Udyog Aadhaar
The Micro, Small, and Medium Enterprises (MSME) sector is one of major sectors of the Indian economy. It is responsible for generating employment, contributing to exports, and promotes innovation at the grassroots level. However, it is often observed that they struggle to avail various government benefits due to lack of formal recognition and limited technological adoption.
In order to address this issue, the Udyog Aadhaar was introduced by the Indian government in 2015 as a simple and paperless system of registration for MSMEs. Through Udyog Aadhaar, small businesses received a unique identification number, which validated their enterprise. This recognition enabled them to avail themselves of a range of government benefits such as subsidies, collateral-free loans, tax exemptions, and easier access to various schemes.
Change of Udyog Aadhaar to Udyam Registration:
In July 2020, the Udyog Aadhaar system was upgraded to Udyam Registration to make the process more transparent and digital. Through Udyam Registration, MSME enterprise details are directly linked with Aadhaar, PAN, and GST records. Doing so helps in better verification of the enterprise and significantly reduces the chances of errors and duplication.
When an MSME registers itself on Udyam, they receive a a Udyam Registration Certificate instead of the earlier issued Udyog Aadhaar Certificate. The Udyam certificate consists of a unique Udyam Registration Number (URN) and a QR code which can be scanned to verify details online.
Key Benefits of Udyam Registration
The new MSME framework offers multiple advantages, including easier compliance, simplified registration, and financial support. The Udyam Registration process is now fully digital, self-declared, and paperless, eliminating the need for extensive documentation. Entrepreneurs only need to provide their Aadhaar number to register, making the process hassle-free.
The revised classification ensures that MSMEs can expand operations without losing government benefits such as:
- Priority sector lending, which provides easier access to bank loans.
- Interest rate subsidies to reduce borrowing costs.
- Tax exemptions under direct tax laws, improving cash flow.
- Faster approvals for licenses, registrations, and government schemes.
- Protection against delayed payments, ensuring MSMEs get paid on time.
Features of Udyam Registration:
The listed below are some of the features of Udyam Registration:
Recognition: The Udyam Registration Certificate is a government issued document that recognises and validates MSMEs. This recognition helps enterprises earn credibility and access various government and non-government schemes.
Legal Protection: The MSMEs registered on Udyam can claim interest at three times the bank rate for payments delayed beyond 45 days. This helps in protecting MSMEs against late payments. Moreover, Registration also streamlines the process of obtaining licenses, approvals, and compliance with labor and environmental regulations.
Easy Access to Bank Loan and other Subsidies: Registered MSMEs often have access to bank loans at a lower rate of interest. They xan also
Cost Reductions: Provides electricity bill concessions and reimbursement for ISO certification fees. Additionally, registered MSMEs receive subsidies on barcode registration, patent registration, and trademark registration.
Tax & Legal Exemptions: Grants exemptions under direct tax laws, reducing the overall tax burden. MSMEs are also eligible for subsidies on stamp duty, registration fees, and state-specific incentives.
Business Growth & Government Support: Facilitates easier license and registration approvals, giving businesses access to various government schemes. Udyam-registered MSMEs receive priority in government tenders through EMD waivers and benefit from subsidies under CLCSS (Credit-Linked Capital Subsidy Scheme) and IPS (Industrial Promotion Subsidy).
Operational Benefits: Ensures faster dispute resolution and protects MSMEs from delayed payments under the MSME Development Act. Registered businesses also get easier access to financial support in case of market fluctuations or crises.
Documents Required for Udyam Registration
The Udyam Registration process is completely online and does not involve uploading any physical documents. However, applicants must keep certain details ready before filling out the registration form:
1. Aadhaar Card
- Proprietorship: Aadhaar number of the proprietor.
- Partnership Firm: Aadhaar number of the managing partner.
- Hindu Undivided Family (HUF): Aadhaar number of the Karta.
- Company, LLP, Cooperative Society, Society, or Trust: Aadhaar number of the organization’s authorized signatory.
2. PAN Card of the enterprise or owner.
3. GSTIN (if applicable): GSTIN is mandatory only for enterprises that are required to register under GST law. Businesses not mandated to register under GST can still apply for Udyam Registration without GSTIN.
Note: As an applicant, you are not required to upload documents. You only need to enter your Aadhaar, PAN, and GST details (if applicable) in the Udyam Registration form.
Key Points to Note about Udyam Registration
The below listed are some of the key points to be noted about Udyam Registration:
Paperless and Free: Registration requires no documents and is entirely self-declared.
Quick & User-Friendly: The process is faster, with a shorter form and a user-friendly interface.
Digital Verification: The certificate is sent via email and can be verified using a QR code.
Aadhaar Requirement: The owner's Aadhaar, linked to a valid mobile number, is mandatory, and only one enterprise can be registered per Aadhaar.
Here is a comparison table between Udyog Aadhaar and Udyam Aadhaar:
Feature | Udyog Aadhaar | Udyam Aadhaar |
Registration Process | Required multiple documents and manual verification | Requires only an Aadhaar number and self-declaration |
Validity | Required periodic updates | Lifetime validity |
Cost | Free | Free |
Eligibility | MSMEs meeting the earlier classification based on investment only | MSMEs meeting the revised classification based on investment and turnover |
Documentation | Required additional paperwork | Paperless and based on self-declaration |
Government Benefits | Allowed MSMEs to avail schemes and subsidies | Simplifies access to MSME benefits, including priority lending and subsidies |
Compliance | Less streamlined process | Integrated with other government portals for easier compliance |
Disclaimer
FAQs on Udyog Aadhar
- Will I be charged for registering on Udyam?
No, you will not be charged for registering on Udyam.
- Is Udyam Registration the same as Udyog Aadhaar?
Yes. Udyam Registration replaced the earlier Udyog Aadhaar system in July 2020, with a more transparent and digital process.
- Who is eligible for Udyam Registration?
Any enterprise engaged in manufacturing, production, processing, or service activities that falls under the MSME definition can register under Udyam.
- How long does it take to get the Udyam Certificate?
The Udyam Registration Certificate is usually issued within 2 to 4 working days and sent to the applicant’s email ID.
- What is the validity of Udyam Registration?
The Udyam Registration Certificate is valid for a lifetime and does not require to be renewed.
Prerna Surana is a Finance Content Writer with over three years of experience at Bank Bazaar. She specialises in creating insightful content on Credit Cards, Debit Cards, Taxes, and other BFSI products. Beyond finance, Prerna also writes about non-financial utility products such as Aadhar Card, Voter ID, and Government Certificates.
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