MSME Registration Process: A Guide for Business Owners
The GDP of India gains a great deal from the noteworthy contributions made by micro, small, and medium-sized enterprises (MSMEs). There are more than 110 million workers in these companies. On the other hand, MSMEs face difficulties and roadblocks as they develop and expand. On May 13, 2020, the Indian government introduced a new classification metric as a critical first step towards addressing and supporting these MSMEs. All MSMEs in India are referred to as "Udyam" under this categorization, and they have to go through the "Udyam Registration" procedure. The Union Cabinet approved this move, which means that all MSMEs must register for Udyam as of July 1, 2020. The MSME or Udyam registration will be thoroughly examined in this guide.
Table of Content
Understanding the MSME Classification
Micro, small, and medium-sized businesses, or MSMEs, are essential to the economy because they generate output, jobs, and potential for export. MSMEs play a vital role in the manufacturing sector by providing larger companies with a wide variety of goods, raw materials, and components. When the government first instituted MSME registration in 2006, the MSME categorization was determined by the amount invested in machinery and equipment. The yearly investment and annual criterion were added by the government when they changed the MSME categorization. Additionally, the MSME definition's difference between the manufacturing and service sectors was eliminated. The investment and yearly turnover are the two factors that determine whether a company is classified as an MSME under the most recent revision of the MSME categorization scheme.
Micro: Investment & Annual Turnover- < Rs.1 crore & < Rs.5 crore
Small: Investment & Annual Turnover- < Rs.10 crore & < Rs.50 crore
Medium: Investment & Annual Turnover- < Rs.50 crore & < Rs.250 crore
MSME Udyam Registration: A Comprehensive Overview
MSME registration is also known as Udyam registration. Firms that meet the MSME classification requirements can apply for MSME registration using the government site, Udyam. You can access the fully online MSME registration using the Udyam registration platform. While obtaining this registration is not required for MSMEs, it is advantageous to do so as it offers numerous advantages regarding taxation, business setup, credit facilities, loans, and other areas.
Benefits of MSME Registration
The benefits of MSME registration are outlined below:
Bank loans become more affordable as a result of MSME Registration India since the interest rate is significantly lower—between 1% and 1.5%—than it is for conventional loans. MSMEs are qualified for banks' priority sector loans.
It additionally permitted the minimum alternate tax (MAT) credit to be carried forward for a maximum of 15 years as opposed to 10 years. A direct tax exemption programme is also applicable.
MSME registration makes it easier to obtain government tenders because the Udyam Registration Portal is integrated with the Government e-marketplace and numerous other State Government portals, providing quick access to their marketplace and e-tenders. MSMEs can participate in e-tenders with the benefit of a government security deposit waiver.
Once registered, the cost of obtaining a patent or the cost of starting an industry decreases because many rebates and concessions are available.
If any MSME payments are outstanding, there is a one-time settlement fee.
The MSMEs' ability to participate in government programmes like the Credit Guarantee Scheme, Credit Linked Capital Subsidy Scheme, Public Procurement Policy, Protection against Delay in Payments, etc., will be facilitated by their registration as MSMEs.
One MSME registration may include any number of operations, such as manufacturing, services, or both.
Barcode registration subsidy
Reimbursement of ISO certification fees
Concession on electricity expenses
Special attention at international trade shows
Eligibility for MSME Registration
Applications for MSME registration are open to all manufacturing, service, wholesale, and retail businesses that meet the updated annual revenue and investment requirements for MSME categorization. Thus, an entity's eligibility for MSME registration is determined by its annual turnover and investment. The following businesses are eligible to register as MSME's:
Individuals, business owners, startups, and entrepreneurs
Limited companies, both private and public
Sole proprietorships
Partnerships
Limited Liability Partnerships (LLPs)
Cooperative societies
Trusts
Self Help Groups (SHGs)
Documents Required for MSME Registration
The following documents are required for MSME registration:
A passport-size photo of the applicant
A photo ID and proof of address for the candidate
The Aadhar card of the applicant
The documentation related to business
The operational premise proof (a selling deed if you are the property's owner or a letter from the owner stating that there are no objections is required if you decide to rent the property)
The documentation related to banking
Partnership Deed of the Firm if you are a partnership
The PAN card, MOA, AOA, and Certificate of Incorporation in case of a firm
Components of MSME Registration Application
Besides the aforementioned documentation, you may need the following information to fill out the application for MSME registration:
The name on the applicant's Aadhar card, or the name of the entity
Gender
Social category (general, OBC, SC/ST)
Physically challenged
The name and nature of the organisation
PAN Cards for people and organisations
Location of the plant:
State, District, City, Tehsil, Phone number and email address of the applicant, PIN code, and proof of office address
The date the entity was established
Number of bank account and IFSC
2-digit NIC code for business activity
Any other information about the entity
The number of workers
The expenditure on equipment and machinery
Notably, there are no registration fees for MSMEs, and no documentation evidence is needed. The Udyam Registration Portal is integrated with the Income Tax and GSTIN systems, so it will automatically retrieve PAN and GST-related information about an enterprise's investment and turnover from government databases. Businesses that are exempt from the GST registration requirement are not required to register. Nevertheless, to obtain an MSME registration or Udyam registration, businesses that are required by law to obtain GST registration must enter their GSTIN.
Steps of the MSME Registration Process
All of the MSME registration procedures are conducted online. The government website udyamregistration.gov.in is where MSME online registration is completed. There isn't a fee associated with MSME registration. The portal offers two categories under which MSME registration may be completed online:
New Entrepreneurs not yet registered as MSME or those with EM-II
Step 1: On the Udyam Registration Portal's home page, select the "For New Entrepreneurs who are not Registered yet as MSME or those with EM-II" button. This is for both new and EM-II registered business owners.
