In order to help small businesses start, sustain and grow the Ministry of Small, Medium and Micro enterprises has laid down a system through its MSME Act 2006. This system facilitated their registration via MSME Registration upon which the database was extensively used by the government mechanism to provide support to small, medium and micro businesses across the country. Further, to easy the process of registration the ministry introduced Udyog Aadhar which was a replacement to the old system of offline registration process. It enabled MSMEs to avail simple and easy registration online using just their Aadhaar card information.
It was an instant hit within all MSMEs and the financial and allied institutions also obtained the same smoothly to help MSMEs avail various benefits passed on to them.
With effect from 1st July 2020, the ministry of Micro, Small and Medium Enterprises has discontinued the previously known system of Udyog Aadhaar Registration & MSME Registration and has implemented a completely new system of Udyam Registration. This transition from Udyog Aadhaar to Udyam Registration is not the same as it was for MSME Registration to Udyog Aadhaar. Previously when the old system was implemented the older MSME registrations remained valid, but unlike that this time the Ministry of MSME has announced that all old registrations of Udyog Aadhar or MSME Registration will stand to remain invalid and all MSMEs are hereby instructed to either migrate their older registration to the new Udyam Registration or obtain a fresh registration altogether.
The new system has adopted even advanced mechanisms of digital authentication and verification by implementing a QR Code based system. Every Registration document comes with a unique QR Code which will be used by every Ministry of MSME channel partner to verify and report information about the MSME.
The new system will now categorize MSMEs not just on the basis of Investment value but also on the basis of turnover. This is being done to promote and push MSMEs towards being Champions in their trade. MSMEs with less investment but more turnover are being awarded as being CHAMPIONS and with special benefits over time.
Enterprises will be categorized in three categories namely Micro, Small & Medium Enterprises.
Enterprises with investments up to Rs. 1 crore and turnover up to Rs. 5 Crores.
Enterprises with investments up to Rs. 10 crore and turnover up to Rs. 50 Crores.
Enterprises with investments up to Rs. 50 crore and turnover up to Rs. 250 Crores.
To verify information provided by applicants the Ministry of MSME has also signed a MOU with CBDT which will actively share data with respect to investment & turnover submitted at the time of filing ITR.
In this new system now GST data is also being shared and synced with the database of MSMEs in order to actively categorize and provide benefits accordingly.
Applicants have been informed to provide PAN & GST information by 1st April 2021. With effect from 1st April 2021 it will be mandatory to provide PAN & GST information by Udyamis to avail scheme benefits.
The Udyam Registration scheme is primarily aimed at data collection with regards to MSMEs across India who wish to extend partnership with the MSME towards helping them with growth. All MSMEs registered need to present a valid Udyam Registration Certificate to channel partners at the time of availing any kind of benefits passed on to them by the Ministry of MSME.
There are various other new and improved benefits offered by this new system of Udyam Registration which will be declared and discussed here over time.