GST registration
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What is GST?
- Goods and Service Tax (GST) came into effect from 1st July,2017. It is the biggest tax reform in India since Independence.
- GST is a path breaking indirect tax reform, which attempts to create a common national market.
- GST is levied on the supply of goods and services that was formed to abolish several other plethora of indirect taxes in India, to create a single domestic indirect tax law for the entire nation for ease of tax collection and to increase the efficiency of the process.
- It is a value added tax levied on the manufacturing, sale and consumption of goods and services.
Table Of Contents
An Overview
-
GST is:-
Comprehensive - It has subsumed almost all the indirect taxes except a few state taxes
Multi-stage - It is imposed at every step in the production process
Destination-based tax - It is designed so that the tax will be levied at each stage and the tax collected in the previous stage will be available for tax refund at the next contract stage, avoiding tax. - GST brings advantages for everyone involved in the industry, government and citizens. It is expected to reduce the cost of goods and services, boost the economy, and make our products and services competitive worldwide.
- GST is applicable on all goods and services except petroleum products, alcohol for human consumption, and electricity, etc. which are taxed separately by the individual state governments, as per the erstwhile tax system.
Related Read: An Overview On GST And 5 Ways GST Impacts Your Business
What Is GST Registration?
GST act mandates that all entities involved in selling goods or providing services or both are mandatorily required to get themselves registered under the GST only when the entity crosses a minimum threshold turnover limit or when an individual starts a new business that is expected to cross the prescribed turnover. Although a person can also voluntarily register itself under GST.
Registration of any business entity under the GST Law implies obtaining a unique number from the concerned tax authorities for the purpose of collecting taxes on behalf of the government and to avail Input tax credit for the taxes on his inward supplies.
Without registration, a person can neither collect taxes from his customers, nor claim any input tax credit of tax paid by him.
- Advantages Of Registration:
- Legal recognition under law.
- Authorize to collect tax from its customers.
- You can claim input tax deductions for taxes paid on purchases/procurements. This allows you to pay taxes that you should pay when you ship the goods or services.
- A seamless flow of pre-tax credits from suppliers to recipients at the national level.
Who all are required to register themselves under GST?
- Individuals
- Hindu Undivided Family (HUF)
- All forms of Company including Government Company
- Limited Liability Partnership
- Partnership Firms
- Association of Persons
- Body of Individuals
- Co-operative society
- Local Authority
- Corporation configuration by an Act of parliament
Criteria for Compulsory registration
You must register under GST if:
Crosses aggregate turnover threshold in Previous F.Y. or in current year
(1) Special Category States – Arunachal Pradesh, Meghalaya, Sikkim, Uttarakhand, Puducherry, and Telangana
(2) Special Category States – the States of Manipur, Mizoram, Nagaland, and Tripura
(3) Special Category States – States of Manipur, Mizoram, Nagaland and Tripura
Important Points to be Noted –
Aggregate turnover is calculated on PAN India basis. This means that if you have two units in two different states, then the turnover of both the units will be added to calculate the threshold limit. Even if the entity has one branch in the special category states, then its overall limit will be the threshold limit applicable to that special category states on PAN India Basis.
Obligation to pay taxes under the reverse charge mechanism (“RCM”)
If a person is liable to pay tax under RCM, then the person has to compulsorily register under the GST irrespective of its turnover.
RCM is a mechanism whereby the recipient of a product or service is required to pay taxes, not the provider of the product or service.
E-commerce Operator(ECO)
A person who manages or owns any electronic platform and provides the platform to sell products or services or both is known as an E-commerce operator (ECO)
An ECO is mandatorily required to get himself registered if he is required to collect TCS as per section 52 or charge reverse charge under section 9(5), irrespective of the amount of turnover.
| Business Activity | Aggregate Turnover (For Normal Category States) | Aggregate Turnover (For Special Category States) |
|---|---|---|
| Dealing in Goods | 40 Lakhs | 20Lakhs(1) 10Lakhs(2) |
| Providing Services | 20 Lakhs | 10Lakhs(3) |
| Deals in both goods and services | 20 Lakhs | 10Lakhs(3) |
Tax collected at Source (‘TCS’)
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An ECO has to collect TCS at the rate of 1% (0.5% CGST & 0.5% SGST) as per Section 52 of CGST Act 2017.
