What is MSME Registration
The Indian government offers MSME registration to Micro, Small, and Medium Enterprises (MSMEs) in order to assist them in receiving benefits that will help establish and grow their businesses. Obtaining the MSME registration is not obligatory; however, it can be advantageous as it provides a range of benefits related to setting up the business, taxation, credit facilities, loans, and more. The MSME registration process is entirely online and can be completed via the Udyam registration portal.
What type of business comes under MSME?
MSME, as per the Government of India, refers only to manufacturing and service industries, with trading companies being excluded from the scheme. The MSMED Act 2006 categorizes businesses under Manufacturing Enterprises or Service Enterprises based on their definition and categorization, as well as the registration policy relevant to Central government and State governments.
Manufacturing Enterprises engage in the manufacture and production of goods, while Service Enterprises provide various services.
To qualify for the MSME scheme, industries have to meet the eligibility criteria issued by the Ministry of Micro, Small and Medium Enterprises. These eligibility criteria differ for Micro-Enterprise, Small-Enterprise, and Medium-Enterprise based on the investment in plant and machinery/equipment and turnover.
For Micro-Enterprise the investments in machinery/ equipment should not exceed Rs. 1 crore, and the turnover should be below Rs. 5 crores. For Small- Enterprises, investment in machinery/equipment should not exceed Rs. 10 crores, and the turnover should not exceed Rs. 50 crores while Medium-Enterprises investment in machinery/equipment should not exceed Rs. 50 crores, and turnover should not exceed Rs. 250 crores.
Documents required to register as MSME
- Aadhar number
- PAN number
- Address of the business
- Bank account number
- The basic business activity
- NIC 2 digit code
- Investment details (Plant/equipment details)
- Turnover details (as per new MSME definition)
- Partnership deed
- Sales and purchase bill copies
- Copies of licenses and bills of purchased machinery
What is Udyam Registration?
Udyam was launched by the Union MSME Ministry in 2020 as an online system for registering micro, small and medium enterprises. Records show that over 88 lakh MSMEs have successfully registered themselves to date through the Udyam registration portal.
One can avail a free Udyam registration for their enterprise through a fully digital and paperless process based on self-declaration. Udyam registration is a prerequisite for availing the benefits of schemes or programmes of the Ministry of Micro, Small & Medium Enterprises such as Credit Guarantee Scheme, public procurement policy, additional edge in Government Tenders and protection against delayed payments etc.
To register, you need to provide your Aadhaar, PAN, and GST numbers. The Udyam portal is integrated with the Income Tax and GST identification systems, as well as the government e-marketplace, making the registration process seamless. Your investment and turnover details will be automatically retrieved from government databases.
What is the difference between MSME and Udyam Registration?
The Indian government introduced the Udyam registration process as a simpler alternative to Udyog Aadhaar for MSMEs to register on the government portal. The new process enables new businesses to register easily without lengthy procedures, saving them time. Previously, registration involved numerous categories and documents that required extensive paperwork. In contrast, the Udyam registration process is hassle-free, and anyone can register quickly through a single window without the need for extensive documentation.
The Indian government launched two programs to support and promote the growth of MSMEs in India: Udyog Aadhar and Udyam Registration (UR), also known as Udyam registration online. Both programs aim to achieve the same goal, but there are significant differences between the two that businesses should know.
Udyog Aadhar, also known as Udyog Aadhar memorandum (UAM), was launched by the Ministry of Micro, Small and Medium Enterprises in September 2015. The primary purpose of Udyog Aadhar was to provide MSMEs with a unique identification number that would enable them to access various government benefits, including subsidies and tax benefits.
A key difference between Udyog Aadhar and Udyam is the process of obtaining the unique identification number. Udyog Aadhar required businesses to provide a significant amount of information to the government as opposed to Udyam Registration which only requires self-declaration by the business.
The other difference between Udyog Aadhar and Udyam is that Udyam follows a one-page structure. In other words the Udyam registration process only has one step.
How to Apply for MSME Registration on Udhyam Registration?
