Legal and Regulatory Framework
Registrations that apply
The exam tests the legal steps and ongoing compliances for a small unit. Udyam registration gives MSME classification and access to schemes. GST registration is required once turnover crosses the threshold - generally ₹40 lakh for goods and ₹20 lakh for services, with lower limits in special-category states. The Maharashtra Shops and Establishments Act covers many shops and commercial establishments. The Factories Act, 1948, applies to premises with 10 or more workers using power, or 20 or more without power. Pollution Control Board consent is needed for listed industries. FSSAI is required for food businesses; legal metrology for packaged goods; labour laws cover EPF, ESI and minimum wages. Intellectual property protection is separate.
Worked example
A bakery uses electric ovens and employs 12 workers. Because it has 10 or more workers with power, it needs Factories Act registration/licence, not merely a shop licence. It also needs FSSAI registration/licence, Udyam for MSME benefits, and GST if turnover exceeds the threshold. If it emits or discharges as a listed polluting process, it needs consent to establish and operate.
Traps that cost marks
Udyam does not replace sector licences. GST registration is not always voluntary once the threshold is crossed. A shop licence and a factory licence are not interchangeable. Do not ignore annual returns and renewals after the initial registration.