The ministry of msme registration announce detailed criteria for classifying enterprise as micro, small and medium enterprise as well as the form and method for udyam registration, which takes effect on 1st of july, 2020.
A business is defined as a micro, small and medium business based on the following criteria.
A micro business with a capital investment of less than one crore rupees and a turnover of less than five crore rupees.
A small business with a capital investment of less than ten crore rupees and revenue of less than fifty crore rupees.
A medium sized business with an investment in plant and machinery of not more than fifty crore rupee and a turnover of not more than 250 crore rupees.
When compared to the former micro, small and medium enterprise classification criteria the new criteria include investment and turnover implying that turnover criteria have been added as an extra criterion over and above investment criteria. As a result enterprise will be classified as micro, small and medium enterprise using a composite criterion of investment and turnover.
If an enterprise exceeds the ceiling limit specified for its current category in either the investment as well as turnover criteria it will cease to exist in that category and be placed in the next higher category. However no enterprise will be placed in the lower category unless it fall below the ceiling limit specified for its current category in both the investment and turnover criteria.
All unit with the same good and service tax identification number listed against the same permanent account number will be treated as one enterprise and the turnover and investment figure for all of these entity will be viewed together with only the aggregate value being used to determine whether the entity is classified as micro, small and medium enterprise.
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Calculation method for composite criteria.
Plant and machinery.
The calculation of investment in plant and machinery will be based on prior year income tax return filed under the income tax act of 1961. Previous year refer to the previous year as defined in section 3 of the income tax act of 1961.
In the case of a new business with no prior income tax return the investment will be based on the promoter self declaration and this relaxation will terminate after the 31st of march of the financial year in which the business files its first income tax return.
The term plant and machinery has the same meaning as plant and machinery in the income tax rule, 1962 which were enacted in response to the income tax act, 1961 and includes all tangible asset.
If the firm is a new one without an income tax return the purchase value of a plant and machinery whether obtained first hand as well as second hand shall be taken into account on a self disclosure basis, excluding good and service tax .
The cost of certain items listed in explanation one to sub section one of section seven of the act is not included in the computation of plant and machinery investment.
Export of good and service are excluded from the calculation of a company turnover for classification reason whether it is micro, small and medium enterprise.
The income tax act and the central good and service act and the goods service tax identification number are used to link information about a business turnover and export turnover.
For the period up to 31st of march 2021 the turnover related number of such enterprise that do not have a permanent account number will be assessed on a self declaration basis after which permanent account number and goods service tax identification number will be required.
Process of registration.
The ministry of micro, small and medium enterprise has launched a web portal called www.champions.gov.in to assist micro, small and medium enterprise in this difficult time in terms of labor as well as raw material and permission and finance as well as to capture new opportunity such as manufacturing of medical item and accessory.
Anyone interested in starting a micro, small and medium business can utilize the udyam registration portal to complete a self declaration form without having to upload any paperwork and paper as well as certification and proof.
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The registration form will be available on the udyam registration portal.
There will be no charge for registering for udyam.
Udyam registration will require an aadhaar number.
In the case of a proprietorship firm the aadhaar number will be that of the proprietor the controlling partner in the case of a partnership firm and a karta in the case of a hindu undivided family .
The organization and its authorized signatory must submit its goods service tax identification number and permanent account number as well as its aadhaar number in the case of a company a limited liability partnership a co operative society and a society as well as a trust.
If an entity is properly registered as an udyam with a permanent account number any information gap from prior year when it did not have a permanent account number must be filled out on a self declaration basis.
No business may file more than one udyam registration with the exception that any number of activity including manufacturing and service as well as both may be listed and added to a single udyam registration.
Anyone who willfully misrepresent and try to suppress self declared fact and figure in the udyam registration and updation procedure will be subject to the penalties set forth in section 27 of the act.