MSME Registration: Eligibility, Process, Documents Required & Benefits

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Laxmi Navlani

MSME Registration
Start & Run Business
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MSME – Micro, Small, and Medium Enterprises can apply for MSME registration in India. Proprietorships, Hindu Undivided Family, Partnership Firm, One Person Company, Limited Liability Partnership, Private Limited Company, Limited Company, Producer Company, any association of persons, co-operative societies or any other undertaking can obtain MSME registration.

Moreover, In accordance with the Micro, Small, and Medium Enterprises Development (MSMED) Act in 2006, the enterprises are classified into two divisions.

  1. Manufacturing enterprises – engaged in the manufacturing or production of goods in any industry
  2. Service enterprises – engaged in providing or rendering services

Further, the earlier definition of MSMEs was based on investments in plants and machinery or equipment. However, MSMEs will now be defined in a composite manner, taking both investments as well as turnover into account. Moreover, this new definition will bring about many benefits that will aid MSMEs to grow in size.

MSME Online Registration
Do you want to file an application for MSME Registration online? We can help you out.
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MSME Online Registration
Do you want to file an application for MSME Registration online? We can help you out.
[Rated 4.8 stars by customers like you]

Classifications of MSME

Definition of Micro, Small and Medium Enterprises has been altered with the aim of providing them greater support as well as various benefits as a part of the relief measures under Atmanirbhar Bharat Abhiyaan.

Earlier & Latest Classifications of MSME are mentioned in the tables below:

                                      Previous MSME Classification
              Criteria: Investment in Plant and Machinery/ Equipment
Classification Micro Small Medium
Manufacturing enterprises < Rs 25 lacs < Rs.5 crore < Rs.10 crore
Service enterprises < Rs.10 lacs < Rs.2 crore
< Rs.5 crore
                                         Revised MSME Classification
                               Criteria: Investment as well as Turnover
         For Manufacturing enterprises as well as Service enterprises
Classification Micro Small Medium
Investments < Rs.1 crore < Rs.10 crore < Rs.20 crore
Turnover < Rs.5 crore < Rs.50 crore
< Rs.100 crore

Note: Enterprise has to fulfill both of the above criteria to become eligible as an MSME as per the revised MSME classification.

MSME Online Registration Process

Time needed: 15 minutes.

Follow the detailed process given below to complete the registration. Once the registration process is complete, the government will verify the information provided and you will receive an e-registration document on your e-mail ID.

  1. Go to the Udyog Aadhaar website

    Visit the official website for beginning the registration process.Udyog Aadhaar Website

  2. Select the option to register

    Click on “For new Entrepreneurs who are not registered yet as MSME” option.

  3. Enter required information

    Enter the details of your Aadhaar and click on the option “Validate & Generate OTP”Udyog Aadhaar Registration Form

  4. Validate the details

    Enter the OTP sent to the registered mobile number to verify the details of the Aadhaar.

  5. Verify PAN details

    Select the type of organization and enter your PAN number and click on validate. Verify PAN details

  6. Enter the required details

    Enter the following details:
    1. Mobile number and Email ID
    2. Social Category and Gender
    3. Name of Enterprise and Address of office
    4. Date of Incorporation
    5. Select whether in production or not
    6. Date of commencement of business
    7. Bank details of the entity
    8. The major activity of the business unit i.e. Manufacturer or service unit
    9. National Industry Classification (NIC) Code for Activities (One or more activities can be added)
    10. The number of persons employed
    11. Amount invested in plant or machinery
    12. Check yes or no if you are interested to get registered on Government e-Market (GeM) Portal
    13. Check yes or no if you are interested to get registered on TReDS PortalEnter important details in the Udyog Aadhaar Form

  7. Enter the OTP

    After filing out the important details, select the checkbox “Agree Terms and Conditions” and finally submit the form and validate with OTP.

Points to be noted:

  1. To do the registration the small and medium scale industry owner can file form in both manners, i.e, whether online or offline.
  2. Secondly, there are no registration fees required to be paid for this process.

MSME Registration without Aadhaar Card

In case the applicant doesn’t have Aadhaar card then he/she must visit the nearest Aadhaar enrollment center for enrollment. Till the time Aadhaar is issued to the individual the below documents can be used to continue the registration process:

Further, a Copy of Aadhaar enrollment slip or copy of Aadhaar slip for Aadhaar enrollment can be used.

For Aadhaar enrollment process below documents are required:

Then, after completing the above process you can continue your business with MSME/SSI certificate.

Documents Required For MSME Registration

Benefits of MSME

The Finance Minister listed various benefits for MSMEs which included easier credit and equity infusion as well as various other benefits like redefining these units under Atmanirbhar Bharat Scheme.

