Is An Aadhaar Card Mandatory For Small Businesses?

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5 Sep,2022 18:06 IST 2 views
Is An Aadhaar Card Mandatory For Small Businesses?

Over the past few years, the government has taken a number of steps to encourage micro, small and medium-sized enterprises (MSMEs), starting from helping them register with authorities to providing them loans on priority.

While technology-oriented ventures are taking advantage of the Startup India programme, traditional businesses that come under the MSME category are also benefitting from a range of government initiatives.

The first step towards starting a business is to register with the concerned government body. And whether it is a services business or a manufacturing unit, and whether it is a proprietorship, partnership firm or a private limited company, registering a small business has become far easier in recent years.

How To Register An MSME?

The MSME registration programme, managed by the Ministry for MSME, is a fairly simple process. The registration can be done online on the government portal

All that the applicant has to do is enter the personal Aadhaar number and other details as asked. After the form is submitted, a Udyog Aadhaar number on a certificate will be sent to the applicant online.

In case the applicant does not have an Aadhaar Card, the application for Udyog Aadhaar must be made by the District Industry Centre (DIC). But it is advisable to apply for an Aadhaar number at the Aadhaar enrollment center.

Why Register As An MSME?

Registering a small business is not mandatory. But it is good to register for the ease of doing business and to avail perks and legal benefits. Some of the benefits of registering as an MSME are:
• Limit personal liability by showing the company as a separate legal entity;
• Avail startup rebates and tax benefits;
• Become eligible for priority-sector lending from banks and get access to cheaper loans;
• Concessions on electricity bills, barcode registration, direct taxes and ISO certification fees.

Is Aadhaar Compulsory?

An entrepreneur can file for an MSME registration completely on the basis of Udyog Aadhaar, which has now become the basis of almost all official transactions. It is a unique 12-digit identification number issued by the Ministry of MSME to small and medium enterprises.

Along with Aadhaar, businesses need a PAN to file tax returns. No other documents are necessary for the registration process. The Udyam registration is a fully integrated system that can pull PAN and GST (Goods and Service Tax) linked details on investment and turnover of enterprises from the available database.


Micro, small and medium enterprises are the driving force of developing economies across the globe. Being labour-intensive, these enterprises account for almost half of the total workforce in India.

Though the process of registration is not compulsory, registration allows business owners to benefit from a wide range of government and banking services.

Thanks to new-age technologies and government initiatives, the MSME sector has seen some remarkable changes in the recent past. One such initiative is the simplification of the MSME registration process that can be done online just with an Aadhaar number.

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