MSME as {Udyam Registraion}


MSME as {Udyam Registraion}

SERIES 608                                                 Dated: June 27, 2020



In this editorial author shall discuss about:

·      Classification of Enterprises

·      Criteria / Calculation of Investment in Plant and Machinery or Equipment

·      Calculation of Turnover

·      Process of Registration

·      Registration for existing enterprises

MSME to be known as “Udyam Registration”.

This Notification passed on June 26, 2020 and came into force from July 01, 2020. vide notification dated June 26, 2020


Most Important Point of Notification:



*   The existing enterprises registered prior to 30th June, 2020, shall continue to be valid only for a period up to the 31st day of March, 2021.

*   Such Enterprises shall register again on Udyam Registration Portal after July 1st, 2020.

*   All enterprises registered till 30th June, 2020, shall be re-classified in accordance with this notification



I.        What are the new criteria for registration Classification under MSME?


As per the MSME [1]Notification Dated June 01, 2020 read with notification dated June 26, 2020 , Following shall be criteria for Classification of MSME w.e.f. July 01 , 2020:

Investment in Plant & Machinery or Equipment AND Turnover





Manufacturing & Service

Investment < 1 Crore AND

Investment < 10 Crore AND

Investment < 50 Crore AND

Turnover < 5 Crore

Turnover < 50 Crore

Turnover < 250 Crore



II.         How to check under which category enterprise fall on the basis of Investment and turnover?


a)    To classify an enterprise, Composite criteria of Investment and Turnover shall apply.

b)    If an enterprise crosses the ceiling limits specified for its present category in either of the two criteria of investment or turnover, it will cease to exist in that category and be placed in the next higher category


1.     If an enterprise having Investment of Rs. 3 Crore and Turnover of Rs. 4 Crore then in which category enterprise shall fall?

As per above clarification, in such situation Investment is falling under small and turnover is falling under Micro, therefore, it will place in higher category i.e. SMALL.


III.         Whether MSME registration is Unit wise registration or entity wise registration?

MSME Registration is entity wise registration instead of unit wise registration. Even MSME registration form provides the option to mention details of all units of an enterprise.

In this notification they have clarified that: *While calculation amount of Turnover/ Investment aggregate value of turnover/ investment of all units shall be considered collectively.

Even all the unit registered under GST with same PAN shall be collectively treated as on enterprise for the purpose of calculation of Turnover/ investment.


Calculation of Investment in Plant and Machinery & Equipment’s:


      I.         Calculation of P, M and E shall be as per previous year Income Tax Return.

    II.         New Enterprise where ITR are not available.

·      Calculation of investment shall be on the basis of self-declaration of the promoter.

·      Invoice value of P, M & E can be base for the same.

·      Invoice amount shall taken into account excluding the GST.

  III.         When enterprise filed first ITR after point no 2, then that year calculation of P, M & E shall be as per the value mentioned in ITR.


Meaning of Plant and Machinery & Equipment’s:


The expression ―plant and machinery or equipment of the enterprise, shall have the same meaning as assigned to the plant and machinery in the Income Tax Rules, 1962 framed under the Income Tax Act, 1961 and shall include all tangible assets (other than land and building, furniture and fittings)


Calculation of Turnover:


      I.         Exports of goods or services or both, shall be excluded while calculating the turnover of any enterprise.

    II.         Information as regards turnover and exports turnover for an enterprise shall be linked to the Income Tax Act or the Central Goods and Services Act (CGST Act) and the GSTIN.

The turnover related figures of such enterprise which do not have PAN will be considered on self-declaration basis for a period up to 31st March, 2021 and thereafter, PAN and GSTIN shall be mandatory.


Updation of Information:


§  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, on selfdeclaration basis.

§  Based on the information furnished or gathered from Government’s sources including ITR or GST return, the classification of the enterprise will be updated.

§  In case of graduation (from a lower to a higher category) or reverse-graduation (sliding down to lower category) of an enterprise, a communication will be sent to the enterprise about the change in the status.


Maintenance of Status due to Upgrate or Down grate


§  In case of an upward change in terms of investment in plant and machinery or equipment or turnover or both, and consequent re-classification, an enterprise will maintain its prevailing status till expiry of one year from the close of the year of registration.

§  In case of reverse-graduation of an enterprise, whether as a result of re-classification or due to actual changes in investment in plant and machinery or equipment or turnover or both, and whether the enterprise is registered under the Act or not, the enterprise will continue in its present category till the closure of the financial year and it will be given the benefit of the changed status only with effect from 1st April of the financial year following the year in which such change took place.



Process of Udyam Registration:


i.         The form for registration shall be as provided in the Udyam Registration portal.

ii.         There will be no fee for filing Udyam Registration.

iii.         Aadhaar number shall be required for Udyam Registration.

iv.         The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm and of a karta in the case of a Hindu Undivided Family (HUF).

v.          In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organisation or its authorised signatory shall provide its GSTIN and PAN along with its Aadhaar number.

vi.         In case an enterprise is duly registered as an Udyam with PAN, any deficiency of information for previous years when it did not have PAN shall be filled up on self-declaration basis.

vii.         No enterprise shall file more than one Udyam Registration: Provided that any number of activities including manufacturing or service or both may be specified or added in one Udyam Registration.

viii.          Whoever intentionally misrepresents or attempts to suppress the self-declared facts and figures appearing in the Udyam Registration or updation process shall be liable to such penalty as specified under section 27 of the Act.


IV.         What type of enterprise can registration under MSME?

As per the MSME Act, 2006 All type of enterprises can be registered under MSME, whether:


Hindu Undivided Family



Private Company

Public Company

Self Help Group

Limited Liability Partnership






V.         Which type of business activity eligible for registration under MSME?

As per the MSME Act, 2006 following business activities can register under MSME Either Manufacturer or Service provider can register under MSME.

The major activity i.e. either "Manufacturing" or "Service" may be chosen by the enterprise for Udyog Aadhaar. If your enterprise involves in both type of activities and if major work involves in Manufacturing and a small portion of activity involves in Service sector then select your major activity type as "Manufacturing" and if major work involves in Services and a small portion of activity involves in Manufacturing then select your major activity type as "Services"


Author – CS Divesh Goyal, GOYAL DIVESH & ASSOCIATES Company Secretary in Practice from Delhi and can be contacted at ‘


Disclaimer: The entire contents of this document have been prepared based on relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information.



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