Udyog Aadhar, and What Replaced It
Chapter Fourteen
Syllabus topic 4, "Business Registration under UDYAM / UDYOG AADHAR."
Pages 30 to 31 of 80
Why MU's topic line names both
Her topic reads "Business Registration under UDYAM / UDYOG AADHAR." The slash reads as though the two were alternatives.
They are not. Udyog Aadhar is the older scheme. Udyam replaced it, and the notification that created Udyam required every Udyog Aadhar holder to register again.
The three schemes, in order
| Scheme | Under | Ran | The document |
|---|---|---|---|
| Entrepreneurs Memorandum, EM-I and EM-II | Section 8 of the MSMED Act 2006, filed with the District Industries Centre | 2006 to 2015 | An acknowledgement of the memorandum, on paper |
| Udyog Aadhar Memorandum, UAM | A notification of September 2015 | 2015 to 30 June 2020 | The Udyog Aadhar Memorandum, with a twelve-digit Udyog Aadhar Number |
| Udyam Registration | S.O. 2119(E) of 26 June 2020, with effect from 1 July 2020 | Since 1 July 2020 | The Udyam Registration Certificate, with a permanent Udyam Registration Number |
What Udyog Aadhar was
A one-page online self-declaration, filed on the Udyog Aadhar portal against the entrepreneur's Aadhaar number. It replaced the paper Entrepreneurs Memorandum and it made registration free and instant for the first time.
Its weaknesses are why it was replaced.
- It was self-declared and unverified. Nothing was linked to the income-tax return or to GST, so the investment and turnover figures were whatever the applicant typed.
- Duplicates were easy. One enterprise could hold several memoranda.
- Classification was on investment alone, which let a service enterprise with very large turnover and very little equipment stay micro.
- There was no permanent identity number tied to the enterprise's PAN.
What Udyam changed
| Udyog Aadhar | Udyam | |
|---|---|---|
| Basis of classification | Investment only | Composite: investment and turnover |
| Verification | None | Linked to PAN, the income-tax return and GSTIN |
| Number | Udyog Aadhar Number, twelve digits | Udyam Registration Number, permanent |
| Certificate | Memorandum | Udyam Registration Certificate, with a QR code |
| Duplicates | Possible | Forbidden, paragraph 6(7); one registration per enterprise |
| Multiple units | Separate memoranda | All GSTINs under one PAN are one enterprise, paragraph 3(3) |
| Updation | None | Annual, from the tax systems |
| Trading enterprises | Excluded | Retail and wholesale trade admitted from 2 July 2021, by the Ministry's office memorandum of that date, with benefits restricted to priority sector lending |
The transition, which is the examinable point
Paragraph 7 of S.O. 2119(E):
(1) All existing enterprises registered under EM-Part-II or UAM shall register again on the Udyam Registration portal on or after the 1st day of July, 2020.
(2) All enterprises registered till 30th June, 2020, shall be re-classified in accordance with this notification.
"Shall register again." Not "may convert", not "will be migrated". The obligation was on the holder to register afresh, and an enterprise that did not do so is not registered at all today, whatever memorandum it holds.
The validity of existing memoranda was extended more than once and has since run out. A Udyog Aadhar Memorandum is a historical document. It is not a subsisting registration, and an enterprise still relying on one should register on the Udyam portal today.
Udyog Aadhar, and What Replaced It
So how should the topic be answered
If a question asks about registration under "Udyam / Udyog Aadhar", the correct answer has three parts:
- What Udyog Aadhar was, and the two dates: introduced 2015, closed to new registration from 1 July 2020.
- What replaced it and why, which is the composite criterion and the linkage to PAN and GSTIN.
- What a holder of a Udyog Aadhar Memorandum has to do, which is to register again under paragraph 7.
An answer that describes Udyog Aadhar as a current option is wrong, and it is the mistake a student who learned this topic from an old textbook will make.
And the Udyam Assist Platform, which is the newest layer
A further scheme reaches enterprises that have no PAN and no GSTIN at all, the informal micro enterprises, through the Udyam Assist Platform.
S.O. 1296(E), dated 20 March 2023, made under section 9 of the MSMED Act, provides that a certificate issued on the Udyam Assist Platform to informal micro enterprises shall be treated at par with a Udyam Registration Certificate for the purpose of availing priority sector lending benefits.
That is a narrow equivalence and the notification says so: at par for priority sector lending, and for that purpose. It is not a general substitute for Udyam registration.
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.