GST registration in India – all you need to know

Goods and Services Tax came into effect on 1st July 2017 in India. In short it’s referred as GST. It’s a destination based tax levied on every value addition. In simpler terms, goods and services tax is levied on the supply of goods and services. GST has subsumed almost all the indirect taxes in India. 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 act in India.

Registration under GST is the first and foremost thing every business man does to get started. Registration recognizes a person as a supplier of goods or services. After 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 of your invoices, name plate and other legal documents.

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.  As per goods and services act, small taxable persons whose total turnover is less than Rs 20 lakhs are not required to register under GST.

However, the limit of Rs 20 lakhs is not applicable if you are supplying taxable supplies from special category states. As per article 279A(4)(g) of the consitution, following 11 states are considered as special category of states;

  • Arunachal Pradesh,
  • Manipur,
  • Meghalaya,
  • Mizoram,
  • Nagaland,
  • Puducherry,
  • Sikkim,
  • Telangana,
  • Tripura,
  • Uttarakhand, and
  • 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.

With effect from 1st April 2019, CBIC has notified vide notification number 10/2019-Central Tax to enhance the aggregate turnover limit to Rs 40 lakhs. Here is the important part of the notification given below in italicized bold words;

Any person, who is engaged in exclusive supply of goods and whose aggregate turnover in the financial year does not exceed forty lakh rupees, except, –

(a) persons required to take compulsory registration under section 24 of the said Act;
(b) persons engaged in making supplies of the goods, the description of which is specified in column (3) of the Table below and falling under the tariff item, sub-heading, heading or Chapter, as the case may be, as specified in the corresponding entry in column (2) of the said Table;
(c) persons engaged in making intra-State supplies in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, Uttarakhand; and
(d) persons exercising option under the provisions of sub-section (3) of section 25, or such registered persons who intend to continue with their registration under the said Act.

Table

SI No Tariff item, sub-heading, heading or Chapter Description
(1) (2) (3)
1 2105 00 00 Ice cream and other edible ice, whether or not containing cocoa.
2 2106 90 20 Pan masala
3 24 All goods, i.e. Tobacco and manufactured tobacco substitutes

This means, the threshold limit for compulsory registration of service providers would continue to be Rs 20 lakhs and in case of four Special category States (as listed above) the aggregate turnover threshold limit is Rs 10 lakhs.

As the limit of Rs 40 lakhs, 20 lakhs and 10 lakhs depend on the aggregate turnover, you should go through the definition of aggregate turnover. Here is the link for you.

On the basis of above analysis the threshold limit criteria for GST registration can be summarized below;

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

However, certain categories of persons mentioned in Section 24 of GST Law are liable to be registered irrespective of this threshold.

Can a person take voluntary registration irrespective of turnover

As per section 25(3) of the CGST Act, 2017, a person, though not liable to be registered under Section 22 or Section 24, may get himself registered voluntarily. In such case, all provisions of this Act, as are applicable to a registered taxable person, shall apply to such person.

Once you have registered under the GST act, you are bound to pay GST even if turnover during the financial year is less than the threshold limit. This means if a person has voluntarily registered, then he is required to pay GST even if his/her aggregate turnover is below the threshold limit.

While applying for registration, such person has to select voluntary registration in the application form.

What happens if someone failed to register

As per section 25(8) of CGST Act, 2017, where a person who is liable to be registered under the CGST Act fails to obtain registration, the proper officer may, without prejudice to any action which may be taken under the CGST Act, or under any other law for the time being in force, proceed to register such person in the manner as may be prescribed.

Where should you register your business

The person is required to get registered 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.

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.

If you are engaged in supply of taxable goods and/or services in more than one state and one of such states is a specified state to which a lower threshold limit is applicable, then such lower limit is applicable to all your business in India. For example, Mr A is exclusively in intra state supply of goods from its showroom in Kolkata, West Bengal. During the year his aggregate turnover from West Bengal’s business is 25 lakh rupees. It has another showroom in Tripura with a turnover of 12 Lakh rupees. In this case since Mr A is engaged in supply of goods from a special category state i.e. Tripura, the applicable threshold limit for GST registration will be 10 lakhs rupees. Therefore, Mr A is liable to get registered in both the state West Bengal and Tripura.

Please note, without GST registration, you cannot collect GST from your customers nor claim any input tax credit of GST paid by him.

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.

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.

Compulsory registration under goods and services act

Irrespective of the threshold limit as specified above, in following cases registration 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 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
  • Persons liable to deduct tax (TDS)
  • 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.

Who is not required to register under GST

Here is the list of person who is not liable to register under section 23 of CGST Act. As per this section, certain persons will not be the taxable person. Government has also notified certain category of persons as being exempted from obtaining registration under GST law. Here is the list of those who are not required to obtain registration under GST law;

  • Person exclusively engaged in the business of supplying goods or services or both not liable to tax under GST law or wholly exempt from tax
  • An agriculturist to the extent of supply of produce out of cultivation of land
  • 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]
  • A person making inter-state supplies of taxable services and have an aggregate turnover to be computed on all India basis not exceeding an amount of Rs 20 lakhs in a financial year have been exempted from obtaining compulsory registration. In case of special category states of Mizoram, Tripura, Manipur and Nagaland, this limit of Rs 10 lakhs. [notification number 10/2017 IT dated 13.10.2017]
  • Person making inter-state taxable supplies of notified handcraft goods up to Rs 20, 00,000.
  • A casual taxable person making inter-state supplies of notified handicraft goods up to Rs 20 lakhs in a financial year.
  • 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.

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
  • Photographs of proprietor, partner, trustees, CEO etc
  • 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

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.

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.

is a fellow member of the Institute of Chartered Accountants of India. He lives in Bhubaneswar, India. He writes about personal finance, income tax, goods and services tax (GST), company law and other topics on finance. Follow him on facebook or instagram or twitter.