Small and medium-sized enterprises (SMEs) are the backbone of any economy, contributing significantly to employment generation and economic growth. The Indian Government recognizes the importance of SMEs and has implemented various measures to support them. One such measure is the Udyam registration process.
Udyam registration is a government scheme introduced by the Ministry of Micro, Small, and Medium Enterprises (MSME) in July 2020. The registration process replaces the erstwhile registration process known as the Udyog Aadhaar Memorandum (UAM). This new registration process aims to simplify the process of registering and classifying MSMEs and to provide them with various benefits.
Under this scheme, all existing MSMEs and new enterprises that meet the eligibility criteria can register themselves online at the Udyam registration portal. The registration process is entirely free of cost, and entrepreneurs can apply for registration by providing basic information about their businesses, such as their name, address, and type of activity.
Eligibility for Udyam Registration
To be eligible for Udyam registration, the enterprise must fall within the definition of an MSME as per the Micro, Small, and Medium Enterprises Development (MSMED) Act, 2006. The following table provides the criteria for the classification of an MSME:
| Type of Enterprise | Investment in plant and machinery or equipment | Turnover |
|---|---|---|
| Micro Enterprise | Less than Rs. 1 crore | Less than Rs. 5 crore |
| Small Enterprise | Less than Rs. 10 crore | Less than Rs. 50 crore |
| Medium Enterprise | Less than Rs. 50 crore | Less than Rs. 250 crore |
Benefits of Udyam Registration
The Udyam registration provides several benefits to the registered enterprises, some of which are:
- Access to government schemes and subsidies – Registered MSMEs are eligible for various schemes and subsidies introduced by the central and state governments. The government provides financial assistance to MSMEs for technology upgradation, marketing, and innovation, and to participate in trade fairs and exhibitions.
- Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) – Registered MSMEs can avail collateral-free loans under the CGTMSE scheme. This scheme is intended to provide credit support to MSMEs in the form of a guarantee for credit facilities from banks and other financial institutions.
- Income Tax exemption – Registered MSMEs can avail of various income tax exemptions provided by the government, such as a 100% deduction in profits for the first five years of operation.
- Easy access to credit – Banks and financial institutions prefer lending to registered MSMEs as they are considered less risky. MSMEs can easily avail of credit facilities at lower interest rates and with relaxed collateral requirements.
- Protection against delayed payments – The government has introduced the MSME Development Act, which provides protection to MSMEs against delayed payments from buyers.
- Eligibility for government tenders – MSMEs registered under Udyam can participate in government tenders, which were previously reserved for micro and small enterprises. This provides a level playing field for MSMEs to compete with larger companies.
- Protection of intellectual property – Registered MSMEs can avail of various schemes introduced by the government for the protection of their intellectual property, such as patents, trademarks, and copyrights. The government provides financial assistance to MSMEs for the registration of their intellectual property.
- Technical and skill development – The government provides various technical and skill development programs to registered MSMEs that help them upgrade their technology and skills. This results in improved product quality and productivity and enables MSMEs to compete more effectively in the global market.
- Reduced compliance burden – The Udyam registration process replaces the earlier Udyog Aadhaar Memorandum (UAM) registration process, which required annual updation. With Udyam registration, MSMEs do not need to update their registration annually, resulting in a reduced compliance burden.
- Easy exit process – MSMEs registered under Udyam can easily exit from their businesses. The government has introduced the MSME pre-pack insolvency resolution process, which enables MSMEs to resolve their insolvency issues through a simple and speedy process.
Procedure for Udyam Registration
The Udyam registration process is entirely online, and the registration is free of cost. Here is the procedure for Udyam registration:
- Go to the Udyam registration portal – https://udyamregistration.gov.in/
- Enter the Aadhaar number and name of the entrepreneur.
- Validate the Aadhaar number through an OTP.
- Provide the necessary details of the enterprise, such as PAN, GSTIN, and bank account details.
- Provide the details of the enterprise’s activities, such as the type of business, the number of employees, and the investment made.
- Complete the self-declaration form.
- Submit the application.
- The registration certificate is issued after verification of the application by the government authorities.
Conclusion
The Udyam registration process is an essential step towards making the MSME sector more competitive and organized. The registration provides various benefits to MSMEs, making it easier for them to operate and grow their businesses. Therefore, it is recommended that all eligible MSMEs take advantage of this registration process to reap its benefits.
Read more useful content:
- section 145 of income tax act
- section 10e of income tax act
- section 9 of the income tax act
- section 94b of income tax act
- section 206aa of income tax act
Frequently Asked Questions (FAQs)
Q:1 What is Udyam registration?
A: Udyam registration is an online process for the registration of micro, small, and medium enterprises (MSMEs) in India. It replaced the earlier Udyog Aadhaar Memorandum (UAM) registration process and was introduced to provide benefits to MSMEs and make the sector more competitive.
Q:2 Who is eligible for Udyam registration?
A: Micro, small, and medium enterprises that meet the eligibility criteria as defined by the government are eligible for Udyam registration.
Q:3 What is the eligibility criteria for Udyam registration?
A: The eligibility criteria for Udyam registration are based on the investment made in plant and machinery or equipment and the turnover of the enterprise. For micro enterprises, the investment should be less than or equal to Rs. 1 crore, and the turnover should be less than or equal to Rs. 5 crore. For small enterprises, the investment should be less than or equal to Rs. 10 crore, and the turnover should be less than or equal to Rs. 50 crore. For medium enterprises, the investment should be less than or equal to Rs. 50 crore, and the turnover should be less than or equal to Rs. 250 crore.
Q:4 Is Udyam registration mandatory?
A: Udyam registration is not mandatory, but it is recommended for MSMEs to avail of the benefits provided by the government.
Q:5 What are the benefits of Udyam registration?
A: The benefits of Udyam registration include easier access to credit, subsidies, government schemes, and other benefits provided to MSMEs. It also provides eligibility for government tenders, protection of intellectual property, technical and skill development, reduced compliance burden, and an easy exit process.
Q:6 Is there a fee for Udyam registration?
A: No, Udyam registration is free of cost.
Q:7 Can a registered MSME update its Udyam registration?
A: Yes, a registered MSME can update its Udyam registration in case of any changes in its details.
Q:8 Can a business have more than one Udyam registration?
A: No, a business can have only one Udyam registration, and it should be registered in the name of the business owner.
Q:9 What is the validity period of Udyam registration?
A: The Udyam registration certificate is valid for the lifetime of the enterprise, provided there is no change in the details of the enterprise.
Q:10 How long does it take to get the Udyam registration certificate?
A: The Udyam registration certificate is issued immediately after the application is submitted, and the details are verified by the government authorities.
