Learn about the recent changes in Udyam registration, which the government had launched to ease the registration process, including whether GSTIN is necessary for Udyam registration.
Micro, small, and medium-sized businesses (MSMEs) have long been considered the driver of economic prosperity. Economic experts say that it has a lot of potential for growth.
Following the ‘COVID-19’ outbreak, the Government of India (GOI) had launched a host of relief programs for the MSME sector. These aimed to boost both the industry and the country’s economy by taking initiatives like convenience in conducting trade, availability of easy loans, lower interest rates, etc. With effect from 1 July 2020, the government has established the idea of Udyam Registration for current and new MSME firms listed under the EM-II and Udyog Aadhaar Memorandum (UAM). The MSME Udyam registration portal was launched by the Ministry of Micro, Small, and Medium Enterprises.
Modification in the Specified Requirements for Udyam Registration
At first, the notification released by the Government on 26 June 2020 stated that both the PAN card number and the GSTIN of a firm are necessary to register for the Udyam registration, with effect from 1 April 2021. However, the Government received many petitions from various MSMEs as ‘making the GSTIN mandatory’ impacts the authorisation process. This was because many enterprises in different states of the country were exempted from filing GST returns as per the Goods and Service Tax Act. A business with a revenue of more than 40 lakh must register for GST. Therefore, it exempts many MSMEs from registration since their annual revenue is less than the threshold level. After taking into consideration the petitions of the MSMEs, the Ministry of MSME issued a notification on 5 March 2021 where it clearly stated that GSTIN would no longer be a prerequisite 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).’
Furthermore, this relaxation will make it easier for other micro-firms to register rapidly and effortlessly who do not want to file for GST at the beginning stage of their business but still want to enjoy the benefits of Udyam Registration.
What are the Required Documents to Apply for Udyam Registration?
The documents required to process the registration of Udyam are an Aadhar Card and a PAN Card. A proper Aadhar Card Number of a legitimate representative of the firm or organisation is required. The firm or organisation filing for registration must have a valid PAN Card number. Proprietorships can utilise the proprietor’s PAN card number to get authorisation for proprietorship enterprises. An authorised GST Registration Number or GSTIN of the respective organisation or firm is also needed during the registration.
Use our GST calculator to determine the exact amount of GST to be paid before registering for GST.
How are the Different MSME Firms Classified Under Udyam Registration?
An MSME registration, also known as Udyam registration, includes a government signature, a recognised certificate, and a distinctive number. If you have opened a small-scale business and want your business to be certified by the government and enjoy the other benefits and schemes provided by the government, then this Udyam registration should be a must-do for you.
According to the Ministry of MSME, micro, small and medium enterprises are segregated based on their investment in plant and machinery or equipment and turnover or revenue. If the investment of a firm is less than ₹ 1 crore and has a turnover of fewer than ₹ 5 crores, then it is considered a Micro Enterprise. A firm with an investment of fewer than ₹10 crores and an overall turnover of fewer than ₹ 50 crores, then that firm falls under the category of Small Enterprise. Similarly, another firm with an investment of fewer than ₹ 50 crores and revenue of fewer than ₹ 250 crores is regarded as a Medium Enterprise.
Can One Apply for GST Registration Using Udyam Registration?
It was announced by the government on 26 June 2020 that the GSTIN (GST Identification Number) would be mandatory for all enterprises registering with Udyam. A PAN and GST will be mandatory for businesses starting on 01 April 2021. However, multiple MSME associations have communicated to the government that the mandatory requirement of GSTIN has negatively impacted MSME registration. Now, any enterprise above the threshold limit of ₹ 40 lakhs can apply for GST registration, though all of them don’t need to do the same.
Who is Not Liable to Register Using GST?
There are several businesses that are not liable to register using GST according to the government’s revised regulations, like the businesses involved in forestry and logging, fishing and aquaculture, wholesale and retail trade, repair of motorcycles and motor vehicles, activities of the households as employees for domestic personnel etc.
Conclusion
The Udyam registration platform: https://udyamregistration.gov.in/ has been a huge hit. Because of its neutrality, openness, accessibility, and user-friendliness, it has gotten a lot of positive feedback from stakeholders. From 5 March 2021, after removing GSTIN as the mandatory requirement for the MSME Udyam Registration, the portal has already received nearly 26 lakh registrations.
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