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New definition of MSMEs & Udyam registration

New definition of MSMEs & Udyam registration

Economy

Anil Ganga

Anil Ganga

25 Jul 2020, 10:00 — 5 min read

Ministry of MSME announced new definitions for Micro, Small, and Medium Enterprises (MSMEs), and that definition is in effect from July 01, 2020.


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Given recent changes to the definitions of MSMEs, many firms/ companies falling under MSMEs, therefore, registering under the MSME act is very important to the MSMEs to get loans/advantages that the Government of India or the State Governments provide during Covid-19 times or in general.

New Definition of MSMEs (with effect from July 01, 2020)

As per The Gazette of India - CG-DL-E-26062020-220191, published on Friday, June 26th, 2020, the new definition is as follows:

Category

Criteria / Definition

 

Micro

Investment in plant and machinery or equipment does not exceed 1 crore rupees and turnover does not exceed 5 crore rupees.

 

Small

Investment in plant and machinery or equipment does not exceed 10 crore rupees and turnover does not exceed 50 crore rupees.

 

Medium

Investment in plant and machinery or equipment does not exceed 50 crore rupees and turnover does not exceed 250 crore rupees.

 

Udyam Registration

EM–Part-II / MSME / Udyog Aadhaar Registration process is also changed/replaced with new registration called “Udyam Registration.” All existing MSMEs who registered under EM–Part-II / MSME / Udyog Aadhaar shall again register under the Udyam Registration portal. However, the existing enterprises registered under EM–Part-II / MSME / Udyog Aadhaar Registration before 30th June 2020, shall continue to be valid only up to the 31st, March 2021.

Once registered under the Udyam Registration portal, one will get a “Udyam Registration Certificate” with “Udyam Registration Number (URN).”

Therefore get registered under Udyam Registration.

Checklist for Udyam registration

1. Aadhaar Number of one key director/partner(valid mobile number shall be linked to Aadhaar, OTP will be received to this mobile number)
2. Exiting EM–Part-II / MSME / Udyog Aadhaar Registration number, if registered already.
3. Phone number, mail ID
4. Social Category (of a person mentioned in point no 1 above) like SC/ST/BC/OBC (valid certificate is required)
5. Gender
6. Physically handicapped: yes/ no
7. Company / Firm Registration number
8. PAN number
9. Location of Plant (s) / Office location(s) for service sector
10. Official Address for communication
11. Date of Commencement of Business
12. Bank Account Number & IFSC
13. Business activity details
14. Number of persons employed
15. Investment in plant & machinery / Equipment as per latest ITR & GSTR

Calculation of investment in plant and machinery or equipment

• Calculation of investment in plant and machinery or equipment shall be as per the latest ITR for existing enterprises.

• Calculation of investment in plant and machinery or equipment shall be based on the self-declaration for new enterprises, but once they file ITR, they shall update the figures as per the latest ITR.

• Purchased value/invoice value of the plant and machinery or equipment (whether first hand or second hand) excluding GST shall in considered during calculation for new enterprises.

• “Plant and machinery or equipment” shall have the same meaning as per Income Tax Rules, 1962

• Land and building, furniture and fittings, etc. shall be excluded during the calculation.

Calculation of turnover

• For calculation, the export of goods and services, or both shall be excluded.

• Turnover and export turnover shall be linked to PAN or GSTIN.

Updation of information

1. The enterprises registered under the Udyam Registration portal shall continuously update the data as per the ITR and GST returns for the previous financial year.

2. The government will also collect and update data for government sources like ITRs, GSTRs, Banks, etc.

3. The status will be suspended if not updated.

4. Based on the updating of the data, the enterprise classification will also be updated from time to time.

Also Read: Udyam Registration - All about the new MSME Registration Process

 

Image Source: Shutterstock

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Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.

Posted by

Anil Kumar Ganga

"Ananya legal LLP" is a full service, dynamic, and trustworthy Corporate Advisory and Legal Consultancy Limited Liability Partnership (LLP) Firm that specializes in a...

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