The Ministry of MSME (Micro, Small and Medium Enterprises) has launched the MSME delayed Paymen...
The Ministry of Micro, Small and Medium Enterprises (MSMEs) issued a clarification on existing Entrepreneurs Memorandum (EM) Part-II/ Udyog Aadhaar Memorandum; vide Office Memorandum dated 6th August 2020.
The revised procedure and the criteria for the classification of enterprises as Micro, Small and Medium Enterprises and their registration in Udyam were announced earlier on 26th June 2020.
According to the notification, the ministry has classified the entity as MSME based on the investment in plant and machinery or equipment, and if a person is willing to establish an MSME, they should file Udyam Registration online.
The notification also deals with the following:
Before we know about Clarification on New Udyam Registration, understanding the following is essential:
The Entrepreneurs Memorandum (EM) part II enables the entrepreneurs to avail of the benefits of different incentives under the Central and State Government. It should be filed within six months from the date of commercial production.
Udyog Aadhaar Memorandum is a one-page registration form that constitutes a self-declaration format under which the MSME shall certify its existence, details of bank account, Aadhaar details of promoter/owner, and other information.
An entrepreneur who seeks to establish a Micro, Small, and Medium Enterprise is required to file Udyam Registration online through the Udyam Registration portal. Upon registration, an enterprise will be assigned with an Udyam registration number and Udyam registration certificate.
The validity of Entrepreneurs Memorandum (EM) Part II and Udyog Aadhaar Memorandums (UAM)
All the existing EM Part II and UAMs obtained till 30th June 2020 will remain valid until 31st March 2021. Therefore before 31st March 2021, they are required to register themselves on the Udyam portal to keep their registration valid thereafter.
Editing/Updating of the existing registration detail in Udyog Aadhaar Memorandum portal
The Ministry of MSME has also clarified that existing UAM holders can edit or amend the details on the UAM portal until 31st March 2021. The firms that have not entered the Aadhaar or PAN number thus far in the UAM portal are advised to obtain the Udyam Registration Number before 31st March 2021.
Action to be taken by the Entrepreneurs
It may be noted that existing registrations as Entrepreneurs Memorandum Part II and Udyog Aadhaar Memorandum shall not remain valid after 31st March 2021; therefore, they are required to register themselves in the new Udyam Registration portal.
All enterprises registered until 30th June 2020 will be reclassified following new definition, and enterprises are required to enter the latest details for proper and realistic classification.
The Ministry notified that it is preferable that the entrepreneur files new registration in the Udyam Registration portal and further advised all enterprises with EM Part II and or UAMs to register themselves on the Udyam registration before 31st March 2021 in the Udyam Registration portal.
Value of Plant and Machinery or Equipment
There were many representations from the entrepreneur about the valuation of Plant and Machinery or Equipment on cost or price of purchase while filing the Udyam Registration, considering which MSME notified the procedure.
According to an earlier notification from the ministry dated 26th June 2020 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 the expression plant and machinery also includes all tangible asset other than the land and building, furniture and fittings.
That online form for registration of Udyam captures depreciated cost as on March 31st every year of the relevant previous year. Therefore the value of Plant and Machinery or Equipment for all-purpose of the Notification No. S.O. 2119 (E) dated 26th June 2020 and for all enterprises will mean the Written Down Value at the end of the financial year as mentioned in the Income Tax Act and not the cost of acquisition or original price, which was applicable in the context of the earlier classification criteria.
The key highlights of the Udyam Registration Process are as follows:
Read our article:MSME clarification on New Udyam Registration