TCS provisions are applicable only if :- - Supplies are made through its portal by other suppliers.
- And the consideration for such suppliers is collected by the operator and not directly by suppliers.
- Thus, TCS shall not apply in cases where a person supplies his/her own product through his/her own website or supplies made by purchasing different vendors and selling them on his/her own website.
- In case TCS is applicable, ECO will have to take two separate registrations, one will be for TCS collection and payment and the other would be for filing normal returns such as GSTR1 and GSTR 3B, etc.
- Reverse charge mechanism (‘RCM’)
- RCM as per section 9(5) lists down services which if supplied through an Electronic Commerce Operator (‘ECO’) then the ECO has to pay taxes for such services as if the ECO himself was the supplier of such services.
- The services covered for Section 9(5) are as follows:
- Passenger services by radio taxi, motor cabin, maxi cabin and motorcycle.(e.g. OLA, Uber, Rapido etc.)
- Services provided by the provision of accommodation for hotels, inns, guest houses, clubs, campsites or other commercial facilities for houses or accommodation (e.g. Oyorooms, Make My Trip)
- Cleaning services such as plumbing and carpentry (e.g. Urbanclap)
- ECO on which the provisions of TCS or RCM u/s 9(5) are not applicable has to get itself registered only if he exceeds the aggregate turnover threshold.
Registration under GST is PAN-based. So, if the aggregate supply for all the entities under a single PAN exceeds the threshold Turnover limit, then all the business entities must be registered in each of these states or territories where they have a place of business.
Unlike the service tax regime, the GST law does not have the facility of centralized registration for units across multiple states.
If you register for GST, you will receive a 15-digit GST identification number and a certificate of registration. This GSTIN will be made available to applicants on a common GSTN portal. The first 2 digits of GSTIN are the state code, the next 10 digits are the corporate PAN, the next 2 digits are for the entity code, and the last digit is the checksum number. Registration under GST is not tax specific. That is, there is a single registration for all taxes, i.e. CGST, SGST / UTGST, IGST.
E-commerce supplier
- For supplier of Services
- If the services provided are through ECO, who is required to deduct TCS, then compulsory registration, the reason being so as to take credit for the TCS deducted by the E-commerce operator.
- Suppliers supplying services mentioned in section 9(5) are not liable to be registered under GST even if their turnover is more than the threshold limit, as the liability to pay GST is on the e-commerce operator. Eg:- Uber drivers, carpenters etc.
- Suppliers supplying services not mentioned in Section 9(5) are liable to be registered under GST only when they exceed the prescribed turnover limit of Rs. 20 lakh or Rs. 10 lakh in case of special category states.
- For supplier of goods
- Suppliers of goods are required to get compulsorily registered under GST even if their turnover is less than the threshold limit.
- Casual taxable person
- A "Casual Taxable taxpayer" is a person who carries out transactions related to the delivery of goods and / or services in both the principal and representative positions in states where there is no fixed place of business. So, a casual taxable person offering taxable supplies in India has to mandatorily register and does not enjoy the registration threshold.
- Non-Resident Taxable Person
- A "non-resident taxpayer" is a person who occasionally carries out transactions in connection with the delivery of goods and / or services, in the capacity of a principal or agent and has no fixed place of business or place of residence in India. The country was not decided. Taxpayers who are not resident in India and offer taxable supplies have to mandatorily register and do not enjoy the turnover threshold.
- Input Service distributor
- A company may have its headquarters in one location and all its business units making taxable supplies in some other location which are registered separately. The headquarters procures certain services for common use by all units in different states of the country. Invoices for such expenses are procured at headquarters. But the Head Office itself would not be providing any output supply in order to utilize the credit which is accumulated on account of such common input services. In such cases, the headquarters can take ISD registration, which enables a proportionate distribution of the credit for input services to all business units.
- Online information and database access or retrieval services (‘OIDAR’)
- A person who provides OIDAR services to an unregistered person in India from a location outside of India, has to compulsorily take the registration under a simplified registration scheme.
- OIDAR includes services that are delivered via the Internet and electronic services such as:
- Advertising on the internet.
