Difference between Udyam and Udyog Aadhar for MSME Registration

In order to acquire a registration of either a micro, small or medium enterprise, one needs to follow the guidelines of the MSME Act. The Indian ministry of MSME introduced a notification which had the details of a new process for Udyam Registration from July 1, 2020. According to this notification of the government of India, any individual who wants to set up an MSME may visit the Udyam Registration Portal and file an Udyam Registration on the basis of a self-declaration without needing to upload any documents, papers, proofs or certificates. MSME registration is not mandated by the government of India but one should still register in order to enjoy various benefits related to taxation, credit facilities and loans, etc. in this article, we will go through the differences between Udyam and Udyog Aadhaar for the registration of MSME.

Udyam Registration

Udyam registration is a new process that was introduced by the Government of India on 1 July, 2020 for the registration of MSME. This method for MSME registration was initiated by the Government of India as a substitute of the earlier process named as Udyag Aadhar. This process was aimed at making registration on the portal of the government easier and swifter.

The process of Udyog Aadhar was previously used for registration but it was quite confusing and lengthy. Earlier, the person had to go through a lot of paperwork and documents but with the new and better registration process of MSME Registration, the registration can be done easily and efficiently without the requirement of too many documents or paperwork.

Udyog Aadhar for Registering MSME

The Udyog Aadhar for MSME registration was introduced by the Ministry of MSME in 2015. It was a part of the initiative taken by the government to ease the process for registration of MSME.

The registration process of MSME in India has been simplified ever since the introduction of the Udyog Aadhar for MSME. Before the launching of Udyog Aadhar, two memorandums had to be filed in order to acquire MSME registration. These were Entrepreneur Memorandum-I and Entrepreneur Memorandum-II. But it has become really easy to obtain the MSME registration.

Udyog Aadhar did not only simplify the process of registration, it also simplified the MSME Registration Form. The registration Form via Udyog Aadhar was issued in the format of a self-declaration. Under this form, the mSME will have to self-certify its existence, details of the bank account, Aadhar of the promoter or owner and other important information.

Entrepreneurs Memorandum -I and II

Once the Micro, Small, and Medium Enterprises Development Act was  implemented in October 2006, the filing of Entrepreneurs Memorandum I and II became prevalent.

As per the guidelines of the MSME Act, Entrepreneurs Memorandum I is filed by the MSMEs at District Industries Centers before they start setting up the enterprise. The applicants would file applications in order to acquire utilities, approvals of building plans from the local authorities, establishment consent from State Pollution Control or a term loan from banks and financial institutions so that they can set up the enterprise.

Once the projects started, the particular entrepreneur would file the Entrepreneurs Memorandum II. It is optional for an MSME to file an Entrepreneurs Memorandum II. In order to make it easy to register an MSME, an online portal has been developed by the MSME Department to file Entrepreneurs MEmorandum I and II online. These features were introduced in order to make the process of MSME Registration easy and simplified and accessible everywhere.

Earlier Registration process of MSME

Before the introduction of Entrepreneur Memorandum I and II, the MSME Registration was managed by the District Industry Centers of the State. The registration and filing process of an MSME was done manually and it was difficult for the entrepreneurs to acquire the registrations because the process was quite lengthy and was full of challenges.

Differences Between Udyam and Udyog Aadhar for MSME

Both are the same process and are used for MSME registration. The previously used Udyog Aadhar Registration has been converted into the new Udyam registration. This happened in July 2020.

Method of Registration:

In order to perform the registration of an MSME, Udyog Aadhar will need the Aadhar Card and PAN Card of the Applicant and avails immediate self-certification according to the criteria set by the MSME. Whereas, Udyam Registration only needs the Aadhar Card of the Applicant and avails the registration certificate according to the new criteria set by the MSME.

Unification of Other Portals:

The new and improved Udyam registration process is integrated with all the other MSME portals whereas the Udyog Aadhar method does not possess the integration with other MSME Portals.

Registration Forms:

Compared to the Udyog Aadhar Registration form, the form that is required to be filed at the Udyam Portal is long and needs a lot of details from the GST departments and Income Tax Portal in order to register for MSME. For Udyam Registration, an Aadhar card that is linked to the mobile number is also required.

Numbers of Registration:

You can not acquire Udyam registration again if you have already registered once with your Aadhar Card whereas Udyog registration can be done several times under different corporate names.

Advantages of Udyam Registration

There are a lot of benefits of Udyam registration for MSME businesses. These may include easy availability of bank loans without any sort of collateral mortgage, concessions on Electricity bills, some special treatment in getting government tenders, fast resolution of disputes, rebates on taxes, a special discount of 50% on government trademarks and patents fees, Some exemption on overdrafts in banks, Protection in case there is a delay in payments by the buyer, and many more.