Summary of Major Changes in Classification and Registration Process for MSMEs

1. Revised Definition of MSME’s:

Definition for classification of MSMEs has been revised and now the threshold limit of Investment in Plant and Machinery and Turnover has been increased for Medium Enterprise.

Below is the table reflecting the current limits defined for classification under MSME’s:

2. MSME Registration through Udyam Portal- Option Available for traders as well:

· Now any person can file an online application on the Udyam Registration portal, based on self-declaration with no requirement to upload documents, papers, certificates or proof and therefore an entity who is involved in trading can now also apply for MSME registration.

· The entity will be provided with a permanent identity number to be known as “Udyam Registration Number” and e-certificate namely Udyam Registration Certificate on completion of registration process.

3. Calculation of Investment in Plant and Machinery:

thevaluationofinvestmentinPlantandMachinerywillbelinkedtotheIncomeTax Return (ITR) filed for the previous years of the applicants.

· In case of a new enterprise, where no prior ITR is available, the investment will be based on self-declaration of the promoter of the enterprise and such relaxation shall end after the 31st March of the financial year in which it files its first ITR.

· The purchase value of the Plant and Machinery or Equipment whether purchased first hand or second hand will be taken into account excluding GST.

4. Calculation of Turnover:

· Export of goods will be excluded while calculating the total turnover of an enterprise.

· Information related to export figures will be linked to the Income Tax Act and GSTIN.

5. Existing enterprises will also be required to obtain the registration on Udyam Registration Portal :

· The new Registration process on the Udyam Registration Portal will be effective from July 01, 2020.

· The existing enterprises registered prior to 30th June, 2020 under the EM–Part-II or UAM, shall continue to be valid only for a period up to the 31stday of March, 2021 after which they shall apply for fresh registration on the new Udyam Registration portal.