As an Indian Company, expanding outside of your first state is one of the biggest milestones in your company's growth. Whether through opening a satellite office, warehouse, manufacturing plant or service center within another state, this will create tremendous business opportunities as well as present new questions surrounding compliance and regulations. One common question entrepreneur asks when expanding their company is "*Do I need a separate MSME registration for each state I enter? With more and more businesses being forced to operate in multiple states due to digital technology enabling services to be offered digitally or via shipping; expansion into new markets or states will lead to many questions regarding the registration itself as well as the different registration processes and requirements between states. In order to take advantage of many of the government support programs available to small and medium enterprises (SMEs), and also the many benefits associated with MSME registration, understanding which states require separate MSME registrations will be crucial to the company's continued success. In this article, we discuss the necessity for a separate MSME registration when doing business within two or more states, how the MSME registration process works and what the regulations regarding MSME registration say, and the potential penalties for non-compliance.
Understanding MSME Registration in India
The MSME Registration (formerly known as Udyog Aadhaar and currently referred to as Udyam Registration) is a certification from the Ministry of Micro, Small and Medium Enterprises, granting government approval to categorize businesses into three classes of business - Micro, Small and Medium.
In general, MSME Registration provides numerous benefits to Indian businesses, including
• Easier access to financial banking products.
• Less expensive money through interest rates.
• Priority lender in the lending sector.
• Protection from slow payments.
• Includes access to government contracts/schemes.
• Possibility of being reimbursed (subsidized) for patents/trademarks/certifications.
Due to these many benefits, MSME registration has transitioned from being an option for companies to a critical strategy to remain competitive in the marketplace.
Can One Company Operate in Two or More States?
Yes, absolutely.
A single business, whether it is a Private Limited Company, LLP, Partnership Firm or Proprietorship, may legally have businesses established in multiple States within India and may do so through:
Despite having numerous business locations across India, from a legal perspective the business remains one legal entity.
With respect to business registration and compliance, some registrations are location-based and some are entity-based. MSME Registration falls under the entity- based registrations.
Is a Separate MSME Registration Required for Each State?
To clarify simply: No;
A company does NOT require separate MSME Registrations for every state in which they operate.
The Actual Legal Position
MSME Registrations are based on what type of business is registered (the 'entity'), rather than what locations (the 'states') they are located in;
This means:
• One MSME Registration can apply to one legal entity
• Multiple branches, offices and/or units located in different states can share one MSME Registration
• The MSME Registration is associated with an entity's PAN, not a specific location within the country.
Therefore, if all units are registered under one PAN, they can all be covered under one MSME Registration.
What Determines MSME Registration: Location or Entity?
Here is where the majority of the confusion starts.
MSME registration is granted to a business entity and not each physical location or state.
To make it very straightforward:
• When an MSME registration is issued, it will be issued based on the PAN.
• Means it is issued for the entire legal entity.
• Covers all branches, offices, units, and operations of that business throughout India.
This is true no matter if you operate in:
• One state
• Two states
• Multiple states
For one legal entity, you only need one MSME registration
How MSME Registration Is Linked to a Business
In India, MSME Registration is tied to the specific legal entity that is applying for it and not to where the entity is located (ie. the location of the business operation).
When determining how many MSME Registrations can be obtained for each legal entity based upon the location of where the entity is operating, it does not matter if the entity operates in:
One state,
Two states,
five states
The same MSME Registration will hold value, provided the same legal entity applies for the registration.
Key Factor: PAN-Based Registration
The most important element in MSME Registration is the Permanent Account Number (PAN).
So, if there is an MSME located in Delhi who has opened branches in the states of Maharashtra and Karnataka, that company can operate under the same MSME Registration for all its operations.
When Is a Separate MSME Registration Required?
While there are some States that do not necessarily require businesses to register under multiple registrations, there are some cases where business structures will need to register as an MSME on a separate MSME Registration.
1.Different Legal Entities
An entity will have to register an MSME Registration as an MSME if it is organized as either:
• A Private Limited Company
• A Partnership Limited Liability Company (LLP)
• A Partnership Firm
• A Proprietorship under differing PAN Numbers
The above-listed entities will require registration with each of their states of business, even if they are located in different states, as long as they fall into the definition of MSME.
2. Different PAN Numbers
A company can have more than one PAN Number. If it is registered with two different PANs, then it will require registration as a separate MSME.
3. Subsidiary Companies
A parent company and its daughter companies are considered distinct legal entities. Therefore, each will be required to apply for MSME Registration separately.
Example Scenarios for Better Clarity
Example 1 - Only One MSME Registration Needed
A private limited company has been registered in Gujarat.
The private limited company operates as one business and uses the same PAN as each location, thus only one MSME registration will be required.
Example 2 - Separate MSME Registrations Required
A business owner operates:
The two companies are owned by the same business owner but have different PANs and therefore require two separate MSME registrations for the two businesses.
MSME Registration Process in India (Step-by-Step)
The process of registering for MSMEs allows business owners to identify problems and fix them before they create a problem or excessive delay.
