Udyam Registration

Eligibility for Udyam Registration

Who is eligible for Udyam registration in India?

Not all businesses require to obtain Udyam registration in India. The entities that are mentioned below that are classified as micro, small or medium enterprises based on the investment in plant and machinery are eligible for Udyam registration.

Classification of Enterprise

Becoming an Enterprise

• Any individual who is intending to establish a Micro, small or medium enterprise should get an Udyam registration in India.
• Once the registration is done an enterprise that is referred to as Udyam is assigned the permanent identification number that is known as the Udyam Registration Number
• An Udyam Registration Certificate is issued on completion of the registration process.
• All the units with the Goods and the Service Tax Identification Number ( GSTIN) that are listed against the same Permanent Account Number ( PAN) should be treated as one enterprise and turnover and the investment figures for all the entities should be seen together and only the aggregate values will be considered for deciding the category as a micro, small or medium enterprise.

Calculation of investment in plant and machinery

• The calculation of investment in plant and machinery or equipment is to be linked with the Income Tax Return for the previous years that is filed under the Income Tax Act,1961.
• In case of new enterprises where no ITR filing is available, the investment will be based on the self-declaration of the promoter of the enterprise and this relaxation will end after 31st March of the financial year in which the first ITR is filed.
• The expression “plant and machinery or equipment” of the enterprise shall have the same meaning as it is assigned to the plant and machinery in the Income Tax Rules,1962 are under the Income Tax Act,1961 and shall include the tangible assets which do not include the land and buildings, furniture and fittings.
• The invoice value of a plant and the machinery or the equipment whether it is purchased first hand or second hand should be considered and the GST should be excluded on a self-disclosure basis if in case the enterprise is newly formed without any ITR.
• The Cost of certain items that are specified in explanation I to the sub section of section 7 of the Act should be excluded from the calculation of the amount of the investment in plant and machinery.

Calculation of turnover

• Exports of the goods or services or both should be excluded while calculating the turnover of the enterprise be it micro, small, or medium for classification.
• Information concerning turnover and export turnover for an enterprise should be linked to the Income Tax Act or the CGST and the GSTIN.
• The turnover relevant to the figures of such enterprise which is not having a PAN will be considered on a self-declaration basis for a period up to 31st March 2021 and after. The PAN and GSTIN shall be mandatory.

Composite criteria of investment and turnover for classification

Composite criteria of investment and turnover should be applied for the classification of an enterprise as micro, small or medium.

If the enterprise is crossing the ceiling limits that are specified for the present category in either of the two criteria of investment or turnover it will cease to exist in that category and will be placed in the next higher category but no enterprise should be placed in the lower category unless it is going below the ceiling limits that are specified for the present category in both investment as well as turnover criteria.

All the units that have a valid GSTIN which is listed against the same PAN are to be collectively treated as one enterprise and the turnover and the investment figures of these entities should be seen together and only the aggregate values will be considered for deciding the category as a micro, small or medium enterprise.