entries automatically. First, however, the entrepreneur has to fill in the ITR information.
Once the PAN details entries are submitted, a notification stating "Udyam Registration has been already processed through this PAN number" appears, and the founder / owner now proceeds to click on the "Validate PAN" button.
After the PAN is verified, the Udyam Registration pop-up box appears, and the startup or businesses need to fill out the details of them and the enterprise. When you click the "Submit and Get Final OTP" button, the MSME is finally registered, and a notice of successful completion of registration with a reference number appears. A new Udyam Registration Certificate is assigned and issued following the registration verification that may take a few days.
On the homepage of the relevant government portal, click the button "For New Business who are not yet Registered as MSME." enter your Aadhar number (#) and the full name of the founder / owner, then click the "Validate and Generate OTP” action button. After that, a new page will be generated to verify the PAN, triggers an OTP that needs to be entered. If the founder or owner of business doesn’t hold a PAN Card, select the "No" option under the title "Do you have a PAN?" before choosing the "Next" button.
The rest of the process is similar to the above one.
To avoid suspension of Udyam Registration, after receiving the PAN number and GSTIN account number must be updated on the portal before 01/04/2021.
Registration for the Entrepreneurs who already have EM - II or UAM:
Those who have already registered as EM - II or UAM must click one of the following relevant buttons
Now, enter your Udyog Aadhar number and choose an OTP option. Click the "Validate and Generate OTP" button. Finally, submit the registration form to complete the process of Udyam registration.
GoTaxfile is your one-stop source solution. We get you in touch with a team of experienced mentors, CAs, and CPAs who will make your MSME registration transparent and completely easy. What sets GoTaxfile apart is its transparency while doing the right things with the right set of expertise. We aim to provide a helping hand while you focus on the business goals.
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