If you are someone who runs a small business in India, you must have heard about terms like MSME Registration, Udyam Registration & GST Registration. These are terms which might be confusing but are essential for your business. If you’re wondering whether you need both Udyam Registration and GST Registration, we will help you find out the difference and advantages of these registrations.
Both registrations have distinct purposes. One can help you obtain benefits from the government , the other will help in your tax compliance. So let us break it down so you can determine what’s right for your business.
What is Udyam Registration?
Udyam registration is a government registration process for MSMEs in India. It helps businesses receive official recognition and access government benefits.
Who Uses Udyam Registration?
You ought to apply for Udyam Registration if:
- Your business is classified in Micro, Small or Medium depending on investment & turnover.
- You want to get a discount on loan interest rates, government subsidies or priority in tenders.
- You own a manufacturing or service business in India.
Key Benefits of Udyam Registration
Here are the key benefits of Udyam registration:
- Government Support: Your business gets priority in government schemes.
- Easier loans: Banks lend at reduced interest rates to registered MSMEs.
- Tax Benefits: Some businesses receive subsidies or exemptions.
- Participation in Government tenders: Most tenders call for MSME registration.
- Easier Licensing & Approvals: Helps obtain permits and approvals quicker.
What is GST Registration?
GST (Goods & services tax) registration is a tax registration for companies selling goods and services in India.
Who Should Register For GST?
You require GST Registration if:
- Your business turnover is over 40 lakh (20 lakh for service providers).
- You market products or services in different states of India.
- You sell on online sites like Amazon, Shopify or Flipkart.
- You want to claim ITC on purchases.
Key Benefits of GST Registration
Here are the key benefits of GST registration:
- Legal Recognition: GST-registered businesses are legally recognized and trusted.
- Tax Credit Benefits: Get refund for your taxes on items purchased.
- No Entry Barriers in Inter-State Trade: You sell across states without restrictions.
- Better Business Opportunities: Some companies work with GST-registered vendors only.
- Keep up with the Law: Avoid penalties for non-registration.
Udyam Registration vs. GST Registration: What’s the Difference?
Here are the main differences between Udyam registration and GST registration:
| Feature | Udyam Registration | GST Registration |
| Purpose | Provides benefits to MSMEs | Mandatory tax compliance |
| Who Needs It? | Small businesses, startups, manufacturers, and service providers | Businesses exceeding Rs. 40 lakh turnover or inter-state sellers |
| Government Benefits | Subsidies, loans, tax benefits, easier approvals | Tax refunds (Input Tax Credit), legal compliance |
| Cost | Free | Government fees apply |
| Compulsory? | No, but beneficial | Yes, if turnover is above the threshold |
Main Difference:
- Udyam Registration is for business benefits.
- GST Registration is for tax compliance.
Udyam Registration and GST Registration: Do You Need Both?
Some businesses do need both registrations but not all. This is how you can decide:
When You Need Only Udyam Registration:
- You own a local business that doesn’t cross 40 lakh turnover.
- You want government subsidies and easy loans.
- You don’t do interstate trade or e-commerce.
When You Just Need GST Registration:
- You sell products across India and have to comply with GST laws.
- Your business has over 40 lakh revenue and is governed by GST.
- You want to claim Input Tax Credit on business expenses.
When You Want Both Udyam & GST Registration:
- Your business is an MSME and has surpassed the GST turnover limit.
- You want government benefits plus tax compliance.
- You’re an online merchant that sells across states.
For instance :
- A local grocery shop may require just Udyam Registration.
- A digital marketing agency with 25 lakh turnover selling across states will require GST Registration.
- A manufacturing business with 50 lakh turnover should have Udyam and GST Registration.
How To Apply for Udyam & GST Registration?
Here is how to apply for Udyam registration:
Udyam Registration Steps:
- Visit the official Udyam Registration Portal.
- Enter Aadhaar Number & confirm with OTP.
- Give specifics of business like PAN, turnover and industry type.
- Send the form and obtain your Udyam Registration Certificate by email.
Udyam GST Registration Steps:
- Go to the GST portal & select New Registration.
- Fill in information as business name, PAN, mobile number and email.
- Verify OTP and also obtain a TRN.
- Log in with TRN to submit your application with needed documents.
- Submit the application using electronic signature and also obtain your GST Registration Certificate.