- Providing cloud services.
- Providing e-books, films, music, software and other intangible assets over a telecommunications network or the Internet.
- Providing data or information to individuals in a searchable or otherwise electronically available form over a computer network.
- Providing digital content online (films, television programs, music, etc.).
- Digital data storage.
- Online gaming etc.
- As per the simplified registration Scheme provided for OIDAR service suppliers, instead of State-wise registration, he will take single registration for entire India either himself or through his appointed agent in India, and will pay IGST.
Tax Deducted At Source (‘TDS’)
- Specified Persons required to deduct TDS under GST
- A person who is required to deduct TDS has to compulsorily take registration under GST.
- Following persons are liable to deduct TDS under GST :-
- A department or an establishment of the Central Government or State Government; or
- Local authority; or
- Governmental agencies; or
- Such persons or category of persons as may be notified by the Government.
- An authority or a board or any other body which has been set up by Parliament or a State Legislature or by the government, with 51% equity ( control) owned by the government.
- A society established by the Central or any State Government or a Local Authority, and the society is registered under the Societies Registration Act, 1860.
- Public sector undertakings.
- Rate of TDS is 2% (1% CGST and 1% SGST or 2% IGST)
- TDS will only be deducted when the total value of taxable supply under an individual contract is more than Rs. 2.5 lakh.
- Persons making a sale on behalf of some other taxable person (i.e. an Agent or Principal)
- Explanation - Suppose A is an agent of Principal B, and A sells some goods to Customer. Then if the invoice is in the name of Agent A, then A has to compulsorily get registered under GST under section 24 of CGST Act 2017 which lists down persons who are compulsorily required to get registered. However, if the invoice is in the name of Principal B, then agent A will only be required to register if his turnover crosses the threshold limit. If you do not fall under any of the above categories, but you still want to get yourself registered under the GST Act, then the law doesn't prohibit you from registering your business under GST. Registering under GST will be beneficial for you in the following cases :-
- Voluntary Registration
- If you do not fall under any of the above categories, but you still want to get yourself registered under the GST Act, then the law doesn't prohibit you from registering your business under GST.
- Registering under GST will be beneficial for you in the following cases :-
- Suppose your purchases are from a GST registered person. The invoice that he will raise on you will have a GST component. Since you are not registered, you cannot claim that GST and the same shall form a part of your cost. As a result, your overall cost of purchases will be more compared to your peers.
- You may not want to register if your end buyers are not registered.
- If you want to grow your business, you can choose the composition scheme. Less taxes have to be paid and less compliance has to be observed.
- Registering makes it easy to get a bank loan.
- All the rules and provisions of the GST law will be applicable to the voluntary registrants just like the normal registrants, and they shall be required to strictly follow them.
- Also, you can cancel your voluntary registration anytime after the completion of one year of registration.
Types of GST Registration:
-
Normal Scheme
A person has to compulsorily register under the normal scheme when his turnover exceeds the prescribed limit mentioned above. Majority of the businesses register under the normal scheme. In this scheme, a person has to either file monthly or quarterly (depending on the turnover) GST returns. -
Composition Scheme
A person registered under the composition scheme can neither charge Tax from its customer nor claim ITC on its purchases. They need to pay a fixed percentage of their turnover as GST to the government by the 18th of the month after the end of the quarter.
- Advantages of Composition scheme
- Lesser compliances
- Not required to maintain detailed records of Purchases and sales and filing of detailed returns.
- Lesser tax liability
- Disadvantages of Composition scheme
- Barred from carrying out inter-state transactions
- No ITC available on purchases
- Not allowed to supply exempt goods
- Not allowed to supply goods or services from e-commerce operator
- Who Is Allowed To Take Registration Under The Composition Scheme?
- In case you are a supplier of Goods (trader or manufacturer) and your turnover in the previous financial year is upto Rs. 1.5 crore then you can register under the composition scheme and pay a flat rate of tax, which is a fixed percentage of your turnover.
- In case you are a supplier of Services and your turnover in the previous financial year is upto Rs. 50 Lakh then you can register under composition scheme and pay a flat rate of tax, which is a fixed percentage of your turnover.
