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MSME Classifications and Registration Requirements w.e.f. 01.07.2020

Hemant Gupta
MSME classification criteria revised to combine investment and turnover; Aadhaar based Udyam registration and reclassification required. Replaces earlier MSME thresholds with combined investment and turnover criteria, aggregating all units under the same PAN for classification. Investment excludes land, buildings, furniture and fittings and follows income tax definitions, with prior year ITR as primary evidence and self declaration or invoice value (excluding GST) as alternatives. Turnover excludes exports and must be linked with income tax and GST; PAN requirement is imposed for consistent reporting. Introduces Aadhaar based Udyam Registration requiring specified identity authentication, mandates URN allocation, and requires prior year ITR/GST uploads with potential suspension for non compliance. (AI Summary)

Ministry of Micro, Small and Medium Enterprises have come out with notification no. [F. No. 21(5)/2019-P&G/Policy (Pt-IV)] dated 26th June 2020, wherein following new criteria of classification of enterprises and new registration procedures under MSMED Act,2006:-

Classification

Micro Enterprises

  • Investment in Plant & Machinery or Equipment - Not more than 1 Crore
  • Turnover- Not more than 5 Crores  

Small Enterprises

  • Investment in Plant & Machinery or Equipment- Not more than 10 Crores
  • Turnover- Not more than 50 Crores

Medium Enterprises

  • Investment in Plant & Machinery or Equipment- Not more than 50 Crores
  • Turnover- Not more than 250 Crores

Criteria of investment and turnover for classification

  1. Investment and Turnover criteria shall be considered together for classification.
  2. All units with GSTIN under same PAN shall be considered collectively i.e. Investment and turnover of all the units shall be considered collectively 
  3. For calculation of Investment in Plant & Machinery: -
    1. Investment declared in previous year Income Tax Return shall be considered.
    2. If there is no previous year Income Tax Return, self-declaration shall be filed by promoter.
    3. Value in Purchase invoice excluding GST shall be considered, where there is no Income Tax Return.
    4. Plant & Machinery or Equipment shall be all tangible asset except Land & Building and Furniture & Fittings.
    5. Definition of Plant & Machinery or Equipment shall be considered as written in Income Tax Act,1961
  4. For calculation of Turnover: -
    1. Export turnover shall be excluded.
    2. Value of turnover and export shall be linked with Income Tax and GST
    3. For Enterprises not having PAN turnover shall be considered on self-declaration basis upto 31.03.2021. After that obtaining of PAN shall be mandatory for enterprises

Registration for New Enterprises

  1. Aadhar Number shall be required for registration at Udyam Registration portal.
  2. Criteria of usage of Aadhar number shall be :

Constitution

Whose Aadhar shall be required

Proprietorship

Aadhar Number of proprietor

Partnership

Aadhar Number of managing partner

HUF

Aadhar Number of Karta

Company, LLP, Cooperative Society, Society or Trust

GSTIN & PAN of Organisation and Aadhar of authorised signatory

Registration for Existing Enterprises

  1. All enterprises registered under EM–Part-II or UAM (i.e. existing Udyog Aadhar) shall register again on Udyam Registration portal.
  2. Enterprises shall be reclassified as per new criteria.
  3. Existing registration shall be valid upto 31st March, 2021.

Post- Registration procedures

  1. Udyam Registration Number (URN) shall be allotted to the enterprises.
  2. After URN is allotted enterprises shall update the details of ITR and GST return relating to previous year, on Udyam Registration portal.
  3. If details are not updated in prescribed time, status of MSME may be suspended.
  4. After the details are update by enterprise, status of enterprise shall get updated on portal.
  5. If there is any change in status, as applied, communication shall be sent to enterprise.
  6. If status is shifted upward, enterprise shall continue its existing status till one year from end of year of registration.
  7. If status is shifted downward, enterprise shall continue its status till the end of financial year. And benefits of new status shall be applicable from 01st April of new year.

 

 

Corporate Laws / IBC / SEBI
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giri gattupalli on Jul 21, 2020

respected sir

thanks for valuable information.what are the benifits relating to electricity bills for msmes and how to approach the related authorities

thanking you

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