Goods and Services Tax (GST) is an indirect tax regime introduced in India to streamline the nation’s complex taxation system. GST registration is a crucial step for businesses to comply with the legal requirements and gain access to the benefits offered under GST. This article aims to provide a comprehensive guide to GST registration in India, outlining the eligibility criteria, registration process, and key considerations for businesses.
What is GST and why is it important? :
GST is a unified taxation system that replaces various indirect taxes such as excise duty, service tax, value-added tax (VAT), and others. It aims to create a seamless flow of goods and services across state borders while eliminating the cascading effect of taxes. GST simplifies the tax structure, enhances transparency, and promotes ease of doing business.
Who must get GST registration?
As per sec 22 of the CGST/SGST Act 2017, every supplier who makes a taxable supply of goods and his or her aggregate turnover in a financial year exceeds the threshold limit of 40 lakh rupees, then the individual or business must get registered under the GST law.
The above threshold limit of Rs.20 Lac may apply to service providers.
(Note: For North-East states the threshold limit is Rs. 20 lakh and Rs.10Lac respectively )
Meaning of turnover: Aggregate turnover for the current financial year is considered for the applicability of new threshold limits. Turnover includes taxable, nontaxable, and exempt turnover.
There are certain businesses need to be registered compulsorily under GST.
In simple terms the below persons and business owners need to register themselves irrespective of their turnover value. The list is as below:
- Persons making any inter-state taxable supply.
- Persons who are required to pay tax under reverse charge
- Every business owner or individual who is involved in electronic commerce operators
- Non-resident business owners who want to transact within India for any supply of goods or services.
- Input service distributor
- Individual or business owners involved in the 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.
- Every person or business owner operating and transacting in multiple states is 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 owner who is operating under a different business either in the same state or multiple states is 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:
- Person supplying exempted goods or services which are not liable for tax under GST.
- 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 the GST regime if they feel the requirement and business need for themselves.
When to register?
On a general basis, every Manufacturer or Service provider or 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 a new dealer, he or she has to apply online for 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, canceled, 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.
- 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 a 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, the 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 statutes, etc.
– Details & Proof of place of business such as a copy of electricity bill, municipal tax receipt, rent agreement, etc.
– Details of bank account such as the 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 the 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 in charge.
Advantages: Registration under GST:
- Once the business or individual is registered under the GST tax regime, the person or business enjoys legal recognition as a supplier of goods or services under the tax regime.
- The individual or business can enjoy the benefit of the input tax credit on the purchase of goods or services which can be utilized for making payment of GST due on the 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 business owners.
- Registration for GST will ensure that the business is compliant and scalable without any barrier to 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 with the GST tax regime; the GST registration, the required returns, and payment 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 of these returns will lead to the 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 an increase in the cost of business operations.
- The 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 with any requirement for assessment & penal provisions as implied under GST law. This can attract unnecessary interest and penalties to businesses 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.
Below are the cases wherein the registration can be surrendered by the registrant or canceled 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.
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
GST registration is an essential step for businesses in India to comply with tax laws and gain access to the benefits offered under the GST regime. By registering for GST, businesses can streamline their operations, claim input tax credits, and enhance their credibility in the market. It is crucial for businesses to understand the eligibility criteria, complete the registration process accurately, and ensure compliance with the GST regulations. Staying updated with any changes in the GST framework and seeking professional advice can help businesses navigate the complexities of GST registration.