Udyam Registration Certificate and Its Benefits for MSME

31 Mar, 2025 14:42 IST 73137 Views
Udyam Registration Certificate and Its Benefits for MSME

If you are an MSME owner struggling to access government schemes or get credit, we have touched the right nerve. Before getting deep into what’s there for you, here’s a quick look at the current scenario. 

India is a growing country where Micro, Small, and Medium Enterprises (MSME) play a major role in the economy. The government is constantly introducing new schemes for businesses in this sector, and Udyam Registration is one of those initiatives.

There are countless MSME owners struggling to secure the necessary credit or government schemes for MSMEs or expand their theory businesses. This is where the Udyam registration stands out as an excellent tool to access better opportunities. It helps simplify the MSME registration process for business owners, enabling them to access better opportunities.

If you have any doubts about this registration, then you are in the right place. Here, we will learn all that you need to know about Udyam Registration Benefits and how to get started.

First, Let's Understand What Udyam Registration is All About

Simply put, Udyam registration is an initiative by the Government of India to register and classify MSMEs in the country. The Ministry of Micro, Small, and Medium Enterprises (MSME Ministry) facilitates this process. 

This is a great way to simplify registration and make business opportunities more accessible for everyone. More importantly, the registration can be a game changer for business owners looking to access necessary financial initiatives. 

The Udyam certificate replaced the conventional approach to registration, which was more complicated. With the new approach, the registration process becomes quite simple, and you can easily access many legal and tax-related perks. 

Why was Udyam introduced?

Micro, small, and medium enterprises (MSMEs) are significant to India's growth. As India's GDP aims at a $5 trillion economy, experts predict the MSME sector will be worth Rs.1 trillion by 2028. However, MSMEs face challenges like limited access to affordable credit and heavy compliance burdens. To address these issues, the government has introduced reforms to improve the ease of doing business. One key measure is the Udyam Registration Certificate, which replaced the Udyog Aadhaar Registration/Memorandum (UAM). The Udyam aadhar registration simplifies MSME registration with a self-declaration-based, entirely online, paperless, and cost-free process. The MSME Ministry created MSME Udyam Registration to classify MSMEs and provide them with benefits. With Udhyam registration online, the registered organizations will automatically appear in other government databases with the company’s PAN, GST, and IT data. 

Udyam Registration Process: A Step-by-Step Guide

Ready to unlock the benefits of MSME status for your business? The Udyam registration process is your gateway, and it's easier than you might think. Here's a simplified guide to help you navigate the Udyam registration online journey:

  1. Head over to the official Udyam registration portal. This is your one-stop shop for everything related to online Udyam registration.
  2. On the homepage, locate the option labeled "For new entrepreneurs who are not registered yet as MSME or those with EM-II." This is the correct path for first-time registrations.
  3. Enter your Aadhaar number and your name as per the Aadhaar card. Click the "Validate & Generate OTP" button to initiate the verification process.
  4. An OTP (One Time Password) will be sent to the mobile number linked to your Aadhaar card. Enter the received OTP and click "Validate" to proceed.
  5. Once your Aadhaar is verified, you'll be directed to the PAN verification page. Here, select your "Type of Organisation" and enter your PAN number. Click "Validate" and also indicate whether you've filed the previous year's ITR and if you possess a GSTIN (if applicable).
  6. Now comes the main event: the Udyam registration application form. This form will request details like your name, mobile number, enterprise name, location, address, status (proprietorship, partnership, etc.), bank details, business activity, NIC code (National Industrial Classification code), and employee count. Fill out these details accurately.
  7. When finished, provide investment details (plant & machinery), turnover details, and select the declaration checkbox. Click "Submit" and you'll receive a final OTP.
  8. Enter the final OTP and click "Submit" to complete the online Udyam registration process. Congratulations! Your Udyam registration online is completed. Your Udyam e-registration certificate will be sent to your registered email address.

After the complete procedure, you will get a permanent e-certificate with a twelve-digit URN and a QR code unique to your registration details. You can use the QR later for verification purposes and to access the company details.

By following these straightforward steps, you can successfully navigate the Udyam registration process and unlock the numerous benefits available to registered MSMEs. Remember, the Udyam registration portal is your official resource for the entire process, so keep it bookmarked for future reference. Help others who come seeking the answer on how to register at Udyam.

Features of Udyam Registration

MSMEs can now register online through Udyam, a simplified and streamlined system that offers several benefits. Some of the key features of Udyam registration are:

- No physical paperwork: Enjoy the ease of Udyam registration online and save your valuable time. Yes! It is done entirely in digital mode, reducing hassles for MSMEs.

- One form for all: Udyam registration requires only one form to fill in, which covers all the relevant information, making it easier and faster for MSMEs to register.

