Learn how Udyam Certificate facilitates MSME growth in India, providing official recognition, access to schemes, credit, and market credibility.
Introduction
Small and Medium Enterprises (SMEs) are the fundamental support of the Indian economy, constituting almost 30% of India’s Gross Domestic Product (GDP). Nevertheless, the sector has faced several challenges, such as a dearth of credit accessibility, scarce resources, and difficulties in expanding operations. To tackle these obstacles, the Indian government has initiated diverse measures to buttress MSMEs. One of the game-changing approaches is the Udyam Registration, which has proven to be a panacea for MSMEs in India. This editorial shall expound on why the Udyam Certificate for MSMEs in India is a game changer, its advantages, and how it has simplified the MSME registration process.
Simplifying the MSME Registration Process with Udyam
Entrepreneurial undertakings necessitate obtaining registration certificates, and for Micro, Small, and Medium Enterprises (MSME), the process was previously a labyrinthine, time-consuming, and convoluted task. Entrepreneurs had to enlist agents to complete the registration, which incurred significant costs. However, since the inception of Udyam Registration, the process has become more straightforward and less labyrinthine.
Entrepreneurs may obtain the Udyam Certificate by merely accessing the official Ministry of MSME website and providing the essential details. The registration is wholly digital, and entrepreneurs are not required to present any documents or credentials. The Udyam Certificate is issued solely based on the entrepreneur’s self-declaration, and no further authentication is necessary at the point of registration. The certificate acquisition process has not only streamlined but has also significantly reduced the waiting time for the certificate.
Udyam Certificate and its Role in Government Schemes and Incentives
One of the significant advantages of obtaining the Certificate is that it provides MSMEs with access to various government schemes and incentives. The government has launched various schemes such as the Prime Minister’s Employment Generation Programme (PMEGP), Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), and other state-level schemes to support MSMEs.
By obtaining the Udyam Certificate for MSME, MSMEs become eligible for these schemes and incentives. This has not only helped MSMEs to avail themselves of credit facilities but has also facilitated the expansion of their business operations. Furthermore, MSMEs can avail of various other benefits such as tax exemptions, subsidies, and rebates by registering under the Udyam Registration.
Access to Credit Facilities for MSMEs
Access to credit is one of the significant challenges MSMEs face in India. Many MSMEs find it challenging to get loans from banks due to the lack of collateral, limited credit history, and high-interest rates. However, with the Udyam Certificate, MSMEs can avail themselves of various credit facilities banks and financial institutions provide.
The Udyam Registration enables MSMEs to obtain collateral-free loans of up to ₹ 2 crores from banks and financial institutions. Moreover, the government has also launched various credit schemes, such as the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) and Mudra Yojana, to provide financial assistance to MSMEs. By registering under the Udyam Registration, MSMEs can avail themselves of these schemes and access credit facilities at lower interest rates.
How Udyam Certificate Can Help MSMEs Expand Their Business Reach
Expansion is a critical aspect of any business, and MSMEs are no exception. However, due to limited resources and access to credit, many MSMEs need help to expand their business operations. The Udyam Certificate can play a significant role in enabling MSMEs to expand their business reach.
By obtaining the Udyam Certificate, MSMEs become eligible for various government schemes and incentives that provide financial assistance, subsidies, tax exemptions, and other benefits. This, in turn, enables MSMEs to invest in research and development, upgrade their technology, and expand their business operations.
Moreover, the Udyam Certificate also provides MSMEs with increased visibility and credibility in the market. It is an official recognition of their business, which can attract more customers and clients. The certificate also makes it easier for MSMEs to participate in government tenders and contracts, which can further facilitate the expansion of their business operations.
Benefits of MSME Udyam Registration in India
A non-registered MSME fails to avail numerous subsidies, benefits, and government schemes that are regularly announced and updated.
Collateral-Free Loans:
Registered MSMEs can access bank loans without the need for collateral or security. While not all MSME loans are collateral-free, there are several government schemes that provide such facilities. For instance, the Credit Guarantee Trust Fund Scheme offers instant bank loans without security, provided the conditions are met.
50% Subsidy on Patent Registration:
Registered MSMEs can receive up to a 50% subsidy on patent registration for their business ideas and processes. However, availing this government scheme requires possessing a certificate of registration as an MSME.
Exemption on Overdraft Interest Fee:
MSMEs with registration can enjoy a 1% discount on the interest paid on their overdrafts from banks or financial institutions.
Industrial Promotion Subsidy Eligibility:
Registered MSMEs are eligible for industrial promotion subsidies under various government schemes. These subsidies help them create awareness and promote their businesses worldwide, including funding for participation in business fairs and promotional campaigns.
Protection Against Delayed Payments:
Registered MSMEs have the power to charge compound interest on delayed payments if they have provided goods/services to another business and the payment remains outstanding for more than 45 days. The interest charged is three times that of the approved RBI interest rates, providing protection against delayed payments.
