Are you a small business trying to avail benefits under the Udyam registration? This article will tell you everything about Udyam and whether or not Udyam registration attracts a penalty.
If you are late in registering your business under the Udyam Registration scheme, you may have to pay a penalty. The late registration fee is 10% of the total amount due. The fee is payable at the time of applying for registration.
What is Udyam Registration?
As we just discussed, the central government rolled out a notification in 2020 setting parameters for businesses that can qualify as MSMEs. To be eligible for Udyam, the government introduced a registration process that is free of cost.
If you want to establish micro, small, or medium enterprise, you can start the registration process on the Udyam portal. All you need to register is a self-declaration. If you have a business partner or a promoter, they might have to provide their Aadhaar details during the registration process.
What are the Three Types of Enterprises, According to Udyam?
- Micro Enterprise: businesses with ₹1 crore in investments and ₹5 crores of turnover
- Small Enterprise: businesses with investments of up to ₹10 crores and turnover of up to ₹50 crores
- Medium Enterprise: businesses with investments of up to ₹50 crores. and turnover of up to ₹250 crores
You should keep note of these classifications while applying for the Udyam registration online.
The process of the Udyam registration:
- Self-Declaration: The Udyam registration process is fairly straightforward and hassle-free. Anyone with a basic understanding of technology can register their business on the portal. There is no requirement for any documents to be uploaded. The registration is based only on self-declaration.
- Udyam Registration Number: Once you have completed the registration process on the portal, your enterprise will be referred to as Udyam, and a permanent registration number will be issued. This number is known as the ‘Udyam Registration Number’.
- Udyam Registration Certificate: Apart from the permanent registration number, you will also receive an e-certificate once you complete the entire process of the Udyam registration online.
- GSTIN and PAN: This information is crucial during the self-declaration process. Remember that all the units (products and services) listed on the same Permanent Account Number (PAN)number are treated as one enterprise. Based on this information, the investment and turnover are calculated, which help decide the nature of the business.
- Verification of Details: The General Manager of the District Industries Center carries out verification to rule out chances of inconsistency in the details submitted by the applicant enterprise. Moreover, the general manager also investigates if a complaint regarding the information is received. After the due verification, the manager adds remarks and forwards the application to the Industry Secretary of the state government. Based on the recommendations by the Industry Secretary, you as an applicant are entitled to make corrections to the details. Contradictorily, the manager can also recommend the cancellation of the e-certificate.
- New Laws: The pandemic shook the world economically. Governments are now taking active steps to promote small and medium businesses to improve their contribution to the GDP. Therefore, several MSME provisions were relaxed. Before applying for Udyam registration, you must take note of the new laws.
Penalty
- Since the process of Udyam registration: https://msme.gov.in/ only requires an enterprise to submit a self-declaration, there is a chance of misrepresentation of facts and circumstances. People applying for Udyam registration can make false claims to attract greater benefits, and they might avail of bigger loans by showing their small business as a medium-sized company. To avoid such fraudulent activities, the central government has provided for penalties to save other enterprises from getting duped of a fair opportunity.
- If a company misrepresents facts or attempts to hide crucial information during the registration process, the government will impose a fine extending to ₹1000. In a subsequent conviction, the penalty can extend up to ₹1000.
Conclusion
It is always advisable to consult a professional or an expert before starting the registration process of any business. The same rule applies for Udyam Registration as well. Although the whole process is online and hassle-free, certain steps might be missed out leading to a penalty. Therefore, it is always better to be safe than sorry!
