Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

Direct & Indirect Taxes, Tax Ready Reckoner, Tax Management, Tax Act. & Rules, Tax Planning & Tax Savings.

GST Registration under GST Law

In any tax system, registration is the most fundamental requirement for identification of tax payers ensuring  tax compliance in the economy. Registration of any business entity under the GST Law implies obtaining a  unique number from the concerned tax authorities for the purpose of collecting tax on behalf of the Government  and to avail Input Tax Credit for the taxes on his inward supplies.

For identification of a taxpayer, registration is must for ensuring tax compliance. Under GST, registration  of any business entity implies obtaining a unique number (GSTIN) from the GST authorities for the purpose of  collecting GST on behalf of the Central Government/State Government/Union Territory and to avail input tax  credit on inward supplies. Without registration, a person can neither collect tax from his customers nor claim any  input tax credit of tax paid by him.

GST Registration under GST Law
GST Registration under GST Law

Registration confirms the following advantages to a taxpayer –

– A GST registered person is legally recognized as supplier of goods or services.

– He is legally authorized to collect taxes from his customers and pass on the credit of the taxes paid on the  goods/services supplied to the purchaser/recipient.

– He can claim input tax credit pertaining to GST paid on inward supply and can utilize the same for payment  of taxes due on outward supply of goods/services.

– Seamless flow of input tax credit from suppliers to recipients at the national level.

Table of Contents

1.   Persons Liable for GST Registration [Section 22 of the CGST Act, 2017]

GST is a tax which arises on the event of “supply” of goods/services. Section 22 requires that a supplier of  goods/services should get himself/itself registered under GST. However, the following points should be kept  in view –

Threshold Limit for GST Registration–

If “aggregate turnover” of the financial year is Rs. 20 lakh (or less), registration is not required.  If a person supplies goods/services from a special category State, then the limit is Rs. 10 lakh.

For this purpose,  special category States are Arunachal Pradesh, Assam, Himachal Pradesh, Manipur, Meghalaya, Mizoram,  Nagaland, Sikkim, Tripura and Uttarakhand. 

Compulsory GST Registration –

If aggregate turnover of the financial year exceeds the limit given above, registration is  required on compulsory basis.

Voluntary GST Registration –

Small businesses (having aggregate turnover below the threshold limit given above) can,  however, voluntarily opt for registration.

Aggregate Turnover –

For this purpose, aggregate turnover means the aggregate value of –

– All taxable supplies.

– Exempt supplies.

– Exports of goods/services.

– Inter-State supplies.

– All supplies made by the taxable person, whether on his own account or made on behalf of all his principles.

These supplies shall be determined for all units/branches of the taxpayer having the same Permanent Account  Number (PAN) and aggregate turnover is computed on all India basis.

However, aggregate turnover does not include the following –

–        Value of inward supplies on which tax is payable under reverse charge mechanism.

–        Amount of GST (i.e., IGST, CGST, SGST/UTGST).

–        Supply of goods, after completion of job work, by a registered job worker shall be treated as the supply of  goods by the principal and the value of such goods shall not be included in the aggregate turnover of the  registered job worker.

2.   Persons Not liable for GST Registration – [Section 23 of CGST Act]

The following persons are not liable for registration even if aggregate  turnover exceeds the threshold limit given above –

See also  Appeals to Appellate Tribunal [Section 253(1) and (2)]

Engaged exclusively in making Exempt Supplies –

Any person who is engaged exclusively in the business of  supplying goods/services that are not liable to GST or wholly exempt from GST, is not required to get  registration.

Agriculturist –

An agriculturist is not liable for registration to the extent of supply of produce out of cultivation  of land.

“Agriculturist” means an individual / HUF who undertakes cultivation of land –

a.  by own labour, or

b.  by the labour of family, or

c.   by servants on wages payable in cash or kind or by hired labour under personal supervision or the personal supervision of any member of the family.

