Is it mandatory to have GST Registration to apply for Udyam Registration?

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Udyam Registration in India

• https//www.udyam-registration.co.in/

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Is it mandatory to have GST Registration to apply
for Udyam Registration?
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When it comes to starting and operating a Micro,
Small or Medium Enterprise the government of
India through its Ministry of MSME has laid down
certain processes to facilitate ease of doing
business in India. A major registration process
being implemented by all MSMEs in India today is
the Udyam Registration which was called as Udyog
Aadhar or MSME Registration previously. We all
know that the Ministry of MSME via its
notification no. S.O.2119 (E) dated 26th June
2020 published in the official Gazette of India,
introduced the new system of Udyam Registration
and has since replaced it with the existing
system of Udyog Aadhar Registration or MSME
Registration. While doing so it has laid down
some new pre-requisites which are now required by
MSMEs to obtain their Udyam Registration.
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These pre-requisites or the required documents to
apply for Udyam Registration are 1) A valid
Aadhaar Number of the proprietor / partner /
director / trustee or any other representative
representing the firm or organization. 2) The
Aadhaar number needs to be linked to a valid
mobile number which is accessible to the Aadhaar
holder. An OTP will be sent to this number for
verification. 3) A valid PAN Card Number of the
firm or organization applying for registration.
For Proprietorship firms the PAN Card number of
the proprietor can be used to avail
registration. 4) A valid GST Registration or GSTI
N of the firm or organization. If any enterprise
has the above pre-requisites they can apply for
their Udyam Registration and avail the various
benefits laid down under the MSME Scheme by the
Ministry of MSME.
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Now lets try to answer our question Is it
mandatory to have GST Registration to apply for
Udyam Registration? To find the answer to this
question we will have to cite a few circulars and
notifications passed by the government till
date. Even though GST Registration was not
mandatory for Udyog Aadhaar, the government under
the notification no. S.O.2119 (E) dated 26th June
2020 published in the official Gazette of India
paragraph 6 elaborates the Registration Process
of Udyam Registration.
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Under this paragraph the sub-paragraph (5) states
the following "In case of a Company or a Limited
Liability Partnership or a Cooperative Society or
a Society or a Trust, the organisation or its
authorised signatory shall provide its GSTIN and
PAN along with its Aadhaar number. What we
understand from this sub-paragraph is that from
1st April 2021, PAN Card GST Registration will
be required to apply for Udyam Registration Under
this paragraph the sub-paragraph (5) states the
following "In case of a Company or a Limited
Liability Partnership or a Cooperative Society or
a Society or a Trust, the organisation or its
authorised signatory shall provide its GSTIN and
PAN along with its Aadhaar number." What we
understand from this sub-paragraph is that from
1st April 2021, PAN Card GST Registration will
be required to apply for Udyam Registration
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Paragraph 22 sub-section (1) of the Central Goods
Services Act under Chapter VI states the
following "Every supplier shall be liable to be
registered under this Act in the State or Union
territory, other than special category States,
from where he makes a taxable supply of goods or
services or both, if his aggregate turnover in a
financial year exceeds twenty lakh
rupees Provided that where such person makes
taxable supplies of goods or services or both
from any of the special category States, he shall
be liable to be registered if his aggregate
turnover in a financial year exceeds ten lakh
rupees As per the recent notification of the
GST council the above information has the
following addition "The threshold limit of
aggregate turnover for exemption from
registration and payment of GST for suppliers of
goods is ?40 Lakh (?20 Lakh in the States of
Arunachal Pradesh, Manipur, Meghalaya, Mizoram,
Nagaland, Puducherry, Sikkim, Telangana, Tripura
and Uttarakhand) w.e.f. 01.04.2019."
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• Further, Paragraph 23 sub-section (1) of the act
  also states that
• "The following persons shall not be liable to
  registration, namely
• any person engaged exclusively in the business of
  supplying goods or services or both that are not
  liable to tax or wholly exempt from tax under
  this Act or under the Integrated Goods and
  Services Tax Act
• (b) an agriculturist, to the extent of supply of
  produce out of cultivation of land.
• What we understand is that businesses falling
  under the exempt categories stated above need not
  apply for a GST Registration.
• So now we are left with one important question,
• Will MSMEs who are provided such exemption from
  GST Registration under the above provisions laid
  under the Goods and Services Act 2017 have to
  apply for a GST Registration to avail their Udyam
  Registration?
• The answer is a simple NO.

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On 5th March 2021 the Ministry of MSME through
its notification S.O. 1055 (E) published in the
official Gazette of India has clearly stated the
following which is to be added in the initial
notification S.O. 2119 (E) "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)." This simply means
that as long as the business is exempt from
getting GST Registration under the GST Act, they
can continue to enjoy the benefits while apply
for Udyam Registration as well. It is no longer
mandatory for such businesses to enter their GST
Number while applying for their Udyam
Registration.
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