What is MSME Registration?

The industries classified as Micro, Small and Medium Enterprises (MSMEs) the government for these industries offers MSME Registration to assist these industries in receiving advantages which will help them to establish and grow their business.

Obtaining MSME Registration is not that mandatory but it is beneficial in that it provides various advantages related to settling the business, taxation, facilities in credits, loans etc. Anyone who wants to complete the MSME Registration can register online through the Udyam Registration Portal.

What is MSME Udyam Registration?

Udyam Registration is the obligatory certification provided by the Ministry of Micro, Small and Medium Enterprises which after signing the official government portal the respective MSME receives. Once the enterprises register in the portal, they are provided with a unique twelve-digit Udyam Registration Number (URN) which enterprises can utilise to get various government subsidies, schemes, and incentives.

MSME Classification

For Micro, Small, and medium-sized enterprises, MSME Registration is beneficial to avail of various benefits like tax exemptions and capital investment, etc.

Business entities that fall under the category of MSME (Micro, Small, and Medium Enterprises) need to register under the MSMED (Micro, Small and Medium Enterprises Development) Act, 2006. Such enterprises form the backbone of any nation and spur their economic growth by providing income opportunities to all. To support MSM Enterprises, benefits are provided under the MSMED Act from the State or Central Government after an enterprise has been registered under the Act. Although the MSME Registration is not mandated by statute, it is beneficial for such enterprises to avail benefits such as exemptions for excise duty, subsidies on power tariff, lower interest rates, subsidies on tax, and subsidies on capital investment to name a few. Criteria that need to be fulfilled by an enterprise for registration under the MSMED Act are as per the table below:

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Advantages of MSME Registration

• Tax subsidies – Many income taxes, as well as capital gain subsidies, are provided by the Government to MSMEs.

• Lower interest rates – Banks provide MSMEs with lower interest rates on bank loans to the tune of almost 1-1.5 %.

• Quicker approval – Enterprises registered under MSME are provided with quicker approvals from the Government in terms of licenses and certifications.

• Special tenders – Many Government tenders are open only to MSMEs to encourage smaller businesses in the country.

• Cheaper facilities – Electricity, infrastructure, etc. are cheaper for MSME Registration business units.

What is the difference between MSME and Udyam Registration?

Initially, the Indian Government introduced the Udyog Aadhar to Register MSMEs for their business, but as there were several processes with the registration of Udyog Aadhar the Government launched the New portal Udyam in July 2020 for MSME registration. So anyone who wants to register under MSME can only register their selves through the Udyam Registration MSME portal. 

When Udyam is not introduced the MSME Registration is done only at the state level with mandatory manual completion of documents. But then after the MSMED Act 2006 shift to the implementation of EM-1 and EM-2 which facilitates the registration process to the online platform and ensures that anyone can access it through any location. 

Fees for MSME Registration

There is no cost for the registration under Udyam registration. It is free of cost which is the biggest advantage for the entrepreneurs.

Eligibility for Online MSME Registration

Those who fulfil the classification criteria of MSME annual turnover and investment can apply for the MSME Registration. Manufacturing, service industries, wholesale, and retail trade that fulfil these criteria can apply for the MSME Registration. The Eligibility for MSME Registration is decided by the entity’s annual turnover and investment. 

Individuals, startups, business owners and entrepreneurs, private and public limited companies, sole proprietorships, partnership firms, LLPs, Self Help Groups (SHGs), Co-Operative Societies, and Trusts are the entities that are eligible for MSME Registration. 

Documents Required for MSME Registration

• Copy of MoA and AoA/Partnership Deed/Trust Deed depending on the business entity.

• A copy of licenses/clearance such as from the Electricity Board, Municipal Corporation.

• Copy of purchase or sales bill.

• Bills of machinery.

• Business Address Proof.

For Business Address Proof:

• Telephone/Mobile/Electricity/Gas bill (Less than 2 months old); AND

• In case of rented premises a notarized copy of the Rent Agreement with a No-Objection Certificate (NOC) for conducting business;

• In the case of self-owned premises registered title document.