Udyam registration and new Classification for MSMEs

Shubham | Last updated: 28 December 2020

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Quick Summary

The Ministry of Micro, Small and Medium Enterprises has updated the classification criteria for MSMEs, effective from 1st July 2020. This new system combines investment and turnover figures for both manufacturing and service enterprises. All existing businesses registered before 30th June 2020 need to re-register on the Udyam Registration portal, and it's crucial to keep your information updated to maintain your status.

I. New Classification for MSMEs

As announced as a part of economic stimulus and reforms in response to Covid 19, the Ministry of Micro, Small and Medium Enterprises has modified the classification criteria for MSMEs as follows-

Existing Criteria-

Classification	Micro	Small	Medium
Mfg Enterprises	Investment < INR 25 lacs	Investment < INR 5 cr	Investment < INR 10 cr
Service Enterprises	Investment < INR 10 lacs	Investment < INR 2 cr	Investment < INR 5 cr

New Criteria (Applicable from 1st July, 2020)-

Classification

Micro

Small

Medium

Mfg and Services

Investment < INR 1 cr

AND

Turnover < 5 cr

Investment < INR 10 cr

AND

Turnover < 50 cr

Investment < INR 20 cr

AND

Turnover < 100 cr

Note: All units with GSTIN listed against same PAN shall be collectively treated as one enterprise for the purpose of calculation of limits.

For the purposes of Investments in Plant and Machinery, the calculation will be linked to the previous ITRs filed. If such ITRs are not available, self-declaration to be filed.

For the purpose of Turnover, exports will be excluded from the calculation.

II. Registration

Form of registration will be available at the Udyam Registration Portal.
Aadhaar number will be required for registration.
In the case of company/LLP/Society/Trust, PAN and GSTIN will be required along with Aadhaar.
All existing enterprises registered under EM- Part II or UAM to register again on the Udyam Registration portal on or after 1st July 2020.
The existing enterprises registered prior to 30th June 2020 will continue to be valid till 31st March 2021.

III. Other Matters

An enterprise having Udyam Registration Number shall update its information online in the Udyam Registration portal, including the details of the ITR and the GST Return for the previous financial year and such other additional information as may be required.
Failure to update such information can result in the suspension of the status of the enterprise.

FAQ :

The new classification for MSMEs considers both investment and turnover. Micro enterprises have investment less than INR 1 crore and turnover less than 5 crore. Small enterprises have investment less than INR 10 crore and turnover less than 50 crore. Medium enterprises have investment less than INR 20 crore and turnover less than 100 crore.

The new classification criteria for MSMEs became applicable from 1st July 2020.

For individual proprietorships, an Aadhaar number is required. For companies, LLPs, societies, or trusts, Aadhaar, PAN, and GSTIN are necessary for registration.

Yes, all existing enterprises registered under EM-Part II or UAM must register again on the Udyam Registration portal on or after 1st July 2020. Registrations prior to 30th June 2020 remain valid until 31st March 2021.

For the purpose of calculating turnover, export sales will be excluded.

Failure to update your information online in the Udyam Registration portal, including ITR and GST Return details, can lead to the suspension of your enterprise's status.

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About the Author

Shubham

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Hello Everyone Am a practising Chartered Accountant based in Noida. I have a passion for writing and hope to share my articles here and gain knowledge from fellow members. Blog- www.finlens.in

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Udyam registration and new Classification for MSMEs