Is an Aadhaar card mandatory for small businesses?

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3 May,2022 10:59 IST 105 views
Is an Aadhaar card mandatory for small businesses?

Is an Aadhaar card mandatory for small businesses?

Starting a small business in India has never been easier. Thanks to the government’s push to make India a startup nation, a lot of new small businesses have mushroomed over the past few years.

Indeed, many new-age, technology-driven startups are taking advantage of the government’s Startup India initiative. But this is not all. Even traditional businesses that come under the micro, small and medium enterprises (MSME) category can now be started far more easily than before, thanks to some wide-ranging changes made by the government over the recent past.

What is an MSME?

As the name suggests, micro, small and medium enterprises (MSMEs) are typically smaller-sized businesses that operate mainly in the manufacturing and services sectors.

According to the Indian government’s stipulations, a business started with an initial investment of less than Rs 1 crore and an annual turnover of less than Rs 5 crore qualifies as a micro business.

A business begun with an initial corpus of between Rs 1 crore and Rs 10 crore, and an annual turnover of between Rs 5 crore and Rs 50 crore is a small enterprise.

Any business with an initial capital of between Rs 10 crore and Rs 50 crore, and a turnover of between Rs 50 crore and Rs 250 crore is a medium enterprise.

How to register an MSME

The process of registration is fully online and can be done from anywhere. All one needs to do is follow a step-by-step process on the government portal udyamregistration.gov.in, which is managed by the Ministry for MSME.

Once the registration documents and other details are verified by the ministry, it will issue a registration certificate, which can be downloaded from the website. A copy of the certificate will also be emailed to the applicant.

Why it’s important to register as an MSME

The MSME registration is beneficial as it gives one access to a variety of benefits and facilities. A registered MSME can:

  • Get access to cheaper loans.
  • Carry forward credit for minimum alternate tax to 15 years instead of 10 years.
  • Access various rebates when it comes to getting patents and setting up new plants.
  • Easily apply for government tenders.
  • Access various government schemes like the Credit Guarantee Scheme, Credit-Linked Capital Subsidy Scheme, Public Procurement Policy, and Protection against delayed payments.
  • Become eligible for priority-sector lending from banks.
  • Avail concessions on electricity bills, barcode registration subsidy, exemption scheme for direct taxes and exemption on ISO certification fees.

Details needed to register as an MSME

The process of registering a small business is online and easy, and requires minimal paperwork. An applicant seeking to register an MSME needs to provide some basic information to the authorities. Here are the details:

  • Aadhaar number
  • Name as mentioned in Aadhaar card
  • PAN card
  • Gender
  • Name of business
  • Location of plant or unit
  • Office address of business
  • Business activity and NIC code
  • Type of business – partnership, proprietorship, private limited or public limited company, limited liability partnership, co-operative society, Hindu Undivided Family, trust or society or self-help group
  • Social category (General, OBC, SC/ST)
  • Bank account details
  • Number of employees
  • Investment amount
  • Turnover.

Is it possible to register as an MSME with just an Aadhaar number?

Yes, only the Aadhaar number is enough for registration. Businesses, however, do also need a PAN to file tax returns.

Moreover, one also doesn’t need to submit any proof of documents. On top of that, if someone has a company registered in their name, details pertaining to the Goods and Services Tax (GST) number and other information for business will be automatically retrieved by the ministry from the government database. The MSME ministry’s Udyam Registration Portal is integrated with the Income Tax Department as well as with the GST Network.

Conclusion

The government has over the years made it much simpler for entrepreneurs and businesspersons to register their MSMEs with the relevant authorities. Registered MSMEs can get several benefits such as cheaper bank loans, tax rebates and other concessions.

The process of registering businesses is easy and fully online. Moreover, the entire process requires very little paperwork – just an Aadhaar is enough for businesses to set up shop and start their operations.

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