If you own or plan to start a small company in India chances are you've been exposed to the term Udyam Registration. This is a program launched by the Government of India to simplify the process for officially recognizing Micro, Small, and Medium Enterprises (MSMEs). Having Udyam registration not only provides your business legal status but will also grant you numerous benefits like subsidy schemes, and other programs to help promote entrepreneurship as well as growth.
In this article, we'll explain all you must know about Udyam Registration that includes the eligibility requirements, the process along with the benefits and reasons it matters.
What Is Udyam Registration?
Udyam Registration can be a government-issued certificate that officially recognizes your company as an MSME under the Micro, Small and Medium Enterprises Development Act of 2006. In effect on the 1st of July in 2020 it replaced the previous Udyog Aadhaar Memorandum system.
Registration is completely online, paperless, and is based on self-declaration. When you register, your company is given a unique Udyam Registration ID and an electronic certificate which you can download at any time.
What is the reason why Udyam Registering Important?
These are the primary reasons why every MSME should be thinking about registering
Access to government programs designed to help small companies.
Priority lending and a lower interest rate from banks.
Ineligibility to participate in government tenders or contracts reserved exclusively for MSMEs.
Greater credibility with buyers suppliers and investors.
Protection under law for recovering payments and dues.
Who can apply?
Any firm involved in manufacturing or providing services is eligible to apply to Udyam Registration. But, the business must satisfy certain investment and turnover criteria, as per the new MSME classification.
Micro enterprises are businesses with the potential to invest up to 1 crore rupees and turnover up to five crores rupees. Small businesses can invest up to 10 crore rupees with turnover of up to 50 crore rupees. Medium enterprises may invest that can reach 50 percent, and turnover up to 250 crore rupees.
Companies that trade solely for the purpose of purchasing and selling goods without any value added are not qualified.
What Are the Benefits that Udyam Registration offers?
Financial Benefits
Registered MSMEs can access collateral-free loans through the Credit Guarantee Fund Trust for Micro and Small Enterprises scheme. They can also claim grants for patent registration and industrial promotion costs and also receive interest rate concessions on overdraft facilities.
Market Access
Udyam Registration is a way to be a part of government tenders. Some products and services are specifically reserved for MSMEs, giving them a clear market advantage.
Compliance and Tax Relief Compliance Relief
Registered MSMEs get a competitive advantage in government procurement as well as reimbursement for ISO cost of certification, as well as faster resolution of dispute over payment with clients.
Business Credibility
Being registered with Udyam Registration enhances trust among potential clients, partners and investors. It shows that your business is legally compliant and complies with government policy. Print Udyam Certificate
Step-by-Step Procedure to Register
Here's how you can start registering your company:
Visit the official Udyam Registration website.
Select whether you are an entrepreneur new to the market or migrating from Udyog Aadhaar.
Enter Aadhaar details of the proprietor partner or signatory, based on the kind of business.
Validate your Aadhaar by using the OTP that you receive to your linked mobile number.
Enter business information including name of address, address as well as the number of employees in addition to information about investment turnover.
Complete the form, and submit final OTP verification.
You will receive your Udyam Registration ID and download the certification.
Documents Required
The process is paperless and doesn't require physical documents uploads. However, you should know these things:
Aadhaar Number
PAN Number
Business bank account details
Information about investments in plant, machinery, or equipment
Details on the turnover of the previous financial year
All verification is completed automatically through government databases such as GST Tax and income Tax records.
What happens when you register?
You will be issued a permanent Udyam Registration Number. This certificate does not expire. However, if the volume of your business or investment crosses the specified limit, you need to update your information online. Your business may be reclassified according to the data available in tax returns and GST records.
Common Mistakes to Avoid
Many applicants make errors that could result in rejections or delay. Here are some common mistakes:
The incorrect entry of Aadhaar or PAN information.
Selecting the wrong classification of business activities.
There is no annual update on turnover.
Not providing accurate information when compared with GST and tax documents.
Frequently Asked Questions
Does there have to be a cost or cost for Udyam Sign-up?
No this is totally free. Be wary of companies that ask for charges for the service.
Does a company have the ability to have numerous Udyam Registrations?
No, only one registration per business is allowed. You have to include all the activities within this registration.
What if I don't sign up?
Your business isn't eligible to receive government subsidies, support schemes, or protections as per MSME laws.
Conclusion
Udyam Registration is a crucial step for small companies operating in India. It provides access to financial benefits and opportunities in the market, but also grants your company legal recognition and credibility. It is easy to understand, clear and completely web-based, which means it's more convenient than ever before for entrepreneurs to enjoy the benefits in MSME registration.
If you're not registered yet, now is the perfect opportunity to take this vital step to improve and grow your enterprise. By making sure you are in compliance and utilizing the available support from government, you can set your business up for long-term stability and success.