Step 2: Enter the entrepreneur's name and Aadhaar number on the following screen, then click the "Validate and Generate OTP Button." This button opens the PAN Verification page after the OTP is submitted and received.
Step 3: The business owner needs to click the "Validate PAN" button after entering the PAN number and the "Type of Organisation" The site verifies the entrepreneur's PAN number by retrieving PAN facts from government databases.
Step 4: The entrepreneurs must fill out the Udyam Registration form with their personal information and business details after their PAN has been verified.
Step 5: Choose the declaration, enter the investment and turnover information, and then click "Submit and Get Final OTP." The OTP has been sent, and following its entry and form submission, an email with the Udyam Registration Certificate will be delivered. Through the Udyam Registration Portal, entrepreneurs can also ascertain the status of their MSME registration.
Registration for Entrepreneurs with UAM
The "For those having registration as UAM" or "For those already having registration as UAM through Assisted filing" button must be clicked by individuals who have already registered as UAMs. This button may be found on the government portal's home page. This will launch a screen asking for your Udyog Aadhaar Number. You should enter it there and choose the OTP option. There are two ways to receive the OTP: by email or on a mobile device as long as the UAM is completed. Click "Validate and Generate OTP" after selecting the OTP Options. Udyam registration will be finalised once the OTP has been entered and registration information has been completed on the MSME registration form.
Tracking of MSME Registration Status
The following procedures can be used by an applicant to check the MSME Registration status by name and reference number:
Step 1: To check the status of your application, go to the MSME Registration portal.
Step 2: Type the verification code and the 12-digit UAM number as seen in the Captcha image.
Step 3: After inputting the 12-digit UAM number, click the "Verify" button.
Step 4: A business owner's MSME registration status can be viewed.
MSME Registration Number and Certificate
When a company receives an MSME registration, it is known as Udyam, and the permanent identifying number that the Ministry of MSME assigns to it is known as the "Udyam/MSME Registration number." Attached to the MSME Registration Certificate is the 19-digit MSME/Udyam Registration Number. In India, MSMEs receive an electronic certificate from the Ministry of MSME called the Udyam Registration Certificate. Another name for the Udyam registration documents is the MSME registration certificate. Following the completion of the MSME registration procedure, the entrepreneurs receive the MSME registration certificate. The certificate's QR Code can be used to access the enterprise data.
Steps to Download the MSME Registration Certificate
The steps to download the MSME Registration Certificate are shown below:
Step 1: Go to the registration page for Udyam.
Step 2: Select the "Print Udyam Certificate" option after clicking the "Print/Verify" option.
Step 3: Type in your "Udyam Registration Number," "Mobile," select "OTP," and then press the "Validate & Generate OTP" button.
Step 4: Click the "Validate OTP and Login" option after entering the OTP that you received via email or mobile device.
Step 5: Print the Udyam registration certificate after logging in.
Conclusion
For small firms, MSME registration is a crucial step that opens up a world of benefits. It also strengthens a company's reputation by highlighting its legitimacy and compliance with legal requirements. The benefits of registration are numerous and include easier access to credit as well as participation in a number of government programmes.
FAQ
Q1. Is MSME registration mandatory?
No. Small, medium, and micro businesses are not required to apply for MSME registration.
Q2. How long is MSME registration valid?
There is no expiration date on MSME registration. The MSME registration is also valid as long as the organisation is morally and financially sound.
Q3. What are the eligibility criteria for MSME registration?
Businesses must meet certain criteria regarding investment in plant and machinery or equipment for manufacturing enterprises, and investment in equipment for service enterprises, as specified under the MSME Development Act, 2006.
Q4. How does MSME registration benefit startups and small businesses?
MSME registration provides startups and small businesses with access to credit facilities, priority sector lending, government tenders, and various support schemes aimed at fostering their growth and development.
Q5. Are there any fees associated with MSME registration?
As of now, MSME registration is free of cost. However, businesses may need to pay nominal charges for obtaining certificates or availing of specific services related to MSME registration.
q6. How can you cancel MSME registration?
The MSME application cannot be withdrawn once it has been submitted. After the online application for MSME is submitted, the MSME Registration Certificate will be sent out in two to four days.
Q7. Do you need an Aadhar card for obtaining Udyam registration?
An Aadhaar card is required to register for Udyam. The Aadhaar cards of the director and partner would be needed if the applicant is not the owner.
Q8. How much time does it take for the MSME registration process?
As soon as the MSME registration form is filled out and filed on the Udyam Registration Portal, the MSME registration is finalised. A notification regarding the completion of the MSME registration will appear on the screen following the form's submission. You can check the MSME registration status on the Udyam Registration Portal.
Q9. How many days does an MSME Registration Certificate come in?
The MSME Registration Certificate is typically sent three to five days after the MSME registration is completed. The entrepreneur receives the MSME Registration Certificate in their mail.
Q10. Is MSME registration for traders valid?
Earlier, only the manufacturing and service sectors were covered by MSME registration. Nonetheless, the government declared in July 2021 that the retail and wholesale sectors will be classified as MSME's. Therefore, traders, with the exception of motor vehicles and motorbikes, may apply for MSME registration for their wholesale or retail trade firm.
Q11. Is MSME registration and Udyog Aadhaar the same?
No. The government's initiative to give SMEs a 12-digit registration number is called Udyog Aadhaar registration. To receive government incentives for MSMEs, all MSMEs must obtain the 19-digit MSME registration, which took the place of the Udyog Aadhaar registration.
Q12. Is the MSME registration online free?
The MSME registration process on the Udyam Registration Portal is free of cost, so you need not worry about spending on it.
