Who Needs to Register for GST and Obtain a GSTIN?

The Goods and Services Tax (GST) is an indirect tax system introduced in India on July 1, 2017. It replaced multiple indirect taxes previously levied by the central and state governments, such as excise duty, service tax, VAT, and others. GST is a comprehensive, multi-stage, destination-based tax that is levied on every value addition in the supply chain of goods and services.

To comply with the GST system, businesses and individuals engaged in the supply of goods or services need to register for GST and obtain a unique identification number called the Goods and Services Tax Identification Number (GSTIN). Let’s explore who needs to register for GST and obtain a GSTIN.

Also Read-What is GST And Why Was It Introduced in India?

Who Required Mandatory GST Registration.

GST registration is mandatory for certain categories of businesses and individuals based on their turnover and the nature of their activities. Here are the key criteria for mandatory GST registration:

1. Turnover Threshold.

Businesses with an annual aggregate turnover exceeding a certain threshold are required to register for GST. The turnover threshold varies based on the type of business and the state in which it operates.

A. Normal Category States:

• For goods suppliers: If the aggregate turnover exceeds Rs. 40 lakhs in a financial year.
• For service providers: If the aggregate turnover exceeds Rs. 20 lakhs in a financial year.

B. Special Category States (Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, and Uttarakhand):

• For goods suppliers: If the aggregate turnover exceeds Rs. 20 lakhs in a financial year.
• For service providers: If the aggregate turnover exceeds Rs. 10 lakhs in a financial year.

It’s important to note that the aggregate turnover includes all taxable supplies, exempt supplies, exports, and inter-state supplies of the business, but excludes taxes and the value of inward supplies on which tax is payable under reverse charge.

2. Inter-State Supplies.

Businesses engaged in inter-state supply of goods or services are required to register for GST, irrespective of their turnover. This means that even if a business has a turnover below the threshold limit but makes inter-state supplies, it needs to obtain a GSTIN.

3. Reverse Charge Mechanism.

Businesses that receive goods or services from unregistered suppliers and are liable to pay GST under the reverse charge mechanism need to register for GST, regardless of their turnover. Under the reverse charge mechanism, the recipient of goods or services is responsible for paying the GST instead of the supplier.

4. E-Commerce Operators.

E-commerce operators who provide a platform for suppliers to make supplies through their platform are required to register for GST, irrespective of their turnover. This includes e-commerce marketplaces, aggregators, and other online platforms that facilitate the supply of goods or services.

5. Casual Taxable Persons and Non-Resident Taxable Persons.

Casual taxable persons, who occasionally undertake transactions involving the supply of goods or services in a state or union territory where they don’t have a fixed place of business, need to register for GST. Similarly, non-resident taxable persons, who are engaged in the supply of goods or services from outside India but don’t have a fixed place of business in India, are required to obtain a GSTIN.

6. Agents and Input Service Distributors.

Agents who supply goods or services on behalf of other registered persons and input service distributors who receive input tax credit on behalf of their recipients are required to register for GST, regardless of their turnover.

7. Persons Required to Deduct or Collect Tax at Source.

Persons who are required to deduct tax at source (TDS) under GST or collect tax at source (TCS) are mandatorily required to register for GST. This includes government departments, local authorities, and e-commerce operators who are responsible for deducting or collecting tax at source.

Voluntary GST Registration.

Even if a business does not meet the mandatory GST registration criteria, it can choose to register voluntarily. Voluntary GST registration offers several benefits, such as:

1. Input Tax Credit: Registered businesses can claim input tax credit on their purchases, reducing their overall tax liability.
2. Increased Credibility: Having a GSTIN enhances the credibility and professionalism of a business, as it demonstrates compliance with tax laws.
3. Participation in Government Tenders: Many government tenders require bidders to have a valid GSTIN, making voluntary registration beneficial for businesses interested in participating in such tenders.
4. Simplified Compliance: Voluntary registration allows businesses to maintain proper records and comply with GST regulations from the beginning, avoiding potential complications in the future.

Exemptions from GST Registration.

Certain categories of persons and activities are exempt from GST registration, even if they meet the turnover threshold. These include:

1. Agriculturalists: Persons engaged in the supply of agricultural produce grown or produced by them are exempt from GST registration.
2. Educational and Healthcare Services: Providers of educational services by educational institutions and healthcare services by clinical establishments, authorized medical practitioners, or paramedics are exempt from GST registration.
3. Goods Transport Agency: Goods Transport Agencies (GTAs) are exempt from GST registration if they provide transportation services and have not opted for forward charge.
4. Charitable and Religious Trusts: Charitable and religious trusts engaged in the supply of goods or services are exempt from GST registration if their aggregate turnover does not exceed Rs. 20 lakhs (Rs. 10 lakhs in special category states).

