Registration under GST law is the first thing which will legally recognize you as a supplier of goods and/or services and allow you to collect tax from your customers and pass on the credit of the tax paid on the goods and/or services supplied to the purchaser.
In India, Goods and Services Tax came into effect from 1st July 2017. In short it’s referred as GST.
In this article, we will discuss;
- when GST registration is mandatory?,
- what are the documents required?, and
- when to get your business registered under goods and services tax?
GST is a destination based tax levied on every value addition. GST has subsumed almost all the indirect taxes in India. Registration under GST law is the first and foremost thing every business man does to get started. Registration recognizes a person as a supplier of goods or services or both.
After GST registration, your business will be assigned a GSTIN, which is essentially a tax number assigned by the government of India. After having GSTIN, you need to show it on all ivoices, name plate and other legal documents. Registration under GST will let you pass on the input tax credit to recipient of goods.
After getting GSTIN for your business, you can collect taxes from your customer and pass on the credit of the taxes paid on the goods or services supplied to the purchaser or recipients.
Who should register for GST ?
To provide relief to very small taxable persons certain type of persons are not required to get registered under GST law. As per goods and services tax law, small taxable persons whose total turnover is less than Rs 20 lakhs are not required to register under GST. For the special category states the threshold limit is Rs 10 lakhs.
With effect from 1st April 2019, government of India vide notification number 10/2019-Central Tax has increased the exemption threshold limit from Rs 20 lakhs to Rs 40 lakhs for supplier of goods.
This means threshold limit for registration of service providers would continue to be Rs 20 lakhs.
As per article 279A(4)(g) of the constitution, following 11 states are considered as special category of states;
- Arunachal Pradesh
- Assam
- Manipur
- Meghalaya
- Mizoram
- Nagaland
- Sikkim
- Tripura
- Himachal Pradesh
- Uttarakhand
- Jammu and Kashmir,
However, as per explanation (iii) to section 22, for the purpose of registration, only Tripura, Mizoram, Manipur and Nagaland are to be treated as special category states. Therefore, to these four special category of states (i.e. Tripura, Mizoram, Manipur and Nagaland) the aggregate turnover limit is Rs 10 lakhs instead of Rs 20 lakhs. To other special category states as per article 279A(4)(g), aggregate turnover threshold limit should be Rs 20 lakhs.
Based on above analysis here is a table showing the threshold limit applicable to states and union territories to determine eligibility of GST registration:
States or Union Territories | Threshold limit when supplier exclusively supply goods (Amount in rupees) | Threshold limit when supplier engaged in supply of service or both goods and services (Amount in rupees) |
Manipur | 10,00,000 | 10,00,000 |
Mizoram | 10,00,000 | 10,00,000 |
Nagaland | 10,00,000 | 10,00,000 |
Tripura | 10,00,000 | 10,00,000 |
Puducherry | 20,00,000 | 20,00,000 |
Telengana | 20,00,000 | 20,00,000 |
Arunachal Pradesh | 20,00,000 | 20,00,000 |
Meghalaya | 20,00,000 | 20,00,000 |
Sikkim | 20,00,000 | 20,00,000 |
Uttarakhand | 20,00,000 | 20,00,000 |
Jammu and Kashmir | 40,00,000 | 20,00,000 |
Assam | 40,00,000 | 20,00,000 |
Himachal Pradesh | 40,00,000 | 20,00,000 |
Others States | 40,00,000 | 20,00,000 |
Please note, threshold limit as specified above is the aggregate turnover which includes taxable supplies, exempt supplies, exported goods/services and inter-state supplies on all India basis of a person having the same PAN.
Once you have registered under the GST act, you are bound to pay Goods and Services Tax even if turnover during the financial year is less than the threshold limit. This means, if a person has voluntarily registered under GST law, then he is required to pay Goods and Services Tax even if aggregate turnover is below the above mentioned threshold limit.
Where should you register your business
All eligible persons are required to get registered under GST law in the state or union territory from where he makes a supply. If supply is from different states or union territories, then separate registration from such states or union territories is required.
This means if you are established in Odisha and supply is from Odisha state, then you have to get your business registered in Odisha. You have to get it registered only when you are liable to register as per GST law.
If your business entity has branches in multiple states and supply goods from there, then you have to take separate registration in each state. In case within a state you have multiple business verticals, then you can avail multiple registration for each verticals.
Example
A dealer has three offices – one is in Bangalore and the other two are in Delhi. In order to find out whether the dealer is liable for GST registration, you need to add turnover of all the three offices. If total aggregate turnover exceeds the threshold limit, then the dealer is liable for registration under GST.
What is voluntary registration under GST law ?
A person who is not liable to be registered under GST can get registered voluntarily. Such a person has to follow the same process of registration.
Once registered, such a person will be liable to charge GST and must pay it to the government regularly. After obtaining voluntary registration, such a person must pay tax even if annual aggregate turnover for the year is less than the threshold limit.
While applying for registration, you need to select voluntary registration in the application form.
Compulsory registration under goods and services tax law
Irrespective of the threshold limit as specified above, in the following cases registration under goods and services tax law is mandatory;
- Person liable to pay tax under reverse charge as required under section 9(3) of CGST act or section 5(3) of IGST act.
- If a business carried on by a taxable person registered under GST is transferred to another person as a going concern, then the transferee or the successor shall be liable to be registered with effect from the date of such transfer.
- Transferee shall be liable to register under GST if transfer is pursuant to sanction of a scheme or arrangement for amalgamation or as the case may be, de-merger of two or more companies.
