All about udyam registration

All about udyam registration

Jul 2, 2021, 8:08:28 AM Business

Micro, Small, and Medium Enterprises are defined as businesses that are involved in the manufacture, production, processing, or preservation of commodities or businesses that provide or provide services up to a certain limit, as defined below:

The Union Ministry of Micro, Small, and Medium Enterprises (MSME) issued a notification on June 26 announcing the beginning of a new procedure for categorization and registration of MSME enterprises, dubbed "Udyam registration," on July 1, 2020. The MSME Ministry has established a new site for Udyam Registration. The site will assist entrepreneurs in learning what they need to know and doing what they need to do. Following the Advisory Committee's recommendations in this regard, the Central Government thus notifies certain criteria for categorizing firms as micro, small, and medium enterprises, as stated.


A. Plant and Machinery or Equipment Investment

1. Investment in plant and machinery or equipment shall be calculated using the previous year's Income Tax Return (ITR) submitted under the Income Tax Act of 1961.

2. In the event of a new business with no prior ITR, the investment will be based on the promoter's self-declaration, and this relaxation will expire after the 31st March of the financial year in which the business files its first ITR.

3. The term "plant and machinery or equipment" must have the same meaning as "plant and machinery" in the Income Tax Rules, 1962, enacted under the Income Tax Act, 1961, and shall refer to all physical assets of the company (other than land and building, furniture and fittings).

4. If the business is a new one without an ITR, the purchase (invoice) value of a plant and machinery or equipment, whether acquired first hand or second hand, should be taken into account on a self-disclosure basis, excluding Goods and Services Tax (GST).

B. Turnover:

1. Exports of products or services, or both, should be excluded from the calculation of any enterprise's turnover for categorization purposes, whether micro, small, or medium.

2. Information on an enterprise's turnover and exports turnover must be connected to the Income Tax Act or the Central Goods and Services Act (CGST Act) as well as the GSTIN.

3. The turnover-related data of such businesses that do not have a PAN will be evaluated on a self-declaration basis until March 31, 2021, after which PAN and GSTIN would be required.

C. Investment and Turnover Composite Criteria for Classification:

1. To classify an enterprise as micro, small, or medium, a composite criterion of investment and turnover must be used.

2. If an enterprise exceeds the ceiling limits specified for its current category in either the investment or turnover criteria, it will cease to exist in that category and be placed in the next higher category; however, no enterprise shall be placed in the lower category unless it falls below the ceiling limits specified for its current category in both the investment and turnover criteria.

3. All units with the same Goods and Services Tax Identification Number (GSTIN) listed against the same Permanent Account Number (PAN) will be treated as one enterprise, and the turnover and investment figures for all of these entities will be viewed together, with only the aggregate values used to determine whether the entity is classified as micro, small, or medium.


  • Registration with Udyam facilitates the acquisition of government contracts.
  • Bank loans become cheaper as a result of the Udyam since the interest rate is very low (up to 1.5 percent lower than ordinary loans).
  • Udyam is eligible for some tax breaks.
  • It becomes easier to get permits, approvals, and registrations, regardless of the area of the company, because businesses registered with Udyam are given priority for government licenses and certification.
  • They have easy credit with cheap interest rates.
  • Tariff, tax, and capital incentives are all available to registered Udyams.


1. The registration form must be found on the Udyam Registration portal.

2. There will be no charge for registering for Udyam.

3. For Udyam Registration, an Aadhaar number will be required.

4. In the case of a proprietorship company, the Aadhaar number shall be that of the owner, the controlling partner in the case of a partnership firm, and a karta in a Hindu Undivided Family (HUF).

5. A company, a limited liability partnership, a cooperative society, a society, or a trust must submit their GSTIN and PAN, as well as their Aadhaar number if they are a company, a limited liability partnership, a cooperative society, a society, or a trust.

6. If an organization is properly registered as an Udyam with a PAN, any missing information from earlier years when it did not have a PAN must be self-declared.

7. No business may submit more than one Udyam Registration, with the exception that any number of activities, including manufacturing, service, or both, maybe indicated or added to a single Udyam Registration.

8. Anyone who willfully misrepresents or tries to hide self-declared facts and figures in the Udyam Registration or updation procedure will be subject to the punishment stipulated in section 27 of the Act.


1. On a self-declaration basis, a company with a Udyam Registration Number must update its information online on the Udyam Registration site, including the contents of the preceding financial year's ITR and GST Return well as any other supplementary information that may be necessary.

2. If the required information is not updated within the timeframe indicated in the online Udyam Registration site, the enterprise's status will be suspended.

3. The enterprise's categorization will be updated based on information provided or obtained from government sources, such as ITRs or GST returns.

4. In the event of a business's graduation (from a lower to a higher category) or reverse-graduation (sliding down to a lower category), the enterprise will be notified of the change in status.

5. If a business's investment in plant and machinery or equipment, or its turnover, or both, increases and it is reclassified, the enterprise will keep its current status until the end of the year in which it was registered.

6. In the event of an enterprise's reverse-graduation, whether as a result of re-classification or actual changes in investment in plant and machinery or equipment or turnover or both, and whether or not the enterprise is registered under the Act, the enterprise will remain in its current category until the end of the financial year and will be given the benefit of the changed status on that date.

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