MSME registration (better known as Udyam registration) is essential for small businesses as entrepreneurs can avail various benefits from this. However, not all businesses are eligible for Udyam registration. Do you want to check if your business is eligible for Udyam registration? This article talks about criteria of MSMEs, eligibility for obtaining Udyam registration and businesses that are not eligible.
Eligibility for Udyam/MSME registration
Any company that can be classified as an MSME is eligible for Udyam registration. As per the Micro, Small and Medium Enterprises Development (MSMED) Act of 2006, any enterprise carrying out manufacturing activities or providing services, and meeting the below turnover and investment in plant/machinery criteria can register their business on Udyam as a MSME.
From 2021, even retailers meeting the turnover criteria can obtain Udyam/MSME registration certificate.
|Category||Investment limit||Turnover limit|
|Micro||₹1 Crore||₹5 Crore|
|Small||₹10 Crore||₹50 Crore|
|Medium||₹50 Crore||₹250 Crore|
Apart from the turnover, let’s look at the types of businesses that are eligible for the Udyam registration.
Following types of companies meeting the turnover criteria are eligible for obtaining the MSME registration certificate.
- Startups, business owners, and entrepreneurs
- Private and public limited companies
- Sole proprietorship
- Partnership firm
- Limited Liability Partnerships (LLPs)
- Self Help Groups (SHGs)
- Co-operative societies
As a business owner, it is natural for you to ask: Is MSME and Udyam registration are different? Currently, Udyam is the only platform MSMEs need to register on. It’s online, paperless, and free, and any business meeting the eligibility criteria can apply and register.
Which companies are not eligible for Udyam/MSMEs registration?
Companies with an annual turnover of more than ₹250 crore are considered as large organisations. As a result, these companies are not eligible for obtaining Udyam certification.
Additionally, companies undertaking following activities are not eligible to obtain Udyam certificate:
- Forestry and logging
- Activities of crop, animal production, hunting, and related activities
- Fishing and aquaculture
- Activities of households as employees for domestic personnel
- Undifferentiated goods and services producing activities of private households for own use
- Activities of extraterritorial organisation and bodies
Note: It is recommended to check the list of activities that are eligible/not eligible on the portal of Udyam registration before registering your business.
Benefits of the Udyam registration
Why is Udyam registration necessary? To know more, here are the benefits of Udyam registration.
- You can avail various government schemes designed for MSMEs.
- You can obtain finance from banks and NBFCs at better interest rates (and even get concessions on interest rates).
- It enables you to avail tax concessions.
- Obtaining Udyam registration will help with participation in government tenders (e.g., exemption from paying EMD in eTendering in most cases).
- You can avail reimbursement of ISO certification expenses.
- You can avail the benefits such as facility for foreign business expo.
- You can avail capital grant for infrastructure development.
Documents required for Udyam registration
Udyam registration does not require exhaustive list of documents for registration. In fact, the MSME registration requires only basic documents mentioned below.
- Aadhaar card
- PAN card
If your business is eligible for obtaining a MSME registration certificate, it is best to get it as you can avail multiple benefits from it. Also, process of registration is not lengthy and time consuming.
It is recommended to learn about the online Udyam registration process first to ensure that you can benefit by registering your MSME business.