- Zero registration fee: Udyam registration is free for all MSMEs, regardless of their size or sector, encouraging more entrepreneurs to start and grow their businesses.

- Investment-based classification: MSMEs are classified based on their investment in plant and machinery or equipment instead of only plant and machinery. This gives a more accurate and comprehensive picture of the enterprises.

- Dynamic and updated database: Udyam registration creates a dynamic and updated database of MSMEs, which can be used by policymakers, researchers, and businesses for various purposes.

Once you have completed the Udhyam registration online, you do not need to renew your enterprise registration.

Guidelines for Udyam Registration Application

- Utilize the exclusively online process available on the Udyam Registration Portal for your application.

- Upon successful registration, you will be assigned a permanent identification number and an e-certificate known as the 'Udyam Registration Number' and 'Udyam Registration Certificate,' respectively.

- Ensure that you meet the specified criteria for classification as a medium, small, or micro-enterprise to qualify for MSME registration.

Benefits Of Udyam Registration

There is not one but many different reasons why so many Indian businesses are choosing Udyam registration. So, let's examine each of these perks and understand how they can help you.

1. Get Bank Loans at Lower Interest Rates 

One of the best things about getting a Udyam registration for your business is accessing bank loans at affordable interest rates. In many instances, most banks charge lower interest rates than conventional loans. 

It is also worth noting that MSMEs are eligible for priority lending, making it easier to access proper credits. For instance, banks like SBI and HDFC offer affordable loans of up to ₹1 crore to Udyam-registered MSMEs, making it easier to access financing without risking personal assets.

2. Better Access to Government Schemes

There are countless government MSME schemes. The Udyam registration is your ticket to access these schemes' amazing benefits. 

Some of the most popular of these schemes include the Public Procurement Policy, Capital 

Guarantee Scheme, Protection against Delayed Loans, and Credit Linked Capital Subsidy Scheme.

3. Cost Reduction 

Not many people are aware of this, but a Udyam registration is a great way to reduce a business's operational costs. This small business registration gives you access to countless concessions and rebates. 

As a result, you can save more on the cost of setting up the business and accessing the right patents. For instance, there are also certain state governments offering subsidies on electricity bills for Udyam-registered MSMEs, helping to reduce operational costs.

4. MAT Credit Extension

Minimum Alternative Tax (MAT) is a great way to get an extension on your credits and sail smoothly through challenging times. The Udyam registration allows you to carry forward MAT credits for up to 15 years. This is a five-year extension from the standard extension of up to 10 years, and it works greatly to the business' advantage.

5. One-Time Settlement Scheme 

Most MSME owners don't realise this, but they can actually avail themselves of a one-time settlement scheme for all their unpaid amounts. This is another area where a Udyam registration works to your advantage with credit settlement. 

This can be very useful when dealing with adverse financial situations and helping businesses survive tough times. You can easily access schemes like the Credit Guarantee Scheme, Credit Linked Capital Subsidy Scheme, and Public Procurement Policy to get the perks. 

6. Easier to Acquire Government Tenders 

Udyam registration links your business to existing marketplaces of both state and central governments. This further helps these businesses get government tenders more easily and grow. 

This offers excellent access to better business opportunities, making it easier to foster long-term sustainable growth. Most Udyam-registered MSMEs are given preference in government tenders, increasing their chances of securing valuable contracts.

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Eligibility For Registration

The eligibility for online Udyam registration will depend on different factors that put your business into a specific class. The concerned ministry classifies different businesses based on their investments and turnover. 

Enterprise Type  Investment Limit  Turnover Limit 

Micro 

Up to ₹1 crore

Up to ₹5 crore 

Small 

Up to ₹10 crore 

Up to ₹75 crore 

Medium 

Up to ₹50 crore 

Up to ₹250 crore

Let's get a clearer idea of this classification with some real-life examples that make better sense. 

1. Micro Enterprise 

This can be a small fashion apparel business with an investment of about ₹50 lakh in machinery and an annual turnover of more than ₹2 crore. Meeting these conditions is enough for your business to qualify as a micro-enterprise for the Udyam registration. 

2. Small Enterprises

Suppose you have a business with a manufacturing unit paired with an investment of ₹5 crore in plant and machinery. Considering that you also have an annual turnover of ₹50 crore, your business can be classified as a small enterprise.

3. Medium Enterprise 

Suppose you run a service provider business with an equipment investment of ₹30 crore and an annual turnover of ₹150 crore. In this case, your business will be classified as a medium enterprise for Udyam registration.