- Person engaged in supply of notified handicraft goods making inter-state supply if aggregate turnover is less than the threshold limit.
- Casual taxable person making taxable supply – These persons do not have any permanent place of business. Registration will be valid for 90 days. For instance if you want to participate in an event or exhibition to supply taxable goods or services, you have to compulsorily get registered as a casual taxpayer.
- E-commerce operator
- E-commerce seller
- Input service distributor
- Non resident indian supplying taxable goods and services in India.
- Outside India online portal – if you are providing information and database access from outside India to Indian visitors.
- Person who required deducting tax U/s 51.
- Such other person or class of persons as may be notified by the Government on the recommendations of the Council.
Who is not required to register under GST
Following persons are not required to register under GST;
- A person who is engaged exclusively in the business of supplying goods or services or both that are not liable to tax.
- An agriculturist who undertakes cultivation of land
- Person who are making supplies of taxable goods or services or both, where total tax is payable on recipient of goods or services are exempt from registration under GST Act.
- Person engaged in supply of handicraft having turnover less than the threshold limit.
- Job work with turnover less than the threshold limit.
- Services provided by the commission agent for sale or purchase of agricultural produce. However, a commission agent will be liable to register if the principal is a taxable person and the supplies made by him/her are taxable.
- A person exclusively making supplies of taxable goods and/or services, the total tax on which is liable to be paid on reverse charge basis. [notification number 5/2017 CT dated 19.06.2017]
Is GST registration free?
Yes, you need not pay any fee while registering for a goods and services tax number. However, professional fee for helping you to get registration can be levied if you are taking the help of any chartered accountant or advocate or other finance professional.
What are the documents required for GST registration?
Document requirements depend on the form of business that you register in India. Here is a list of documents that are generally required for registration under GST;
- Income tax PAN of the applicant
- Photographs of proprietor, partner, trustees, CEO etc
- Any governement registration certificate
- Proof of address of principal place of business – rent agreement, ownership document, electricity bill or property tax receipts.
- Bank statement, cancelled cheque
- Authorization letter (In case of company board resolution required)
- Digital signature certificate (DSC)
- Identity and Address proof of promoters/directors with photograph
GST registration is online. You can submit your details through gst.gov.in and upload all required documents with details to get yourself registered.
After registration, every registered person shall display the certificate of registration in a prominent location at his principal place of business and every additional place or places of business. You are also required to display your GSTIN on the name board exhibited at the entry of his principal place of business and at every additional lace or places of business.
What is Suo motu GST registration?
If pursuant to any survey, enquiry, inspection, search or any other proceeding under the GST act, the proper officer finds that a person is liable to registration but has failed to do so, then such authorised government officer may register the said person on a temporary basis. Such registration shall be effective from the date of granting registration.
After granting temporary registration, the person within 90 days from the date of grant of registration, shall submit an application for registration with all the documents. However, such a person is not required to apply for registration if an appeal is filed against such temporary registration. If appellate authority has decided to go for registration, then the person has to file the application within 30 days from the date of issuance of order.
If you have not registered, then you can neither collect tax from your customers nor claim any credit of tax paid by you.
After registration, we suggest you to display your name plate outside the office, display registration certificate in a prominent place of your office and keep all legal documents ready. Make sure that your GSTIN is printed or displayed in all such places. If the proper officer is satisfied that the physical verification of the place of business of the registered person is required after grant of registration certificate, then he may get it done. The verification report along with other documents and photographs shall be uploaded after verification is done. In case of non compliance, action can be taken against you.
Do we have centralized registration system in India?
In India, we do not have a concept of centralized registration system. You have to obtain state wise registration based on the places from where you supply goods or services or both. Within a state, if the person has different branches, then you can grant single registration, wherein it can declare the main place of business as its principal place of business and other branches as additional place of business. For each such registration, separate application in respect of such place of business should be submitted.
Therefore, if you are a supplier and your aggregate turnover exceeds the specified threshold limit, then as per GST law, you must obtain registration in every state or union territories from where you make taxable supply of goods and/or services.
If you have multiple places of business within a state or union territories, you have following two options;
- obtain a single registration for the state or union territories by declaring one place as principal place of business and other branches as additional places of business, or
- get separate registration for each place of business within such state or union territories for each business verticals
Why Income tax PAN is mandatory to get registered under GST law?
In India, GST registration is PAN based. This means, to obtain GST registration, you first have to obtain income tax permanent account number or PAN.
If you want multiple registrations in different states or Union territories, then it has to be obtained under the same PAN.
As per section 25(6) of CGST Act, 2017, every person shall have a permanent account number or PAN issued under the income tax act, 1961 in order to be eligible for grant of registration. If you are liable to deduct tax under section 51 of CGST Act, 2017, then in lieu of a permanent account number, a tax deduction and collection account number has to be issued first.
However a non-resident taxable person may be granted registration on the basis of such other document as may be prescribed. This means for a non-resident PAN or permanent account number is not mandatory. Non-resident has to submit a self-attested copy of his valid passport along with the application signed by his authorized signatory who is an Indian resident having valid PAN.
You also have to note that, GST registration is not tax specific. This means one registration is required for CGST, SGST, UTGST, IGST and compensation cess. You are not required to take separate registration for each of these taxes or Act.
If a person is carrying business or profession with places of business in different states across India has one branch in a special category state, the threshold limit for GST registration will be reduced to Rs 10 lakhs.
A supplier is not liable to obtain GST registration from the state or union territories from where exempt or non-taxable supplies are made. This means, a person is required to obtain GST registration only with respect to place of business from where taxable supply has taken place.
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