Benefits of Udyam Registration & GST Registration Together
If your business is eligible for both, Udyam Registration and GST Registration adds more advantages :
- Tax Benefits + Government Incentives: You get GST tax credit plus MSME subsidies.
- Easier Access to Loans: Banks lend more to MSMEs that have both registrations.
- Wider Market Reach: GST enables interstate trade; Udyam helps with recognition.
- Compliance & Credibility: Your business stays legally compliant and generates consumer trust.
Common Questions regarding Udyam and GST Registration
Some questions generally confuse people about these registration processes. Here are some commonly asked questions about Udyam and GST registration:
Q1: Is Udyam Registration mandatory?
No, but it gets you multiple government benefits for MSMEs.
Q2: Can I apply for Udyam Registration with no GST Registration?
Yes if your business doesn’t charge GST (under 40 lakh turnover).
Q3: What if I do not get GST Registration when needed?
You can be fined and / or even sued for non-compliance.
Q4: Can I sell on Amazon or Flipkart with no GST Registration?
No, all e-commerce sellers must have GST Registration.
Q5: How long does it take to obtain Udyam & GST Registration?
- Udyam Registration: Even same day / 1-3 days.
- GST Registration: Typically 5-7 working days.
Read Also | Difference Between MSME Registration, Udyam Registration, and Udyog Aadhaar
Final Thoughts
Both Udyam Registration and GST Registration serves a different purpose. Udyam can help small businesses obtain government benefits, and GST does the tax compliance.
For government benefits for MSMEs, get Udyam Registration.
But if your turnover is over 40 lakh or you sell across states you require GST Registration.
In case you qualify for both, registering under both schemes is a smart move for business growth.
Need assistance with MSME Registration or GST compliance? StartupFino provides expert guidance for simple and convenient business registration. Contact us today!
FAQs
1. Is GST mandatory following Udyam registration?
No, obtaining a GST number isn’t a precondition imposed by Udyam registration itself. But businesses with an annual revenue over 40 lakhs (20 lakhs for services) should register for GST under GST laws. In case your enterprise gets to these turnover thresholds, GST registration is required regardless of Udyam registration.
2. Can we apply for MSME registration with no GST?
Yes, you can apply for MSME (Udyam) registration with no GST number if your business isn’t required to register under GST laws. Udyam registration necessitates only an Aadhaar number for enterprises below the GST turnover threshold. However, businesses exceeding the turnover limits established under GST regulations must obtain a GSTIN to complete the MSME registration procedure.
3. Can a person have two MSME registrations?
No, an enterprise needs to file just one Udyam Registration. Still, any combination of activities (manufacturing or services or both) may be specified or even added to one registration. This consolidation makes registration easier and also ensures that all business operations are governed by one MSME certificate.
4. What is the difference between Udyam registration & MSME registration?
Udyam registration is the new web based system launched by the Government of India for the Registration of Micro, Small and Medium Enterprises (MSMEs) that replaced the MSME or Udyog Aadhaar Registration previously. The key difference is the automated, paperless and self-declaration based method of Udyam Registration coupled with federal databases for automatic verification.
5. Why is MSME registration considered to be useful?
MSME registration gives collateral-free loans, subsidies on industrial promotion and patent registration, protection from delayed payments, tender eligibility for government tenders and electricity bill concessions. Additionally, registered MSMEs might enjoy tax benefits and access to credit facilities to promote business growth and sustainability.
6. What GST benefits can MSMEs enjoy?
MSMEs in the GST regime enjoy simplified tax compliance under the composition Scheme, reduced tax burdens and improved ease of doing business. GST also removed several indirect taxes from the tax system making accounting simpler and the cost of compliance for MSMEs lower.
7. Who can not apply for MSME registration?
MSME registration in India is open for Micro, Small and Medium Enterprises. Large enterprises with investments and turnovers above specified are not eligible for MSME registration. Not all applicants are eligible for MSME registration – only business entities (proprietaries, partnerships, companies or other undertakings) are eligible.
8. Can I get an MSME certificate with no GST number?
Yes, you can obtain an MSME (Udyam) registration with no GST number if your business doesn’t need to register under GST laws. Enterprises below the GST turnover threshold can register for MSME with just an Aadhaar number. However, businesses exceeding the turnover limits established under GST regulations must obtain a GSTIN to complete the MSME registration procedure.
