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CS Executive · Setting Up of Business, Industrial and Labour Laws · Various Initial Registrations and Licenses

Sunrise Foods, a registered small enterprise, grows so that its turnover exceeds the small limit but stays within the medium limit, while investment is also within medium limits. What is the correct position under the Udyam system?

The enterprise is reclassified as medium on the basis of updated investment and turnover data linked from tax systems. Udyam Registration is not cancelled and no fresh registration is required, since classification under the Udyam system is dynamic.

  1. AIt continues as small for three more years without change
  2. BIt is reclassified as a medium enterprise based on the updated investment and turnover data, with no need for fresh registrationCorrect
  3. CIt must cancel Udyam Registration and apply afresh as a new enterprise
  4. DIt loses MSME status entirely

Explanation

Classification is dynamic: the portal upgrades or reclassifies an enterprise on the basis of data linked from the Income Tax and GST systems. A fresh registration is not required. A grace period applies when an enterprise moves up to a higher category in the benefits context, but reclassification itself still occurs, so the three-year option is wrong.

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