MSME Registration Process: A Comprehensive Overview

MSMEs (Micro, Small, and Medium Enterprises) contribute significantly to India's GDP. However, they face significant challenges regarding growth and expansion. To support MSMEs, the Government introduced a new classification metric, Udyam. MSMEs must register for Udyam to get benefits. The MSME registration process can be done online free of cost. Read on to learn more about the registration process of MSMEs in detail.

What is MSME Classification?

Based on the MSMED Act of 2006, MSMEs are classified into manufacturing enterprises and service enterprises. In 2020, the MSME classification has been revised. The new system of classification is based on investment and turnover. Here is the table stating the revised MSME classification:

Type of Enterprise	Investment	Turnover
Micro Enterprise	Not more than INR 1 Crore	Not more than INR 5 Crore
Small Enterprise	Not more than INR 10 Crore	Not more than INR 50 Crore
Medium Enterprise	Not more than INR 50 Crore	Not more than INR 250 Crore

 

What is MSME Registration?

The Ministry of MSMEs has introduced the Udyam Registration portal to let business owners register their Micro and Small Medium Enterprises (MSMEs). With the introduction of this portal, the registration process has become easy and is based on self-declaration.

Udyam registration assists businesses in growth and expansion. With Udyam registration, all businesses existing under the MSME category can enjoy benefits designed specifically for them. To complete the registration process for MSME, the provision of a registration number and certificate is essential.

• Registration Number: Once the registration process is complete, the portal provides with an identity number for permanent use, referred to as the "Udyam Registration Number".
• Registration Certificate: A registration certificate is issued to enterprises eligible for government benefits. This e-certificate, known as the "Udyam Registration Certificate," confirms the eligibility of entities looking to register as an MSME.

Eligibility for MSME Registration

• Sole Proprietorship
• Individuals, Business Owners and Entrepreneurs
• Private Companies
• Partnership Firm
• Public Limited Companies
• Limited Liability Partnerships
• Co-operative Societies
• Trusts
• Self Help Groups

Also Read: Top 5 Differences between Fixed Capital and Working Capital Loans in Business

Documents Required for MSME Registration

• Aadhaar card
• PAN card

All other details, including the details of investments and turnover, are taken automatically from the Government's database.

Who Can Apply for Udyam Registration?

• Limited Liability Partnership
• Any Association of Persons
• Co-operative Societies
• Hindu Undivided Family (HUF)
• Partnership Firms
• Proprietorships
• One-Person Company
• Limited Company

Benefits of Udyam Registration

• Low Interest Rates: Companies enrolled can avail loans at rates of interest as low as 1% to 1.5% p.a. This raises their capacity to invest in innovation and business expansion.
• Different Government Schemes: Upon successful completion of Udyam registration, MSMEs, can avail of several government programs and subsidy schemes. These include Public Procurement Policy, Credit Guarantee, Credit Linked Capital Subsidy, and more.
• Seamless Integration: The Udyam portal integrates with the GST identification system and other government systems, including PAN and income tax registration. This allows MSMEs to manage their financial needs.
• MAT Credit Extension: MSMEs under Udyam registration can take forward Minimum Alternate Tax (MAT) credit for 15 years rather than 10 years. This allows them to enjoy tax benefits and achieve stability over the long run.
• Priority Sector Lending: Banks and NBFCs offer money to businesses under Udyam registration to support them. This eliminates barriers and lays down a strong foundation for fulfilling business dreams.

How to Register for Udyam Online?

Step 1: Visit the official Udyam registration portal and select the option for new entrepreneurs who are not registered as MSMEs or ‘EM-II’.
Step 2: Enter the 'Name of Entrepreneur' and 'Aadhaar Number'. Click on 'Generate OTP'.
Step 3: You will receive an OTP to the mobile number linked with your Aadhaar card. Enter the OTP and click on ‘Validate’.
Step 4: To validate the PAN verification page, provide the 'PAN' number along with the 'Type of organisation'. Also, validate if your previous year's ITR is filed and whether you have a GSTIN.
Step 5: Fill the registration form with necessary details such as the name of your enterprise, location, address, bank details, NIC code, number of employed persons, etc.
Step 6: Click on the ‘Submit’ button to generate OTP.
Step 7: Enter the OTP. Upon approval, you will receive a Udyam e-registration certificate on your email address.

How to Check MSME Registration Status?

Step 1: Visit the official Udyam registration portal and select the 'Print/Verify' option.
Step 2: Select ‘Verify Udyam Registration Number'.
Step 3: Enter the ‘Reference number’ along with the security code and select ‘Verify’.

The registration status will be displayed.

Also Read: Ultimate Guide on Business Asset Loans in India

Steps for MSME Registration Certificate Download

Step 1: Visit the Udyam registration portal and click on ‘Print/Verify’.
Step 2: Select ‘Print Udyam Certificate’ and enter the ‘Udyam Registration Number’.
Step 3: Enter the mobile number and generate OTP.
Step 4: Enter the OTP and select 'Login'; you may now download the MSME registration certificate.

To Conclude

MSME registration helps in the proper growth and expansion of businesses in the long run. The MSME registration is mandatory. MSMEs can get various benefits such as priority lending, low interest rates on loans, access to various government schemes, and credit extensions.

Frequently Asked Questions

1. When to Apply for MSME Registration?
Businesses must apply for MSME registration as soon as they are established. Early registration allows entrepreneurs to avail themselves of a wide range of benefits that the government provides.

2. What is the MSME Registration Fee?
The government does not charge any fees for MSME registration. Hence, it comes completely free. From the government database, details such as turnover and investment of enterprises are automatically extracted.

3. How to cancel MSME registration?

• Step 1: Visit the MSME Udyam Registration Consultancy portal.
• Step 2: Enter Applicant's Name, Mobile Number, Email Address, Business Name
• Step 3: Provide the reason for cancellation.
• Step 4: Provide all the necessary details and documents and submit.

The cancellation process for your MSME license will be initiated.

4. Is MSME registration mandatory?
No, MSME registration is not compulsory. However, you want access to government subsidies and other benefits, registration is mandatory.

5. What is the MSME registration verification?
MSME registration verification is carried out to check the certificate status once the application is approved. This certificate remains valid for a lifetime, so this verification need not be repeated.

6. Can I get MSME registration for a partnership firm?
A partnership firm meeting the turnover and investment criteria of MSME classification is eligible for MSME registration.

7. Is it mandatory to have an Aadhaar card for obtaining Udyam registration?
Yes, it is mandatory to have an Adhaar card to obtain Udyam registration.

8. What is the validity of the MSME Registration Certificate/Udyam Registration certificate?
MSME registration certificate/Udyam registration certificate remains valid for a lifetime.

9. How much time does it take for MSME registration completion?
It may take around 2-3 days to complete MSME registration. Upon successful completion of registration, the certificate is sent to the registered email address.

10. How many days does it take for an MSME Registration Certificate?
After completing MSME registration, receiving an MSME registration certificate may take 3-5 days. The certificate is sent to the business owner’s email ID.

11. Is MSME registration for traders valid?
Yes, MSME registration for traders is valid. Recently, the government has announced the inclusion of wholesalers and retailers under the MSME categories. Earlier, only companies in the service and manufacturing industries were allowed to register.

12. Is MSME registration and Udyog Aadhaar the same?
No, MSME registration and Udyog Aadhaar are two different concepts. With the Udyog Aadhaar, the government provides a 12-digit number to only SMEs. However, when completing MSME registration, all MSMEs are provided with a 19-digit registration number to avail of all government benefits.

Disclaimer

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