COVID-19 has impacted almost all the sectors of the economy but the micro, small and medium enterprises ( MSME ) seem to be the worst affected. Various survey reports estimate the loss in revenue for this sector to the tune of 30-50 percent and given their fragile scale and vulnerable position, the damage is damn serious. The Government's helping hand through initiatives like bank guarantees, loan moratorium etc. have provided some relief but they are very far from what is actually needed on the ground level. In continuing with the reform agenda, the MSME ministry has introduced a new scheme "UDYAM" to improve access to assisted schemes. The MSME Development Act was introduced to facilitate the development and enhance the competitiveness of MSMEs. Subsequently, various enabling regulations like amendments to income tax forms, GST concessions, banking norms, etc. were introduced to foster their growth.
UDYAM means :
UDYAM is an online only registration which provides for classification of business units engaged in manufacturing and service sector into Micro Small Medium Enterprises (MSMEs) based on its investment and turnover. The UDYAM scheme links both income tax and GST returns for assessing eligible turnover and investment criteria. Formerly it is known as Udyog Aadhar Memorandum (UAM). However, in July 2020, the UAM was substituted by UDYAM.
MSM Enterprises means :
The following are the criteria for classification of a business unit as Micro or Small or Medium enterprises.
1. Micro enterprises is one in which its investment is not more than Rs. 1 crore and its turnover is not more than Rs. 5 crores.
2. Small enterprises is one in which its investment is not more than Rs. 10 crores and its turnover is not more than Rs. 50 crores.
3.Medium enterprises is one in which its investment is not more than Rs.50 crores and its turnover is not more than Rs.250 crores.
Who can apply for UDYAM ?:
The application for UDYAM can be made by,
1. Proprietorship concerns
2. Hindu Undivided Family (HUF)
3. One Person Company (OPC)
4. Partnership firms
5. Limited Liability Partnership (LLP)
6. Private limited
7. Limited company
8. Co-operative Society
9. Any association of persons
Benefits from UDYAM:
The followings are the benefits can be avail from UDYAM
1. Collateral free loans from banks.
2. Electricity bill concession
3. Waiver of Stamp duty and registration fee
4. ISO Certification fee reimbursement.
5. Exemption from Direct tax law rules.
6. NSIC performance and credit rating fees subsidy.
7. Preference in Government tenders.
8. Patent registration subsidy
9. Barcode registration subsidy
10. Waiver of Government security deposit.
11. Special consideration on International Trade Fair.
12. Ease of obtaining registrations, licenses and approvals.
13. Protection against delayed payments against goods already supplied.
Glaring concerns:
1. Registration under UDYAM scheme is entirely online, and in a country where nearly half the population lack internet access and more than half of MSMEs (51.4%) are from rural areas, this expectations seems far from ground reality and not practically possible.
2. Collection of data for expansion of access to welfare schemes is an important requirement for eradicating inequality in distribution of income and wealth. However it should not come at the cost of practicality or undue hardship especially in a year of pandemic.
3. The Government ruling mandates MSMEs to file tax returns even though they may not otherwise be required to file under the respective fiscal laws. In a country where nearly 97.8% of MSMEs are micro and just a small percent of population is actually paying taxes, this expectation seems far fetched.
4. Banks may not be inclined to lend small ticket loans to traders citing commercial reasons affecting financial inclusion and forcing traders to resort to high-cost informal borrowings
My view:
Government should expand the definition of MSMEs to include Traders, accept self-declaration (in lieu of tax returns) and make the registration is mandatory over a 24 month period to make transitions smooth and seamless. After all, the best public policy is made when you are listening to people who are going to be impacted.
Comments
apply udyog aadhar online