The Udyam Registration Procedure
Chapter Thirteen
Syllabus topic 4, "Business Registration under UDYAM / UDYOG AADHAR."
Pages 27 to 29 of 80
What the notification says
Paragraph 2 of S.O. 2119(E):
(1) Any person who intends to establish a micro, small or medium enterprise may file Udyam Registration online in the Udyam Registration portal, based on self-declaration with no requirement to upload documents, papers, certificates or proof.
(2) On registration, an enterprise (referred to as "Udyam" in the Udyam Registration portal) will be assigned a permanent identity number to be known as "Udyam Registration Number".
(3) An e-certificate, namely, "Udyam Registration Certificate" shall be issued on completion of the registration process.
Three facts, and each is worth a mark: the registration is online, on self-declaration, with nothing uploaded; the number is permanent; the certificate is electronic.
Paragraph 6, the registration process
(1) The form for registration shall be as provided in the Udyam Registration portal.
(2) There will be no fee for filing Udyam Registration.
(3) Aadhaar number shall be required for Udyam Registration.
(4) The Aadhaar number shall be of the proprietor in the case of a proprietorship firm, of the managing partner in the case of a partnership firm and of a karta in the case of a Hindu Undivided Family (HUF).
(5) In case of a Company or a Limited Liability Partnership or a Cooperative Society or a Society or a Trust, the organisation or its authorised signatory shall provide its GSTIN and PAN along with its Aadhaar number.
(6) In case an enterprise is duly registered as an Udyam with PAN, any deficiency of information for previous years when it did not have PAN shall be filled up on self-declaration basis.
(7) No enterprise shall file more than one Udyam Registration:
Provided that any number of activities including manufacturing or service or both may be specified or added in one Udyam Registration.
(8) Whoever intentionally misrepresents or attempts to suppress the self-declared facts and figures appearing in the Udyam Registration or updation process shall be liable to such penalty as specified under section 27 of the Act.
The steps, as they are actually done
- Open the Udyam Registration portal. It is the only authorised place. The portal itself warns that no private online or offline system, service, agency or person is authorised to do MSME registration.
- Choose the entry point. New entrepreneurs who are not registered as MSME or those with an EM-II registration take one path; those already holding a Udyog Aadhar Memorandum take another.
- Enter the Aadhaar number and the name as on Aadhaar, of the person paragraph 6(4) or 6(5) names.
- Validate the Aadhaar by the one-time password sent to the mobile linked with it.
- Enter the PAN, of the individual for a proprietorship and of the firm for a partnership, and validate it.
- The portal pulls investment and turnover from the income-tax and GST systems against that PAN. Paragraphs 4 and 5 say so, and it is why nothing has to be uploaded.
- Fill the enterprise details: name, type of organisation, address of the plant or unit, date of commencement, bank details, the National Industrial Classification code for each activity, and the number of persons employed.
- Declare and submit.
- Receive the Udyam Registration Number and the e-certificate, by email and on the portal.
The Udyam Registration Procedure
No fee at any step, and no document uploaded at any step.
Whose Aadhaar, once more
Because it is the single most asked detail.
| Form of enterprise | Aadhaar of | And |
|---|---|---|
| Proprietorship firm | The proprietor | His PAN and GSTIN |
| Partnership firm | The managing partner | PAN and GSTIN of the firm |
| Hindu undivided family | The karta | PAN and GSTIN of the HUF |
| Company, LLP, co-operative society, society, trust | The authorised signatory | GSTIN and PAN of the organisation |
One enterprise, one registration
Paragraph 6(7) allows only one Udyam Registration per enterprise, and its proviso allows any number of activities inside it, manufacturing or service or both.
So a firm that manufactures and also trades does not register twice. It adds the second activity to the one registration, choosing the additional National Industrial Classification code.
And paragraph 3(3) decides what one enterprise is: all units with a GSTIN listed against the same PAN are one enterprise, and their figures are added.
Updation, and what happens if it is not done
The information in the registration is updated every year, and the portal pulls the fresh figures from the income-tax and GST systems.
Failure to update makes the registration liable to suspension. The classification then goes stale, and an enterprise whose figures have risen keeps benefits it is no longer entitled to, which is what paragraph 6(8) is aimed at.
The penalty for a false declaration
Paragraph 6(8) applies section 27 of the MSMED Act to anyone who intentionally misrepresents or attempts to suppress the self-declared facts and figures.
The whole scheme is built on trust and this is its only sanction. Nothing is uploaded and nothing is verified at the counter; the verification is the link to the PAN and the GSTIN, and the penalty is for the person who lies to the machine.
What registration is worth
An answer that lists the steps and stops has not said why anybody bothers. The benefits are the reason.
- Priority sector lending from banks, and collateral-free credit under the guarantee scheme.
- Protection against delayed payment under sections 15 to 24 of the MSMED Act: a buyer must pay within the agreed period or forty-five days, and pays compound interest at three times the bank rate if it does not.
- Reference to the Micro and Small Enterprises Facilitation Council for a delayed payment dispute.
- Preference in government procurement.
- Subsidies on patent registration, barcode registration, industrial promotion and electricity.
- Concessions notified from time to time by the Central and State Governments.
The Udyam Registration Procedure
The delayed payment protection is the one a commerce student should name first. It is the practical reason a small supplier registers.
The rest of this subject
These notes are cut from the University's printed syllabus. Open the syllabus itself, or the past papers, for the same subject.