A Complete Guide to MSME Registration in India

MSME, which stands for Micro, Small, and Medium Enterprises, serves as the supporting structure of the Indian economy. It provides the necessary resilience to our economy against global adversities.

Currently, MSMEs in India have a contribution of 6.11% and 33.4% in the manufacturing GDP and manufacturing output respectively. They also employ 120 mn individuals in India, contributing around 45% of total exports from India.

Becoming a part of the MSME sector in India requires MSME registration. Irrespective of whether a company falls into the manufacturing or service sector, they need to get MSME registration done as defined in the MSME act.

MSME registration provides several benefits to the companies in terms of taxation, credit facilities to scale the business up. Let us dig deeper to find out more about MSME registration in India.

Definition of Micro, Small, and Medium Enterprises

A crucial part of MSME registration is defining the scale of a business in terms of investments made in it. The earlier classification of MSME was based on the amount invested in machinery/equipment or plant.

Thus, the definition of a Micro, Small, and Medium Enterprise can be summarised in the following table:

These low investment criteria often serve as an obstacle for growth, making the demand for revision of MSME classification increase over time.

Keeping the related concerns in mind, the Government revised the classification criteria under Aatmanirbhar Bharat Abhiyan.

The classification now covers both annual turnover and investment and there is no distinction between the manufacturing and service sector.

The revised classification that is considered for MSME registration is defined as follows:

Also Read: All About GST Registration Process in India

What is the MSME registration process?

Companies need to get the MSME registration done online using the portal udyam registration.gov.in. Their registration is done under two broad categories, which are:

• MSME registration for entrepreneurs who are not yet registered
• Registration for those who have already done MSME registration as EM-II or UAM (Udyog Aadhar Memorandum)

Let us cover each of these MSME registration categories in detail.

• New MSME registration for entrepreneurs

One can simply visit https://udyamregistration.gov.in/ to register an MSME. This can be done using an Aadhar card number, with or without a PAN card.

The steps for MSME registration with a PAN card are as follows:

• Click on the “For New Entrepreneurs who are not Registered yet as MSME” button given on the portal.
• Enter your name and Aadhar number as asked on the MSME registration page.
• Generate and validate OTP.
• If you already have a PAN card, the portal fetches the details from the government database, while you need to fill in ITR details.
• Validate PAN and then fill in the details of your plant or industry.
• Once you have entered all the details, you need to submit them up to get a final OTP.
• Post this step, MSME registration gets completed and you will get a reference number. The verification of MSME registration may take a few days, after which you will receive the Udyam Registration Certificate.

For MSME Registration without a PAN card, most of the steps to be followed are the same as above, except that you need to select ‘No’ as the option for the question – ‘Do you have a PAN?’.

You then need to proceed with filling in the other details – industry and personal to complete the process.

Keep in mind that you need to update PAN and GSTIN on the portal to avoid Udyam registration suspension.

• MSME registration for those who already have EM-II or UAM

If you are already registered as EM-II or UAM, visit https://udyamregistration.gov.in/ to click the ‘For those having registration as EM-II or UAM’ button.

Then, enter your Udyog Aadhar number in the next step and generate/verify OTP. This will complete the MSME registration process.

What are the benefits of MSME registration?

• MSME registration makes it easier for individuals to avail bank loans at interest rates that are comparatively lower than regular loans.
• Businesses that have obtained an MSME certificate become eligible for tax exemption under the MSME Act.
• Registered MSMEs are more preferred for various licenses and certificates issued by the government.
• By getting the MSME registration done, an enterprise gets easy access to loans and credit facilities.
• A registered MSME also gets compensation for the expenditure incurred for ISO certification.
• It also enables the allowed credit for MAT (Minimum Alternate Tax) to be carried forward for fifteen years (10 years otherwise).
• Post MSME registration, the total cost of product patent or setting up an industry goes down because of several concessions and rebates.
• It helps acquire government tenders easily. This is because of the integration of the Udyam registration portal with the government e-marketplace which provides easy access to e-tenders.