New Benefits under “Atmanirbhar Bharat Scheme”

There are various other benefits of MSME Registration and some of them are listed below:

Activities specifically Excluded from Coverage under MSME

Ministry of Micro, Small, and Medium Enterprises (MSME) has clarified via notifications that the following activities would be specifically not included in the manufacturing or production of commodities or rendering of services as per Section 7 of the said Act.

  1. Forest and Logging
  2. Fishing and aquaculture
  3. Wholesale, retail trade as well as repair of motor vehicle and motorcycles
  4. Wholesale trade except for motor vehicles as well as motorcycles.
  5. Retail Trade Except for Motor Vehicles as well as motorcycles
  6. Activities of households as employees for domestic personnel
  7. Undifferentiated goods as well as services-producing activities of private households for own
  8. Activities of extraterritorial organizations and bodies

Changes in Effect from 01-07-2020 – Atmanirbhar Scheme

Due to the Atmanirbhar Scheme and to ease the process of doing business, the union of MSME has introduced the new definition of MSME and also the new registration process to be known as the “Udyam Registration.” The new portal takes effect from 01-07-2020.

Difference Between New and Old Registration Process

Basis of Difference Udyog Aadhar Memorandum  Udyam Registration
Aadhaar Number Earlier we can take multiple registrations while using one Aadhar Now one Aadhar one Udyam registration

One enterprise shall only have on Udyam registration.

PAN Validation No PAN validation Now PAN validation is mandatory and all the enterprises registering with portal must have PAN and GSTIN.
Number of Employees Earlier only the number of employees is to be entered. Now segregation must be given as per Gender.
Linkage with Income Tax, PAN and GST department Earlier all figures are to be entered manually on a self-declaration basis. Now, the Udyam portal is lined up with other departments and all the details should be as per ITR (last year filed) and GST.
Composite criteria for the classification of MSMEs Earlier enterprises were classified into two sectors manufacturing and service sector, and there are separate limits for both the sectors for classification of the same. Now there are the composite criteria for both the manufacturing and service sector. There is the same limit of Investment and annual turnover for both the sectors for classification.
Investment Information Amounts of investment had been manually entered. Investment gets auto-filled based on last year’s filed ITR and in case of the new enterprise, must be filled on a self-declaration basis and this relaxation is available till 31st March after that update is required, else certificate gets suspended.
Registration certificate Udyog Aadhar Memorandum (UAM) is issued instantly at the time of registration only. After applying for an Udyam Registration Number is issued and Udyam Registration Certificate shall be issued only after verification.

Important Points Related to Udyam Registration

FAQs

What is the validity of the MSME registration certificate?

There is no expiry of the MSME registration certificate. As long as the entity is ethical and financially healthy there will be no expiry of the certificate.

Can trading companies register under MSME?

No. MSME covers only manufacturing and service industries.

Moreover, the purpose of MSME is to support startups with subsidies and benefits, However, trading companies are like middlemen i.e a link between manufacturer and customer. Hence not covered under the scheme.

Do I need multiple registrations for manufacturing plants in different cities?

No. The MSME registration certificate is for a single entity irrespective of multiple branches or plants. However, information about multiple branches or plants must be furnished.

  • Sumit Kabra says:

    Sir regarding your article on “Activities specifically excluded from coverage under MSME” above do you specifically sight the notification no. whereby those activities have been expressly excluded for MSME

    • Laxmi Navlani says:

      Ministry of Micro Small or Medium Enterprises notified vide notification number F.No. UAM/MC/01/2017-SME dated 27.06.2017 for registration of Udyog Aadhaar Memorandum clarified that the activities mentioned in Table 1 & Table 2 would not be included in the manufacture or production of goods or providing or rendering of services.
      You can click on the link below to read the notification issued
      Notification number F.No. UAM/MC/01/2017-SME

  • Sumit Kabra says:

    Dear Laxmi
    Thanks for your prompt response and sharing the notification.
    Best Regards
    Sumit Kabra

  • Parveen jain says:

    The website i am not able to register more than 5 crore

  • Sampath Arumugam says:

    Hi Madam,

    we have a P&M 47 Cr, i trying to register as medium size industry, but unable to register. It showing p&M does not exceed 10 Cr.

    Please advice..

    • Laxmi Navlani says:

      Under the new definition, Enterprises with investment up to Rs 20 crore and turnover up to Rs 100 crore will be termed medium enterprises. As your investment exceeds 20 crores you are not eligible for this registration

  • Saurabh says:

    If a company got the finished products ready on job work basis after supplying raw material to job worker, whether it can register under msme or not ?

    • Laxmi Navlani says:

      Yes, Company can register as MSME as this business is not covered in the specific exclusions listed in the article.

  • Akash Malhotra says:

    Can a Farmer Producer Organization (registered as a cooperative/producer company/society/trust or a section 8 company), mainly engaged in horticulture, be classified as MSME if it fulfills the investment and turnover criteria?

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