Income tax

Updating of income tax portal at the start of this fiscal year will not affect benefits for MSMEs from Udyam: Government

Ease of doing business for MSMEs: The Ministry of MSMEs has clarified that there will be no change in the benefits enjoyed by companies registered on the Udyam portal and classified under the definition of MSMEs between April 1 and June 7, 2022. The clarification has been made because that the portal of the Income Tax Department, from where the Udyam portal retrieves data for the classification of MSMEs, was being updated during the said period.

“If MSMEs who registered from 01-04-2022 to 07-06-2022 received a benefit based on the classification made during this period, the benefits they received will remain”, reads in the clarification available on the ministry’s Udyam portal.

For the uninitiated, the Udyam portal fetches “frozen” MSME data on investment and turnover from income tax and GSTN portals to classify a registered business as micro, small or medium. . For example, data used for companies registered in fiscal year 22 is for fiscal year 20.

In the current scenario, due to the unavailability of data for FY21 between April 1 and June 7 due to the update of the income tax portal in the corresponding period of In FY23, the classification of registered MSMEs was done based on FY20 data.

However, after the update, Udyam certificates filed for FY23 have been updated based on data from FY21. “Those MSMEs who registered during the period from 01-04-2022 to 07-06-2022 are invited to To download their updated certificates classified for the period 2022-23 based on data from the fiscal year 2020-21 from the Udyam registration portal,” the clarification noted.

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Udyam is an online and paperless registration process based on self-declaration. MSMEs do not have to upload any documents except their Aadhaar number. As of October 25, nearly 1.16 crore MSMEs were registered, of which 1.10 crore were micro, 4.19 lakh were small businesses and 39,116 businesses were medium-sized.

It is important to note that 35,501 Udyam companies had withdrawn their registration for multiple reasons till July 15 since the launch of the portal on July 1, 2020. Of the total withdrawals, 67% or 24,075 registrations were withdrawn during of the previous financial year 2021-22. while 931 registrations were withdrawn in FY21 and 10,495 companies withdrew their licenses in the current FY, according to data shared by Minister of State for MSMEs Bhanu Pratap Singh Verma in Lok Sabha in July this year.

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