Common Mistakes to Avoid During Udyam Registration 

While the process of Udyam registration is quite simple, there is still room for error and mistakes. Hence, it makes sense to take proactive measures to understand these mistakes and avoid them effectively. Some of the most common of these mistakes include:

  • Incorrect Aadhaar Details: One of the most common mistakes people make with Udyam registration is providing incorrect Udyam Aadhar details. It is very important that you remain careful and do your best to avoid this. You can check that the name and number of the Aadhaar match the details on the card to ensure accuracy. 
  • Using Invalid or Expired PAN: Another very common mistake people tend to make with Udyam registration is using an expired or invalid Aadhaar. Here again, the best you can do is check every detail on the PAN and ensure it is valid and active. Always make it a point to double-check these details to get things right for the registration. 
  • Providing Incorrect Turnover or Investment Figures: When you register your business with Udyam, you must offer the correct turnover and investment figures. This is important for helping the concerned department classify your business in the right category and complete the registration. You must make an effort to calculate and report investment and turnover figures with the utmost accuracy. 
  • Selecting the Wrong NIC Code: Another very common error people tend to make with their Udyam registration is selecting the wrong NIC Code. This specific code classifies your business into a given category depending on your specific business activities. Make sure you check things thoroughly and only choose the code that reflects your business activities accurately.

Documents Required For Udyam Registration

• PAN of the enterprise
• GST Certificate
• Copy of the entrepreneur's Aadhaar
• Social Category of entrepreneur
• Phone number
• E-mail address
• Business Commencement Date
• A/C No. and IFSC Code (or a copy of the passbook)
• Number of employees (with male and female divisions)
• The nature of the business
• The latest audited financial statements

Features of Udyam Registration Certificate

- A permanent registration number is provided to MSMEs on the Udyam registration certificate.

- The Udyam registration certificate is an e-certificate issued on the email of the entrepreneur once the registration is done online.

- The Udyam certificate is valid till the existence of the enterprise; thus, it is not required to be renewed.

- An enterprise cannot apply for more than one MSME registration. Thus, all activities of the enterprise are covered in the Udyam registration certificate.

- A Udyam registration certificate is necessary to obtain loans from banks and benefits provided under various schemes to MSMEs.

- The Udyam registration certifies that an enterprise is covered under the MSME category.

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Conclusion 

In today's digitised and competitive business world, Udyan registration is much more than a mere formality. It is a strategic step that will ultimately improve your business's sustainability and growth. 

This simple Udyam registration is your ticket to government schemes, a Business Loan for MSME with lower interest rates, MAT credit extension, cost reduction, one-time settlement schemes, and easy access to government tenders. So make sure you are mindful of these perks and register with Udyam today to take advantage of them.

Frequently Asked Questions

Q1. Is Udyam registration mandatory?

Ans. The Udyam registration process is compulsory for any company registered with another ministry agency under the Department of MSME.

Q2. Is Udyam registration free of cost?

Ans. Yes, Udyam registration is free and does not include any special registration fee.

Q3. Who should register for Udyam?

Ans. Udyam registration is beneficial for any business classified as a Micro, Small, and Medium Enterprise (MSME) in India. This includes:

  • Proprietorships: Businesses owned and operated by a single individual.
  • Partnerships: Businesses co-owned and managed by two or more individuals.
  • Hindu Undivided Families (HUFs): Family businesses governed by Hindu law.
  • Companies: Registered companies, including Limited Liability Partnerships (LLPs).
  • Societies: Registered societies and trusts.
Q4. Should we pay for Udyam registration?

Ans. No, Udyam registration is completely free of charge. The official government portal, https://udyamregistration.gov.in, facilitates the process without any registration fees.

Q5. Why are banks asking for Udyam registration?

Ans. Banks often request Udyam registration as it plays a crucial role in:

  • Identifying MSMEs: The registration helps banks clearly identify businesses eligible for benefits and schemes specifically designed for MSMEs.
  • Loan approvals: Udyam registration can expedite loan approvals for MSMEs as it simplifies the verification process and demonstrates your business legitimacy.
  • Government schemes:Many government business loan schemes and subsidies are exclusively available to registered MSMEs, making registration crucial to access these benefits. 
Q6. Who is not eligible for Udyam registration?

Ans. While most businesses can benefit from Udyam registration, a few exceptions exist:

  • Individuals or businesses not classified as MSMEs: Businesses exceeding the investment and turnover limits set for MSME categorization are not eligible.
  • Foreign companies: Udyam registration is meant for Indian businesses only. Foreign companies operating in India might have alternative registration processes.
Q7. What is the next step after Udyam registration?

Ans. Once you've successfully completed your Udyam registration, you can explore various benefits:

  • Access to government schemes and subsidies: Leverage financial assistance and support programs available for registered MSMEs.
  • Priority sector lending: Benefit from easier loan approvals and potentially lower interest rates offered to MSMEs by banks.
  • Participation in government tenders: Udyam registration opens doors to participate in government tenders reserved specifically for MSMEs.
  • Enhanced credibility: The registration serves as an official recognition of your business, potentially improving your credibility in the market.
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