Last updated: September 11th, 2024 5:29 PM

MSME Clarification on Selection of Financial Year for Udyam Registration

The Ministry of Micro, Small & Medium Enterprises has issued a notification dated 28.09.2021 regarding Clarification on Selection of Financial Year for Udyam Registration. The financial year is mandatory to get details of the enterprises' Investment, Turnover, and Export value for the classification of MSME while registering on Udyam Portal. The current article briefs the MSME's clarification regarding Selection of the Financial Year for Udyam Registration.

Synopsis of MSME Notification

The Ministry of Micro, Small & Medium Enterprises has received several representations from MSMEs stakeholders concerning the selection of the financial year of data in respect of Investment and Turnover and the export value for the MSME classification while registering on Udyam Portal.

• MSME now clarified that details of Investment, Turnover, and Export would be taken from Income Tax Department and GSTN from the relevant Financial Year for the MSME classification.
• For filing on the Udyam Portal for the Financial Year 2020-21, the data (Investment, Turnover, and Export) for Financial Year 2018-2019 was taken from the I.T. Department and GSTN.

The official notification of MSME about MSME Clarification on Selection of Financial Year for Udyam Registration is attached here for reference:

MSME Classification and Udyam Registration

The ministry has classified the entity as Micro, Small, and Medium based on the investment in plant, machinery, or equipment. This new method of categorizing MSME was announced vide notification No. S.O. (E) dated 26.06.2020. Any person who intends to establish an MSME must file Udyam Registration online in the Udyam Registration portal. The notification also deals with the following procedures:

• Composite criteria of investment and Turnover for classification
• Calculation of investment in plant and machinery or equipment
• Calculation of Turnover
• Udyam MSME Registration process
• Registration of existing enterprises
• Updating of information and transition period in Udyam Portal
• Facilitation and grievance redressal of enterprises

Know more about the Procedure and criteria for MSME Classification and Udyam Registration

GSTIN Not Mandatory for MSME Udyam Registration

The government has earlier provided that PAN and GSTIN are mandatory for MSME Udyam Registration. Vide a Notification S.O. 1055(E) dated 5^th March 2021 has relaxed the condition. Subsequently, the Notification No. S.O. (E) dated 26.06.2020 has been amended on 05.03.2021 to facilitate the exemption from the requirement of having GSTIN as per the CGST Act, 2017.

• In case of any proprietorship firm not registered under any Act or rules of the Central Government or the State Government, the proprietor may use their PAN to register the firm in the Udyam Registration portal.
• MSME also clarified that PAN is mandatory for all other types of enterprises for Udyam Registration.

Investment and Turnover details for Udyam Registration

• MSME announced that the data of Investment and Turnover either get auto-filled/ fetched from the Income Tax Department and GSTN  for those entities who have filed Income Tax  and GST Returns
• Investment and Turnover must be filed on a self-declaration basis by those enterprises yet to file the I.T. and GST Returns.

Note: The data which gets auto-filled/ fetched from the I.T. Department and GSTN is the data that the respective Departments had finalized after rectification for the relevant Financial Year.

MSME Udyam Registration for the Financial Year 2020-21

The Ministry of Micro, Small & Medium Enterprises clarified that for filing on Udyam Portal for the Financial Year 2020-21, the data of the Financial year 2018-2019, in respect of Investment and Turnover from the Income Tax Department and Goods and Services Tax Network, were auto-populated to avoid any deviation in data that may affect the MSME classification. For the Financial year 2018-19, the timeline for filing Income Tax Returns was July 2019. Also, the process of GST Return for the Financial Year 2018-19 follows similar timelines. Hence, frozen data of 2018-19 has been considered for MSME registration and classification during 2020-21.

Financial Year Selection Procedure for Udyam Registration

To summarize, the following procedure has been adopted concerning data (auto-filled/ fetched) in the UDYAM Registration Portal with effect from 01 .07.2020 onwards:

Financial Year of Registration in Udyam Portal and Classification of MSME	Data(Investment, Turnover, and Export) taken or to be taken from the I.T. department and GSTN from the relevant financial year
2020-2021	2018-2019
2021-2022	2019-2020
2022-2023	2020-2021

MSME now clarified that the system would take details of Investment, Turnover, and exports from the Income Tax Department and GSTN from the relevant Financial Year.

MSME Udyam Registration for the Financial Year 2022-2023

• The new enterprise is willing to establish itself as an MSME and needs to apply for online Udyam Registration in Udyam Registration Portal.
• The application is based on self-declaration, and there is no further requirement to upload any documents, certificates, papers, or proofs. Udyam registration is free of cost.
• An Aadhaar number is mandatory for obtaining Udyam Registration.
• PAN and GST-linked details on investment and Turnover of enterprises will be taken automatically from Income Tax Department and Goods and Services Tax Network (GSTN). MSME online system is fully integrated with Income Tax and GSTIN systems.
• According to this notification, For Registration in the Udyam Portal and the Classification of MSME for the Financial Year 2022-2023,  Details of Investment, Turnover, and Export will be taken from the details registered in the financial year 2020-2021 in the I.T. & GSTN  department.
• On successful application submission, the enterprise will be assigned an 'Udyam Registration Number' (i.e., permanent identity number).
• On completion of the registration process, the enterprise shall be issued an 'Udyam Registration Certificate.