In the current scenario, startups and micro, small, and medium enterprises (MSMEs) have become a driving force for the Indian economy. The government has initiated various schemes and programs to ease the process of registration and support the growth of MSMEs. One such initiative is the Udyog Aadhaar registration, which has been recently replaced by the Udyam registration. In this article, we will discuss the difference between Udyog Aadhaar and Udyam enrollment.
Udyog Aadhaar Registration
Udyog Aadhaar is a 12-digit identification number issued by the Ministry of Micro, Small and Medium Enterprises (MSME) to small and medium enterprises. The primary objective of this scheme is to simplify the registration process and provide benefits to MSMEs, such as easy access to credit, subsidies, and schemes. It is a one-time registration process for MSMEs, and the registration is done online free of cost.
Eligibility for Udyog Aadhaar Registration
Any entity engaged in manufacturing, production, processing and preservation of goods or any service sector including trading or both having an annual turnover of up to Rs. 5 crores is eligible to apply for Udyog Aadhaar registration. Udyog Aadhaar can be obtained by Sole Proprietorship, Partnership firm, Hindu Undivided Family (HUF), Private Limited Company, Limited Liability Partnership (LLP), Co-operative societies, or any other entities formed under any other law.
Process of Udyog Aadhaar Registration
The registration process for Udyog Aadhaar is straightforward and can be completed online. The applicant needs to fill an online form with the details of their enterprise, such as Aadhaar Number, PAN Card Number, business activity, bank account details, etc. On successful submission of the application, the Udyog Aadhaar Certificate is generated and sent to the registered email address. It takes around 2-3 working days to receive the Udyog Aadhaar Certificate.
Benefits of Udyog Aadhaar Registration
Some of the benefits of Udyog Aadhaar registration are:
1. Easy Access to Credit And Subsidies:
MSMEs registered under Udyog Aadhaar are eligible for various government schemes and subsidies offered by banks and financial institutions.
2. Protection Against Delayed Payment:
The MSMEs registered under Udyog Aadhaar can file their grievances through the MSME Samadhan Portal. This portal helps MSMEs to get their payments due to them from other MSMEs for enterprises after selling their products or providing services.
3. Exemption From Tax And Gst:
MSMEs as per the latest budget announcement are exempted from the payment of Income Tax on profits up to Rs 1.5 crores. Additionally, if an MSME is registered under Udyog Aadhaar and has a GST registration, it gets various benefits, such as reduced tax rates and quick refund of GST paid.
Udyam Enrollment
Udyam enrollment is the new process introduced by the government to replace the Udyog Aadhaar registration. The Ministry of MSME has issued a notification on 26th June 2020 stating the change in the registration process for MSMEs from Udyog Aadhaar to Udyam. As per the notification, all existing enterprises registered under the Udyog Aadhaar scheme must migrate to the Udyam scheme by March 31, 2021. The government has also issued the Udyam Registration portal to register under the Udyam scheme.
Eligibility for Udyam Enrollment
The enterprises registered under Udyog Aadhaar can migrate to the Udyam enrollment scheme. Furthermore, an entity should be an MSME, and the classification of an enterprise should be done based on their turnover and investment as per the new definition of MSMEs.
Process of Udyam Enrollment
The registration process of Udyam Enrollment is also an online process, where the applicant needs to provide their Aadhaar number, PAN, and GST details. Along with these details, they also need to fill in the additional details like investment made, turnover, and other details. They also need to submit their bank details for all financial transactions. Unlike Udyog Aadhaar, the Udyam registration process is not free of cost, and a small fee is levied on the applicant.
Benefits of Udyam Enrollment
1. Priority Lending:
The MSMEs get priority in lending by banks and financial institutions due to their registration under Udyam Enrollment.
2. Reduced Credit Cost:
MSMEs registered under Udyam Enrollment get a 1% reduction in interest on loan due to the interest subvention scheme offered by the government.
3. Purchase Preference:
The government departments provide 25% of their total procurement from MSMEs, 4% from Micro, 3% from Small, and 8% from Medium Enterprises, encouraging the growth of MSMEs.
Conclusion
In conclusion, both Udyog Aadhaar and Udyam Enrollment are registration processes administered by the Ministry of MSME. While the Udyog Aadhaar scheme was replaced by the Udyam Enrollment scheme, both registrations are beneficial for MSMEs.
The primary difference between Udyog Aadhaar and Udyam Enrollment is their eligibility, registration fees, and the classification of MSMEs. Udyam Enrollment offers various benefits such as priority lending, reduced credit costs, and purchase preference for MSMEs, encouraging the growth of small scale businesses in the country. Hence, it is crucial for MSMEs to register under Udyam Enrollment before the deadline to reap its benefits.