What are the documents required for MSME registration?

The business entity has to submit several documents which are required for MSME registration. These include:

• Business address proof
• Purchase bill and sales bill copies
• Partnership deed/Memorandum of Association/Articles of Association
• Copies of bills and licenses of machinery bought for use

List of MSME schemes launched by the Government

How to check the status of MSME registration?

You can check the MSME registration status using the reference number and name. Given below are the steps to be followed:

1. Visit the official portal for MSME registration by clicking here.
2. Enter the 12 digit UAM number and then the verification code as shown in the CAPTCHA image.
3. Click ‘Verify’ to check MSME registration status.

How to print or download MSME registration certificate / Udyog Aadhaar online?

The steps to print Udyog Aadhaar online are given below:

1. Visit the Udyam registration webpage by clicking here.
2. Enter the 12 digit UAM number and registered mobile number.
3. Click ‘Submit’ to print or download your MSME registration certificate.

You should also know that making any correction in the MSME certificate does not require you to pay any money, just like the case of MSME registration.

MSME registration FAQs

• Who is eligible for MSME Registration?

Any type of business entity, be it proprietorships, partnership firms, private or public limited companies, Limited Liability Partnerships (LLP), or trusts, are eligible for MSME registration.

• What is MSME registration?

It refers to the process of registering a business entity to avail of various benefits defined for MSMEs in India. You can get the MSME registration done online by following the steps given above.

• What is MSME registration fee?

There is no fee or cost involved in applying for MSME registration online in India. You should also know that this registration is not made mandatory for all business entities. However, it is highly beneficial to get it done timely.

• Which companies fall under the purview of MSMEs?

The Government of India introduced the term ‘MSME’ in agreement with MSME Development Act, 2006.

It covers enterprises that are primarily engaged in the manufacturing, processing, and preservation of various goods and commodities. The MSME definition is also defined in terms of annual turnover and investment.

• What are the limits for MSME?

The limits of an MSME are defined in terms of annual turnover and investment as defined above.

• Is It Mandatory for All MSMEs to have GST?

As a registered entity, each MSME working in the format of partnership, company, or proprietorship, must comply with GST laws and hence, apply for a GST number.

• Is there any difference Between SME and MSME?

SMEs or Small and Medium Enterprises cover independently owned and operated business entities that are designed for profit.

As per the revised SME definition, they now comprise both service and manufacturing enterprises. On the other hand, MSMEs are defined based on their investment amount and turnover value.

• What are the components of the MSME application form?

During the MSME registration process, the business owner needs to provide several details about the personal identity and that of the business. MSME application form components are nothing but fields to be filled with relevant information.

These include the name of the business owner, Aadhar number, enterprise name and type, address, contact details, business activity, and many others.

• What is an MSME certificate?

MSME registration certificate is proof or evidence held by an enterprise of being registered as an MSME. It is obtained after the confirmation of the MSME application.

• Is MSME registration compulsory for all enterprises?

MSME registration is not compulsory for every enterprise. However, getting the MSME certificate comes with several advantages, including loans at lower interest rates, and a preference for e-tenders raised by the government.

• What is the validity period of the MSME registration certificate?

An MSME certificate is valid for as long as an enterprise is financially healthy. However, a provisional MSME certificate has a validity period of five years.

• What is an Udyam Registration Certificate?

MSME certificate is also known as Udyam registration certificate.

• Is MSME registration different from Udyam registration?

MSME registration has been replaced with Udyam registration, which literally means the same. The registration process is completely online and provides several benefits to businesses.

• What are the common reasons behind the rejection of MSME applications?

An application for MSME registration can get rejected on the grounds of unpaid debts, low CIBIL score, incomplete documentation, loan defaults, to name a few.

• Can registered MSMEs get collateral-free loans?

They can get collateral-free loans provided they maintain a good CIBIL score and have a reliable loan repayment history. The final loan approval depends on the criteria set by individual banks.

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