Udyog Aadhar Composite criteria and investment FAQs

by varun · Published October 24, 2020 · Updated December 24, 2021

Continuing with our articles on trade licenses in India. We would discuss important points related to Composite criteria for investment and How to calculate investment in plant and machinery. You can read our previous article on Udyog Aadhar registration here

Composite criteria of investment and turnover for classification in Udyog Aadhar

A composite criteria on investment and turnover under Udyog Aadhar will apply for classification of enterprise as Micro, Small or Medium. If an enterprise crosses the ceiling limits specified for its present category in either of the two criteria of investment or turnover, it will cease to exist in that category and be placed in the next higher category but no enterprise shall be placed in the lower category unless it goes below the ceiling limits specified for its present category in both the criteria of investment as well as turnover.
All Goods and services tax identification number (GSTIN) against the same permanent account number (PAN) shall be treated as one enterprise. Investment and turnover figure for that enterprise shall be clubbed together and that figure shall be used for categorization.

How to calculate investment in plant and machinery or equipment

The calculation for investment in plant and machinery or equipment shall be derived from Income tax returns (ITR) filed in previous year under income tax act 1961.
In case of a new enterprise where no ITR has been filed yet then investment will be based on self declaration filed by business. This will cease to exist on 31st March of the year in which first ITR is filed.
The expression “plant and machinery or equipment” is same as assigned to the plant and machinery in the Income Tax Rules, 1962 framed under the Income Tax Act, 1961 and shall include all tangible assets (other than land and building, furniture and fittings).
If a enterprise has not filed any ITR then the purchase (invoice) value of a plant and machinery or equipment, whether purchased first hand or second hand, shall be taken into account excluding Goods and Services Tax (GST), on self-disclosure basis.
The cost of certain items shall be excluded from calculation of investment in plant and machinery as specified in law.

This article was second article in series for registartion and trade licenses required in India. Hope you like it and we would continue to write even more informative articles for budding entrepreneurs in India. To read article on Udyog Aadhar registartion click here. To read our articles on GST FAQs, you can visit here or contact us.