- Taxpayers registered under the scheme have to pay tax quarterly and file returns annually.
| Category of Registered Person | Rate of GST |
|---|---|
| Manufacturers, other than manufacturers of ice cream, pan masala and tobacco | (0.5% + 0.5%) = 1% of the turnover in the State or Union Territory |
| Restaurant and Outdoor Catering Services | (2.5% + 2.5%) = 5% of the turnover in the State or Union Territory |
| Any other supplier eligible for composition levy | (0.5% + 0.5%) = 1% of the turnover of taxable supplies of goods and services in the State or Union Territory |
| Supplier of Services | (3% + 3%) = 6% of the turnover in the State or Union Territory |
- Following persons cannot opt for Composition Scheme :-
- Casual Taxable person
- Non-Resident Taxable person
- Manufacturer of pan masala, ice-cream or tobacco
- Persons making Inter-state supplies
- Businesses which supply goods through an e-commerce operator
-
Casual Taxable Person
A CTP has to apply for registration at least five days prior to commencing his business. The business owner must pay an upfront deposit which is equal to the expected GST liability during the GST active tenure. The tenure for registration is 3 months. However, businesses can apply for renewal and extensions. -
Non-resident taxable person
A NRTP has to apply for registration at least five days prior to commencing his business in India. Business owners will need to make deposits equivalent to the expected GST liability during the GST's life. A typical term of office is three months. However, taxpayers can renew or renew their registrations as needed.
- Nature of Registration
- Registration under GST is PAN-based. So, if the aggregate supply for all the entities under a single PAN exceeds the threshold Turnover limit, then all the business entities must be registered in each of these states or territories where they have a place of business. Unlike the service tax regime, the GST law does not have the facility of centralized registration for units across multiple states.
Documents Required for GST registration
- Pan Card of the Person to be registered
- Aadhar Card
- Proof of constitution of business (Certificate of incorporation, Partnership deed etc)
- Identity and Address proof of Promoters/Partners/Sole proprietor with Photographs
- Address proof of the place of business (Copy of rent agreement, utility bill etc)
- Bank Account statement/Cancelled cheque (Required after registration)
- Digital Signature
- Letter of Authorization/Board Resolution for Authorized Signatory (In case of company)
How can we Help you?
- GST Registration is a completely online process and requires no physical paper submissions.
- Steps To Follow For GST Registration:
- Submit a request by clicking here.
- Our GST team will get in touch to get the documents along with a simple checklist. You must fill out this checklist and provide the documentation we need for processing. Once the documents are verified by our team of experts, we shall take the procedure further.
- Our team shall prepare the application form based on the data in the checklist and attach the documents submitted by you with the application. We will keep you updated on the progress of the GST registration throughout the process. We will apply for GST registration online and provide your ARN immediately.
- Once the application form is submitted, the GST officer will verify the application, and in case he finds any deficiency, he shall reject the application only after giving us an opportunity to rectify the mistake. Otherwise, if he finds the application to be satisfactory, he will further process it and issue us a GST registration certificate. It will normally take 3-7 days to get a GST number if the form and documentation are submitted correctly.
FAQs
Aggregate turnover is the total turnover/sales (which shall include all taxable, exempt, non-taxable, and exports of both goods and services) of all the business under the same PAN. However, GST Taxes are not included while calculating this amount.
There are four types of GST. That is, integrated tax on goods and services (IGST), state tax on goods and services (SGST), central tax on goods and services (CGST), and union tax on goods and services (UTGST).
» When the buyer and seller are in two different states, then such a supply is called Inter-state supply.
» When the buyer and seller are in the same state, then such a supply is called Intra-state supply.
When the supply of goods or services are made through an e-commerce operator and payments for such supplies are received by the e-commerce operator, then the e-commerce operator is obliged to collect an amount equal to 1% (0.5% CGST + 0.5% SGST) of the taxable supplies and deposit it with the government. The net amount is paid to the supplier, and the supplier can take credit for this TCS through the GST portal.
» Completely Online Process – No need to visit our office
» Online Document Submission & Application Tracking
» Secure GST Identification Number
» Dedicated manager for the end-to-end processing of GST registration
» CA Assisted GST Filing for all your GST needs
Speak to our experts who shall solve all your doubts.
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