GST Registration Process.

To obtain a GSTIN, businesses and individuals need to follow the GST registration process. The registration can be done online through the GST portal (www.gst.gov.in). Here are the key steps involved in the GST registration process:

1. Part A of the Registration Application:

• Access the GST portal and click on the “Services” tab, then select “Registration” and “New Registration.”
• Select the type of taxpayer (e.g., normal taxpayer, composition taxpayer, casual taxable person) and the state/union territory.
• Enter the legal name of the business, Permanent Account Number (PAN), email address, and mobile number.
• Enter the captcha code and click on “Proceed.”

2. OTP Verification:

• An OTP (One Time Password) will be sent to the registered email address and mobile number for verification.
• Enter the OTPs and click on “Continue” to proceed.

3. Temporary Reference Number (TRN) Generation:

• Upon successful OTP verification, a 15-digit Temporary Reference Number (TRN) will be generated.
• The TRN will be sent to the registered email address and mobile number.

4. Part B of the Registration Application:

• Log in to the GST portal using the TRN and fill in the remaining details of the registration application.
• Provide information such as business details, promoter/partner details, authorized signatory details, principal place of business, additional places of business, bank account details, and documents for proof of identity and address.
• Submit the application along with the required documents.

5. Application Processing:

• The submitted application will be reviewed by the GST authorities.
• If any clarifications or additional information is required, the authorities may raise queries or send notices to the applicant.
• The applicant needs to respond to the queries or notices within the specified timeframe.

6. GSTIN Allotment:

• If the application is found to be in order and all the requirements are met, the GST authorities will approve the registration.
• A unique 15-digit GSTIN will be allotted to the applicant, which will be communicated through email and SMS.

It’s important to note that the GST registration process is entirely online, and businesses need to keep their registration details up to date. Any changes in the business details, such as address, contact information, or authorized signatory, need to be updated on the GST portal within the prescribed timeframe.

Consequences of Non-Registration

Failure to register for GST when required can lead to several consequences, including:

1. Penalty: A penalty of 10% of the tax amount due or Rs. 10,000, whichever is higher, may be imposed for failure to register.
2. Interest: Interest at the rate of 18% per annum may be levied on the tax amount due from the date on which the liability to register arose until the date of registration.
3. Inability to Collect GST: Unregistered businesses cannot collect GST from their customers, leading to a loss of revenue and competitiveness.
4. Denial of Input Tax Credit: Unregistered businesses cannot claim input tax credit on their purchases, increasing their overall tax burden.
5. Legal Action: In case of severe non-compliance, legal action may be initiated against the unregistered business, including prosecution and imprisonment.

Summarizing:

GST registration is a crucial aspect of compliance for businesses and individuals engaged in the supply of goods or services in India. It is mandatory for businesses that meet the specified turnover thresholds, engage in inter-state supplies, or fall under certain categories such as e-commerce operators, casual taxable persons, and reverse charge recipients.

Voluntary registration is also an option for businesses that do not meet the mandatory criteria but wish to avail the benefits of GST registration, such as input tax credit and increased credibility.

The GST registration process is online and involves submitting an application along with the required documents. Upon approval, a unique GSTIN is allotted to the applicant, which is essential for all GST-related transactions and compliance.Failure to register for GST when required can lead to penalties, interest, inability to collect GST, denial of input tax credit, and potential legal action. Therefore, it is crucial for businesses to assess their GST registration requirements and comply with the regulations to avoid any adverse consequences.

By understanding the criteria for mandatory and voluntary GST registration, the registration process, and the consequences of non-registration, businesses can ensure smooth compliance with the GST system and leverage its benefits for their growth and success.

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C.K. Gupta

Hello, I am C.K. Gupta owner of Taxgst.in, a seasoned finance professional with a Master of Commerce degree and over 20 years of experience in accounting and finance. My extensive career has been dedicated to mastering the intricacies of financial management, tax consultancy, and strategic planning. Throughout my professional journey, I have honed my skills in financial analysis, tax planning, and compliance, ensuring that all practices adhere to the latest financial regulations. My expertise also extends to auditing, where I focus on maintaining accuracy and integrity in financial reporting. I am passionate about using my knowledge to provide insightful and reliable financial advice, helping businesses optimize their financial strategies and achieve their economic goals. At Taxgst.in, I aim to share valuable insights that assist our readers in navigating the complex world of taxes and finance with ease.