Subsidy on Electricity Bills:
In special cases, registered MSMEs, especially those with manufacturing units, can avail subsidies on their electricity bills.
Free ISO Certification:
The government of India promises to reimburse the entire ISO certification fees for registered MSMEs. Unregistered MSMEs miss out on this reimbursement opportunity.
Extended Tax Benefits:
Registered MSMEs enjoy extended credit for minimum alternate tax (MAT) up to 15 years, compared to the standard 10 years for other entities.
Boost in Getting Government Tenders:
Udyam Registration links MSMEs directly with various government e-marketplaces and state portals for issuing tenders, providing registered MSMEs with additional help and an advantage in securing government tenders.
One-Time Settlement Fees for Non-Payments:
In cases where a registered MSME is unable to make past due payments, the government offers a one-time settlement fee option to clear all outstanding dues.
How Can MSMEs Calculate Their Registration Process While Applying for the Udyam Portal?
Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in the economic growth and development of a country. To avail of various government schemes and benefits, MSMEs must register themselves on the Udyam Portal. One of the key aspects of this registration process is calculating the investment in machinery, plant, or equipment, as well as turnover. In this guide, we will walk you through the steps to accurately determine your MSME classification while applying for the Udyam Portal.
Step 1: Understand the Investment Criteria
The first step is to comprehend how your enterprise’s investment in machinery, plant, or equipment determines its MSME status. Refer to the Income Tax Act of 1961 to ascertain the relevant rules and regulations.
Step 2: Evaluate Past Year’s Income Tax Return (ITR)
If your enterprise has a previous ITR, use it to determine the investment in machinery, plant, or equipment. The ITR will serve as a crucial reference point for this calculation.
Step 3: Self-Declaration for New Enterprises
For new enterprises without prior ITRs, a self-declaration by the promoter is necessary to estimate the investment. However, remember that this relaxation is only applicable until 31st March of each financial year, after which the first ITR must be filed.
Step 4: Exclude Specific Costs
When calculating the investment, be sure to exclude expenses related to research and development, pollution control, industrial safety devices, etc. These costs should not be considered as part of the investment.
Step 5: Consider Turnover for MSME Classification
The turnover of your enterprise is another essential factor in determining its MSME classification. Link this information to the Central Goods and Services (CGST) Act, Income Tax Act, or GSTIN for accurate turnover calculation.
Step 6: Exclude Export Turnover
Remember to exclude the turnover from the export of goods and services during the calculation process. This applies to all types of enterprises (micro, small, or medium).
Step 7: Self-Declaration for Turnover (If PAN is Absent)
If your enterprise does not have a PAN, you must make a self-declaration of the turnover up to 31st March of the respective year. However, both GSTIN and PAN become mandatory after the financial year.
Step 8: Stay Updated with Notifications
It is crucial to stay informed about any notifications or updates from the government related to the calculation of investment and turnover for MSME registration. Compliance with the latest guidelines ensures a smooth registration process.
Conclusion
The Certificate has been a game-changer for MSMEs in India. It has simplified the registration process, provided access to various government schemes and incentives, facilitated access to credit facilities, and enabled MSMEs to expand their business operations. The certificate has also increased the visibility and credibility of MSMEs in the market, which can attract more customers and clients.
As the Indian government continues to prioritise the growth of the MSME sector, the Udyam Certificate will play a crucial role in supporting MSMEs and driving economic growth.
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FAQs :
What is the importance of a Udyam certificate?All MSMEs are required to undergo Udyam registration, which offers several advantages to support their success. Some of these benefits include access to collateral-free loans from banks and financial institutions, as well as subsidised interest rates. Additionally, the registration provides a simplified process for obtaining licenses, permits, registrations, and approvals. |
Is Udyam certificate mandatory for MSME?Every company that is already registered with another ministry agency under the Department of Micro, Small, and Medium Enterprises must also complete registration with the following website: https://udyamregistration.gov.in/Government-India/Ministry-MSME-registration.htm. |
What is the use of MSME Udyam Registration?Upon obtaining an MSME Udyam Aadhaar registration, the enterprise acquires a distinctive twelve-digit Udyam registration number (URN). This URN enables them to access a range of government subsidies, schemes, and incentives. |
Will a physical copy of the MSME Certificate be issued?The government has introduced a paperless approach, eliminating the issuance of physical copies. Instead, the authority now sends the certificate via email. |
What is the fee for Udyam Registration through msmeregistration.org?The Udyam (MSME) Registration is completely free of cost and conducted in a paperless manner. It is important to note that no online or offline agency, institution, or consultant is authorised to charge any fee or money for this process. |
Also, Read,
- Udyog Aadhaar For MSME – Registration, Documents & Benefits
- Who Can Apply for Udyam Registration
- How Does One Register As An MSME ?
