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MSME Registration: Process And Benefits

By IIFL Home Loans | Published On Dec 18 2023 7:51 AM 1 min read 22 views 334 Likes
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Small and medium-sized enterprises (SMEs) are unorganized businesses such as kirana stores, salons, restaurants, agricultural ancillaries, and others. These businesses play a significant role in the economic development of the country, accounting for 36.2% of the GDP in 2021-22 and 43.6% of the exports in 2022-23.

To boost the MSME sector, the government of India introduced the Udyam registration portal in 2020. This is a single-window system for MSME registration. Any person who wants to establish an MSME can register on the portal based on self-declaration. The registration process is 100% online, paperless, and feeless.

Read ahead for more details on MSME registration.

What are the MSME Registration Criteria?

Classification of MSMEs

To be classified as an MSME, an organization must fulfill the criteria given below.

Category

Investment in plant and machinery

Turnover

Micro

< ₹1 crore

<₹5 crore

Small

< ₹10 crore

<₹50 crore

Medium

< ₹50 crore

< ₹250 crore

If an enterprise exceeds the specified limits in any criterion, it will be placed in the next higher category. For example, imagine company A has invested ₹8 crore in plant and equipment. Its turnover is ₹70 crore. In this case, company A will be classified as a medium-scale enterprise because its turnover has crossed ₹50 crore.

How To Do MSME Registration Online?

Below is a step-by-step guide to registering an MSME successfully.

  1. Visit the Udyam Registration website.
  2. Click the tab "For New Entrepreneurs who are not Registered yet as MSME or those with EM-II (Entrepreneurs Memorandum Part-II)."
  3. Enter the correct Aadhar number and the name of the entrepreneur. Click the button "Validate & Generate OTP".
  4. Input the One-Time Password (OTP) sent to the mobile number linked to the Aadhar card and click "Validate".
  5. Proceed to the permanent account number (PAN) verification page. Enter the "Type of Organisation" and "PAN". Specify if the firm filed last year's income tax returns and has a GSTIN (Goods and Services Tax Identification Number).
  6. Complete the Udyam registration form. Enter the entrepreneur's name as per PAN/Aadhar, mobile number, e-mail, social category, gender, and disability status (if applicable).
  7. Fill out enterprise-related details like name, plant location, address, status, bank details, number of employees, investment in plant & machinery, turnover, etc.
  8. Tick the self-declaration checkbox to confirm you have provided accurate details. Then, click "Submit & Get Final OTP".
  9. Enter the final OTP and submit the form.

Register your business and reap attractive benefits.

As soon as you finish the MSME registration, you receive a permanent identity number called the Udyam registration number. You also receive an e-certificate called "Udyam Registration Certificate '' via e-mail. It has a dynamic quick response (QR) code that helps you access details about the MSME from the Udyam portal.

If you have a Udyog Aadhar Memorandum (UAM), you can migrate to Udyam through re-registration. Informal micro-enterprises can register on the Udyam Assist Platform.

Benefits Of MSME Registration

The prime benefits of MSME registration are:

  1. Priority sector lending: MSMEs are entitled to priority sector lending from financial institutions. Udyam registration improves the credibility of enterprises and helps them procure loans easily. Collaterals for MSME loans are flexible, meaning businesses can leverage a wide range of assets to obtain funds. 

Lenders like IIFL Home Loans provide customized repayment plans to MSMEs with unpredictable revenue streams. They also offer a balance transfer facility to enable businesses to get loans at lower interest rates.

  1. Access to government schemes: The registered organizations can avail of the benefits of many schemes offered by the Ministry of MSMEs, like public procurement policy and credit guarantee. They also get an extra edge in government tenders and protection against delayed payments.

Closing Words!

Udyam portal is seamlessly integrated with the Income Tax and GSTIN systems. The PAN and GST-linked details on investment and turnover of MSMEs will be directly taken from Government databases. Thus, MSME registration is a hassle-free process with no requirement for document uploads.

For instant loans of up to ₹ 10 crore at affordable rates with flexible repayment terms, check out IIFL Home Loans MSME loan eligibility now!

FAQs

Q1. What documents do you require for MSME registration?

You mainly require the Aaadhar card for Udyam registration. See the table below to know which entity must provide the Aadhar number for each type of firm to be registered.

Enterprise Type

Entities who must provide Aadhar number

Proprietorship

Proprietor

Partnership

Managing Partner

Hindu Undivided Family

Karta

Company/Limited Liability Partnership/Society/Trust

Authorised signatories - They must submit the organisation's Aadhar along with its PAN and GSTIN.

Q2. Can an enterprise file more than one registration?

No enterprise can file more than one MSME registration. Any changes to the number of manufacturing activities or services provided should be made in a single registration.

Q3. Does an MSME registration need to be renewed?

Udyam registration is a one-time process. It does not require a renewal.

Q4. What are MSME loan eligibility criteria?

You can apply for an MSME loan if you meet the following conditions:

  • You are a salaried/self-employed resident Indian aged between 21 - 70 years.
  • You are a shopkeeper, jeweller, retailer, or MSME owner.
  • You can pledge a residential, commercial, mixed-use, or industrial property with a loan-to-value of up to 65% as collateral.
  • Your business has been running for at least 2 years with a decent financial turnover.
  • You have a good credit score, preferably above 650.

Q5. What documents should you submit for an MSME loan?

You must submit the following documents for an MSME loan:

  • PAN
  • Identify and address proof - Passport/Voter ID/Driving License/Aadhar.
  • Income proof - Pay slips, Form 16/ITR, and bank statements.
  • All property-related paperwork.
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