New definition of Micro, Small and Medium Enterprises – clarification by RBI
September 9, 2020
Members of the Council,
Sub : New definition of Micro, Small and Medium Enterprises – clarification by RBI
The Reserve Bank of India has issued a circular No.RBI/2020-2021/26 dated 21.08.2020 regarding new definition of Micro, Small and Medium Enterprises. This circular states the following.
Classification of Enterprises as per new definition
(i) Classification/re-classification of MSMEs is the statutory responsibility of the GoI, Ministry of MSME, as per the provisions of the MSMED Act, 2006.
(ii) As per para 2 of the said Gazette notification all enterprises are required to register online and obtain ‘Udyam Registration Certificate’. All lenders may, therefore, obtain ‘Udyam Registration Certificate’ from the entrepreneurs.
Validity of EM Part II and UAAMs issued till June 30, 2020
(i) The existing Entrepreneurs Memorandum (EM) Part II and Udyog Aadhaar Memorandum(UAMs) of the MSMEs obtained till June 30, 2020 shall remain valid till March 31, 2021. Further all enterprises registered till June 30, 2020, shall file new registration in the Udyam Registration Portal well before March 31, 2021.
(ii) ‘Udyam Registration Certificate’ issued on self-declaration basis for enterprises exempted from filing GSTR and / or ITR returns will be valid for the time being, upto March 31, 2021.
Value of Plant and Machinery or Equipment
The online form for Udyam Registration captures depreciated cost as on 31st March each year of the relevant previous year.
Therefore, the value of Plant and Machinery or Equipment for all purpose of the Notification No.S.O.2119(E) dated June 26, 2020 and for all the enterprises shall mean the Written Down Value (WDV) as at the end of the Financial Year as defined in the Income Tax Act and not cost of acquisition or original price, which was applicable in the context of the earlier classification criteria.
Members may kindly note the above.
Thanks & regards,