Do I Need a GST Identification Number for Udyam Registration?

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Do you ever think about the requirements for Udyam registration? Well, MSMEs are traditionally considered the engine of economic growth. Economic experts say it has excellent development potential. After the ‘COVID-19’ pandemic, the Indian government announced many MSME assistance measures. These programs included trading convenience, simple loans, cheaper interest rates, and more to enhance the industry and economy.

The government introduced Udyam Registration for present and new MSME enterprises listed under EM-II and the Udyog Aadhaar Memorandum on July 1, 2020. The Ministry launched the MSME Udyam registration platform.

Changes to Udyam Registration Requirements: Do You Need a GST Identification Number?

On June 26, 2020, the government said that a firm’s PAN card number and GSTIN were required to register for Udyam, effective April 1, 2021. The government received many petitions from MSMEs because ‘making the GSTIN mandatory’ affects authorization.

Due to the Goods and Service Tax Act, numerous businesses in different states were excused from filing GST filings. Businesses earning over Rs. 40 lakh must register for GST. It exempts many MSMEs from registration because their yearly revenue is below the threshold. After considering MSMEs’ petitions, the Ministry of MSME stated on March 5, 2021, that GSTIN would no longer be required for Udyam registration.

‘The exemption from the requirement of having GSTIN shall be as per the provisions of the Central Goods and Services Tax Act, 2017 (12 of 2017).’

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This modification would also make it easier for other micro-firms to register quickly and easily without filing for GST at the start of their operation but still seek Udyam registration benefits.

What Documents Are Needed for Udyam Registration?

If you want to know about the document requirements for Udyam registration, check out the following points:

  • Aadhar cards are needed for business owner identity verification.
  • Business PAN cards are necessary for tax compliance.
  • Provide a utility statement or rent agreement to verify the business’s address.
  • An account number and IFSC code are needed for your business bank account.
  • Provide your incorporation certificate if your firm is legal.
  • Please list any previous MSME or Udyog Aadhar registrations.
  • Manufacturing companies should list plants and machinery, including their value.
  • Your business’s category depends on its overall plant, machinery, and equipment investment.
  • Share your company’s prior year’s revenue.
  • Include both permanent and contract staff numbers.
  • Submit copies of any licenses or permits your firm needs. Check the status continuously.

How are Udyam-registered MSME firms classified?

A government signature, a recognized certificate, and a unique number are the major requirements for Udyam registration. Udyam registration is necessary if you own a small business and seek government certification and other perks.

The Ministry of MSME divides micro, small, and medium firms by revenue and plant and machinery investment. A Micro Enterprise is defined as a firm with an investment of less than ₹ 1 crore and a turnover of less than ₹ 5 crore. Small enterprises are firms with an investment of ₹ ten crores and a turnover of ₹50 crores. A Medium Enterprise is a company with an investment of less than ₹ 50 crores and sales of less than ₹ 250 crores.

Does Udyam Registration Allow GST Registration?

The government’s Udyam-GST integration strategy has changed:

  • Udyam-registered Businesses Must Have GSTIN (June 26, 2020): The government required all Udyam-registered enterprises to have GSTINs, a significant change. This regulation improved MSMEs’ transparency and tax compliance. GSTINs were required for Udyam-registered enterprises by June 26, 2020.
  • GST and PAN required – In effect April 1, 2021: Udyam-registered enterprises had to give their PAN and GSTIN from April 1, 2021. This dual requirement guarantees enterprises are GST and Income Tax Act compliant.
  • Impact on MSMEs: Udyam registration requires a GSTIN, which worried MSME owners. Several MSME associations warned the government that requiring GSTIN for Udyam registration could hurt smaller businesses. Remember that not all businesses need GST registration. Businesses must register under GST if their yearly revenue exceeds ₹40 lakhs (₹ 10 lakhs for particular category states). GST registration is optional for firms below this amount.

Is a GST Number Required for MSME Udyam Registration?

If the firm or entity does not need GST registration, the GST number, also known as the Goods and Services Tax Identification Number (GSTIN), is not required for MSME registration. However, some conditions apply:

  • GST Registration: Businesses with yearly turnovers over ₹40 lakhs (₹10 lakhs for particular category states) are taxed under GST legislation. Such firms need GST registration numbers.
  • Non-Taxable Entities: MSME Udyam Registration does not require a GSTIN for entities or enterprises with annual revenue below the threshold limitations and no GST-related activity.
  • Automatic data retrieval: The Udyam Online Registration Portal links to government systems, including GSTIN and Income Tax. It automatically retrieves PAN and GST data (investment, revenue) for enterprises with annual turnover over ₹40 lakhs. This simplifies registration and assures data accuracy.

If your business has less than the annual revenue criterion for GST registration, MSME Udyam Registration does not require a GST number. When your business exceeds this turnover level, you must obtain a GSTIN for tax compliance under GST regulations. Government systems streamline data retrieval and verification for qualifying enterprises during registration.

Conclusion

The neutrality, transparency, accessibility, and user-friendliness of the Udyam registration portal have made it a success. The portal’s over 26 lakh registrations since GSTIN was removed as a condition for MSME Udyam Registration on March 5, 2021, have changed the game for enterprises.

Read More: Amendments and Revisions in GSTR-5

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Frequently Asked Questions

  1. Who Cannot Register for GST?

    According to the government’s revised regulations, businesses involved in forestry and logging, fishing and aquaculture, wholesale and retail trade, motorcycle and motor vehicle repair, household employment, etc., are not required to register for GST.

  2. Are there any GSTIN requirements for Udyam registration businesses?

    GSTINs are optional for Udyam registration. Business preferences and needs matter more.

  3. Can I use my GSTIN for Udyam registration?

    Udyam registration no longer requires your GSTIN, but you can supply it willingly.

  4. Does Udyam registration require a GSTTIN?

    Since March 5, 2021, GSTIN is not required for Udyam registration. However, Udyam registration requirements must be understood.

Yash Elwadhi

Yash Elwadhi is a highly skilled and experienced finance content writer with a proven track record of providing insightful and engaging content to a wide range of clients in the financial industry. He has collaborated with prominent financial institutions, fintech companies, and wealth management firms, and is known for his ability to convey complex financial concepts in a clear and engaging manner. Yash is committed to delivering high-quality content that adds value to his clients' target audience and helps them achieve their financial goals.

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