Businesses who want to avail benefits announced by the Government for MSMEs will need to register their business on the ‘Udyog Aadhaar Memorandum (UAM) portal’. The registration process is quite simple and free for every user.
Follow the below steps to register your business online:
- Visit the Udyam registration Portal where you will be required to fill a form.
- If you are registering your business as an MSME for the first time, click on the first link on the page.
- Enter the Aadhaar Number and Name and click on ‘Validate & Generate OTP’.
- Once verification is done, you will have to fill in the PAN details. You can select the No option if you don’t have a PAN card yet.
- Post this, you will have to fill the form having field numbers 5-24.
- At the end of the form, an OTP request will be sent to your phone again. Enter the OTP and verification code to submit the form successfully.
- After successful registration, a “Thank You” message will appear with a Registration Number. Keep that number handy for future reference.
- Once the application form is submitted, it can take 2-3 days for the approval and registration to complete.
- If the application gets approved, the registration will be done and the MSME certificate will be delivered to you via email.
Please note that the MSME registration on the government portal is free of cost.
How to register an MSME without Aadhaar Card?
First of all, the applicant who doesn’t have an Aadhaar card according to the section-3 act. Till the time the individual receives the Aadhaar, UAM registration shall be filed by the respective DIC or MSME-DE for the enterprise or business.
Meanwhile, the individual can provide the below documents as an alternative for identification.
- Aadhaar enrolment copy
- Aadhaar enrolment request copy
- Anyone of the following: Voter Id, passport, driving license, PAN card, employee ID, and bank passbook
Benefits of MSME registration
Registration of your MSME is not mandatory. If you choose to register, then your business can enjoy an excise exemption scheme from direct taxes, avail special schemes from banks custom made for MSMEs, and many more.
Also, registered businesses with an MSME certificate will benefit from various government departments, including electricity.
Here are the list of the benefits:
- Lowest interest rates on bank loans
- Avail tax rebates customized for MSMEs credit for Minimum Alternate Tax (MAT)
- Very easily accessible credit for MSMEs
- Reimbursement of ISO Certification
- Avail special rebates and concessions on patents and industry set-ups
- One time settlement fee for the amount unpaid
- Government preference to MSMEs
- Concession in electricity bills
- Get credit guarantee schemes from the Government
- Special consideration on International Trade fairs
- Bar code registration subsidy
- Support from your state government
Who can apply for MSME registration?
Entities that are classified as Micro, Small and Medium Enterprises (MSME) under the MSME classification are qualified to apply for MSME registration. However, an individual is not eligible to apply for MSME registration. On the other hand, entities such as proprietorships, partnership firms, companies, trusts, or societies with an investment below Rs. 50 crore and annual turnover below Rs. 250 crore are eligible to apply for MSME registration.
Frequently asked questions
1. Can I register for MSME online?
Yes, businesses who want to avail the benefits announced by the government for MSMEs will need to register their business online on the ‘Udyog Aadhaar Memorandum (UAM) portal’. The registration process is simplified and free for every user.
2. How can I check my MSME registration?
Upon successful registration, you will receive a registration number that will be required for future reference. Once your form is submitted, it generally takes 2-3 days for the overall approval and registration process to complete. Your registration certificate will be sent to you via email.
3. What are the new criteria for MSME?
MSME qualification is nothing but the eligibility criteria for businesses to register themselves under the tag of MSME. Any business falling under eligibility criteria may register itself/himself under the single registration system for MSMEs.
4. Is the MSME certificate valid?
MSME certificate is valid till the time the business is operational. However, a provisional MSME certificate is valid only for 5 years.
5. What is the cost of MSME registration?
The MSME registration process is free of cost, completely peerless, and online.
6. What are the types of MSME?
According to the provisions of the Micro, Small & Medium Enterprises Development (MSMED) Act, 2006, MSMEs are classified into Manufacturing Enterprises and Service Enterprises.
7. Which industries come under MSME?
All the manufacturing and service industries are covered by MSME.
8. Is Aadhar Card compulsory for MSME registration?
Yes. Your Aadhar Card is compulsory for MSME registration.