GST Registration : Conditions and Procedures

Should I get GST registration for my business ? This question is asked by business owners to all tax practitioner.  I said No to 60% of my clients. Read the article to know the reasons.

Goods and Service Tax (GST) is new tax regime introduced in India which has replaced major indirect taxes. After GST implementation approximately 17 indirect taxes regime will be substituted under one tax regime. This new tax regime is expected to bring a better control mechanism for tracking and payment of indirect taxes. GST will apply to almost every assesse in business, thereby boosting revenues for the government.

Who must get GST registeration?

As per sec 22 of the CGST/SGST Act 2017, every supplier who makes a taxable supply of goods and/ or services and his or her aggregate turnover in a financial year exceeds the threshold limit of twenty lakh rupees, then the individual or business must get registered under the GST law. 

The above threshold limit of Rs.20 Lac may not apply for the below set of business owners and workers. 

(Note: For North-East states the threshold limit is Rs.10Lac)

In simple terms the below persons and business owners need to register themselves irrespective of their turnover value. The list is as below:

1. Persons making any inter-state taxable supply.
2. Persons who are required to pay tax under reverse charge
3. Every business owner or individual who are involved in electronic commerce operators
4. Non-resident business owners who want to transact within India for any supply of goods or services.
5. Input service distributor
6. Individual or business owners involved in supply of online information.

Irrespective of the above list and turnover amount, the individual or business owner may register themselves voluntarily under GST regime if they feel the requirement and business need for themselves.

Note: 

• Every person or business owners operating and transacting in multiple states are liable to take up registration separately for each of the States where he has a business operation and is liable to pay GST.
• Every person or business owners who are operating under different business either in same state or multiple states are liable to take up registration separately for each business activity and each state where he has a business operation and is liable to pay GST.

Who need not get registered under GST?

GST rules and regulation provision a list of business owners or workers who need not register themselves under the GST law regime:

1. Person supplying exempted goods or services which are not liable for tax under GST.
2. An agriculturist to the extent of supply of produce out of cultivation of land. 

But the individual or business owner may register themselves voluntarily under GST regime if they feel the requirement and business need for themselves.

When to register?

On a general basis, every Manufacturer or a Service provider or a dealer registered under Central Excise Act or under Service tax law or State Vat law or any previous law would have got an automatic PAN based registration number without fresh application. Thus the old users need not apply for the new registration and continue with the available details.

In case of new dealer, he or she has to apply online for the registration within a specified period. The specified time is as stated below:

• A dealer crossing threshold limit as specified under GST Law: Within 30 days from crossing of such limit.
• Any other dealer: Within thirty days from the date on which he becomes liable for registration
• Voluntary registrant: The time they want to apply for the same.

Note: The registration Certificate once granted is permanent unless surrendered, cancelled, suspended or revoked.

GST Registration Procedure:

Registrations for GST can be done online through a portal (https://www.gst.gov.in/) maintained by the Central Government or State Government.

Steps:

• The applicant must submit an online application “Form GST-1” for GST registration along with detail of the good and services under consideration.
• The registration fee must be paid online. 

After making such payment and submitting the online application, a temporary GST registration number would be provided.

• On submission of the application, the applicant must take print a copy of the application, attach the required documents as mentioned under GST rules and courier the same to the GST department.
• On verification of the application, final GST certificate will be issued by the concerned officer.

List of documents required for applying for GST registration:

– Proof of Constitution; such as Partnership deed, Registration Certificate under various statute, etc.

– PAN 

– Details & Proof of place of business such as copy of electricity bill, municipal tax receipt, rent agreement, etc.

– Details of bank account such as name of Account Holder, MICR code, IFSC code and bank branch details.

– Details of authorized signatory

– Specific details in-case of: 

– Proprietor in case of Proprietary Concern

– Partners in case of Partnership Firm / LLP – Managing/ Authorized

– Karta in case of HUF

– Managing Director or the Authorized Person in case of Company

– Managing authority in case of Trust, Association of Person or Body of Individual.

– CEO or his equivalent in case of Local Body

– IN any other case the person incharge.

Advantages: Registration under GST:

• Once the business or individual are registered under the GST tax regime, the person or business enjoys legal recognition as supplier of goods or services under tax regime.
• The individual or business can enjoy the benefit of input tax credit on purchase of goods or services which can be utilized for making payment of GST due on supply of goods or services.
• The individual or business owner would be legally authorized to collect tax from his purchasers and pass on the credit of the taxes paid on the goods or services supplied to purchasers or recipients.
• Businesses registered under GST can make inter-state as well as intra-state sales without many restrictions. This widens the potential market for the business owners. 
• Registration for GST will ensure that the business is compliant and scalable without any barrier of future registration. 
• A registered business owner or individual will find it much easier to operate on other business requisitions; such as getting bank loans, renting premises and others.

Disadvantages: Registration under GST

• One of the biggest challenges of many small businesses is the technology required for complying under GST tax regime; the GST registration, the required returns and payments procedures and requirements. This becomes difficult for many small businesses that are used to manual methods.
• Businesses registered under Goods and Services Taxes are required to file three returns every quarter. Failure to comply with the filing these returns will lead to imposition of late fees, interest, penalty and prosecution. Also the business owner for the month of such delay will not be able to claim any input credit. Also to add to these penalties, the business owners’ compliance rating will get affected negatively.
• Once registered under GST, the supplier will have the additional responsibility of collecting and depositing taxes with the authorities. This responsibility might lead to increase in cost of business operations.
• Cost of goods and services would be increased. Unregistered dealers can charge cheaper prices as they don’t have to levy and collect GST and ultimately may end up attracting more customers.
• Once you are registered, you are bound to comply with all the provisions of GST Rules, Acts and notifications. The compliance activities at times can be time-consuming and exhausting.
• Once registered under GST, a business will also be legally bound to assist on any requirement for assessment & penal provisions as implied under GST law. This can attract unnecessary interest and penalty to business due to lack of resources to fully comply.

Cancellation of GST registration certificate

The proper officer may, either on his own motion or on an application of the taxpayer cancel the registration within such period as may be prescribed.

The below are the cases wherein the registration can be surrendered by the registrant or cancelled by the authorities:

• The business has been discontinued or transferred fully.
• There is any change in the constitution of the business
• The taxable person is no longer liable to be registered due to some reasons.

The below are the situations wherein the officer can revoke the registration:

• The registered taxable person has contravened such provisions of the Act or the rules as may be prescribed
• A person paying tax has not furnished returns for three consecutive tax periods
• Any person who has taken voluntary registration has not commenced business within six months from the date of registration. 
• Where any registration has been obtained by means of fraud, willful misstatement or suppression of facts

The GST is an important initiative undertaken by government to keep better checks and governance around tax regulations. Also the GST registration process has been made simple and streamlined to follow. It’s your time the new GST era with confidence and brings about a change in your business processes. After such registration your taxes will be simplified to a large extent and your business will experience the easy flow of goods across state lines.