Step 1: Authenticate PAN & Aadhaar
• Aadhaar for the authorized signatory
• PAN number of business
Step 2: Business Details
• Entity name
• Type of organization
• Date of incorporation
• Registered office address
Step 3 Bank and GST Information
• Bank account details
• GST registration number (if applicable)
Step 4: Business Activities & NIC Codes
• Classification by Manufacturing and Service
• Detailed information about all business activities
Step 5: Submission and Verification
• Automatic verification of submission with governmental databases
• MSME certificate issued
The registration is valid in all locations in India for all business.
Why Only One MSME Registration Is Required
The objective of MSME Registration is to create an easy-to-use method for compliance with Government requirements for MSMEs to obtain MSME registrations. To have multiple MSME registrations for multiple states would create a barrier to being able to conduct your business in a manner that is simple and efficient.
With a single MSME registration you can do the following:
1.PAN-Based Identification
An MSME registration is assigned based on your PAN (Permanent Account Number). Your PAN is unique to your company, so you can only obtain a single MSME registration against that PAN.
2. Centralized Database
By integrating all of the data from GST (Goods and Services Tax), Income Tax, etc., through the MSME portal, the Government can now track your business's operations across the entire country of India.
3. Combined Turnover & Investment
When a Micro, Small, or Medium Enterprise is classified as such, the determination of which classification they fall into is based on the combined total turnover and total investment of all units, irrespective of which state the units are located in.
What About GST Registration vs MSME Registration?
This is a common area of confusion.
Compliance Type
State-Based?
PAN-Based?
GST Registration
Yes
No
MSME Registration
Hence, even if you have multiple GST registrations, you can link them under one MSME Registration.
Importance of Accurate Disclosure
Business owners conducting business in several states must be precise when completing their MSME Registration application.
• All revenue generated through each location must be included
• The value of personal assets should reflect the value at each location
• An inconsistency may cause the business to be reclassified or even cancelled.
To maintain accuracy and consistency with MSME Registration, employers should always use the services provided by an expert Third Party MSME Registration Company. This will increase the likelihood of accurate disclosure and long-term adherence to MSME guidelines.
Why Businesses Prefer MSME Registration Service in India
There are a lot of very valid reasons why business owners prefer the help of a registered MSME service to register their businesses online rather than doing the process themselves. Some of these reasons include:
• Complexity of ownership structures
• Multiple business units
• PAN-linked turnover calculations
• Risk of incorrect classification
By using an established registered MSME service, business owners can be assured they are:
• Minimizing their risk of making an error;
• Maintaining their eligibility for certain benefits;
• Keeping up to date with current MSME policies; and
• Handling re-registration and modifications to their business' registration.
Benefits of Single MSME Registration for Multi-State Businesses
The following are the benefits associated with obtaining a Single MSME Registration:
1.Streamlined Compliance
No need to repeated registration or renewal processes.
2. Consolidated Benefits
All Parts of India benefit equally from the same MSME Registration.
3. Improved Financial Planning
Loans, grants and incentives are based upon overall strength of the business;
4. Increased Trust in the Company
A single MSME Registration establishes a seed of credibility with financial institutions, suppliers, and Government agencies.
MSME Classification Criteria (Applicable Nationwide)
Enterprise Type
Investment Limit
Turnover Limit
Micro Enterprise
Up to ₹1 crore
Up to ₹5 crore
Small Enterprise
Up to ₹10 crore
Up to ₹50 crore
Medium Enterprise
Up to ₹250 crore
These limits apply to the aggregate business, irrespective of how many states the company operates in.
When MSME Registration May Need Updating
While separate registration is not needed, businesses should update MSMEs with the following:
• Whenever they have added new units in another state;
• When their turnover increases significantly;
• Whenever they have changed the type of investments made to machinery;
• When the nature of the business grows or expands.
By updating MSME information, the proper classification is assured, and benefits remain uninterrupted.
Common Mistakes Businesses Make
Despite clear rules, many companies make avoidable errors such as:
Avoiding these mistakes saves time, cost, and future legal complications.
Common Misconceptions About MSME Registration
“Each state needs a separate MSME certificate”
Wrong. MSME registration is not location-based.
“Each factory needs a new MSME registration”
Wrong. Multiple units fall under the same registration.
“Different activities need different MSME registrations”
Wrong. Manufacturing and service activities can be combined.
Conclusion
Business operating multiple states within India do not have to have an MSME registration separately for each state as long as they operate under the same legal entity and PAN. The MSME registration framework was established so that businesses do not have to re-do paperwork and imposing unnecessary steps throughout the process while enabling them to operate across multiple states and provide assistance to businesses to grow and manage on a national level. Understanding the difference will help you to focus primarily on the growth of your business rather than on the confusion as to whether or not you need to maintain compliance. By using the correct MSME registration process and working with a professional MSME registration service, when necessary, businesses will benefit from smooth and easy registration, continued eligibility for government benefits, and clarity of operation over the life of their business by using a centralized MSME registration.
FAQs
1. Is MSME Registration state-wise or PAN-wise?
MSME Registration is PAN-wise, not state-wise.
2. Can one MSME Registration cover multiple branches?
Yes, all branches and offices under the same PAN are covered.
3. Do I need to update MSME Registration when opening a new state office?
No new registration is required, but turnover and investment must remain accurate.
4. Can one company have multiple MSME Registrations?
No, one legal entity can have only one MSME Registration.
5. Is MSME Registration mandatory for multi-state businesses?
It is not mandatory, but highly recommended to access benefits and schemes.
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