An Agriculturist shall be required to be registered if he supplies other goods or services, provided his aggregate turnover exceeds the threshold limit.

Engaged only in making Taxable Supplies, GST on which is payable by recipient under Reverse Charge Mechanism (RCM) –

If a  person is engaged only in making taxable supply of goods/services, GST on which is liable to be paid on reverse  charge basis by the recipient, registration is not required (even if aggregate turnover is more than the threshold  limit of Rs. 20 lakh/Rs. 10 lakh).

3.   Compulsory GST Registration in a few cases, even if aggregate Turnover is less than Rs.20 Lakh / Rs. 10 Lakh [Section 24]

The following persons are required to get GST Registration on Compulsory basis. These cases are given by section 24. In these cases, compulsory registration is required [even if aggregate turnover is not more than Rs.  20 lakh (or Rs. 10 lakh in specified States)] –

1.     Inter-State Taxable Supply of Goods –

If a person is engaged in inter-State taxable supply of goods, GST  registration is required. Registration is required, even if the aggregate turnover is not more than Rs. 20 lakh (or  Rs. 10 lakh in specified States).

However, the following points should be noted –

1.    Persons engaged in supply of handicraft goods† making inter-State supply have been exempted from registration. Exemption is applicable only if –

– If the aggregate value of all their supplies on all India basis is less than Rs. 20 lakh (or Rs. 10 lakh in specified  States).

– They are required to have income- tax PAN.

These persons are also not required to obtain casual registration if they supply goods outside the State where they  are having their fixed establishment.

2.   If a person is engaged in inter-State supply of services, registration is not required, if aggregate turnover is not more than Rs. 20 lakh (Rs. 10 lakh in specified States).

3.   A job worker (with turnover of less than Rs. 20 lakh/ Rs.10 lakh) has been exempted from registration, even if he makes inter-State supply to registered persons. However, this exemption is not available to jewellery,  goldsmiths’ and silversmiths’ wares and other articles (Chapter 71) manufactured on job work basis.

Example:

A person is engaged in making inter-State taxable supply of goods/services. Requirement of registration is as follows –

Different situations Inter-State supply of goods Inter-State supply of services
Situation 1- Supplier of handicraft goods (aggregate turnover not more than Rs. 20 lakh/Rs. 10 lakh, having PAN) Registration not required
Situation 2– Job worker (aggregate turnover not more than Rs. 20 lakh / Rs. 10 lakh) (not being jewellery, goldsmiths’  and silversmiths’ wares) Registration not required
Situation 3 – Any other supplier (aggregate turnover not more than Rs. 20 lakh / Rs. 10 lakh) Registration required Registration not required
Situation 4 – Any other supplier (aggregate turnover more  than Rs. 20 lakh / Rs. 10 lakh) Registration required Registration required

2. Casual Taxable Person Making Taxable Supply –

If supply is made by a casual taxable person, GST registration is required. Registration is required, even if the aggregate turnover is not more than Rs. 20 lakhs (or Rs. 10 lakhs in specified States).

“Casual taxable person” means a person who occasionally undertakes transactions involving supply of goods / services in the course or furtherance of his business (maybe as principal / agent / in any other capacity), in a State/ Union territory where he has no fixed place of business.

A casual taxable person making taxable supply in India must compulsorily take registration.

There is no threshold limit for registration.

A casual taxable person cannot exercise the option to pay tax under Composition Scheme.

He must apply for registration at least 5 days prior to commencing his business in India.

3.     Persons Who Are Required to Pay Tax on Inward Supply Under Reverse Charge Mechanism (RCM) –

If a person is required to pay GST on inward supplies under reverse charge mechanism, GST registration is required. In such a case, registration cannot be avoided even if aggregate turnover of outward supply of goods / services is not more than the threshold of Rs. 20 lakh / Rs. 10 lakhs.

See also  Accumulation of Income in excess of 15% of the income earned [Section 11(2) and Rule 17] by Public Trusts

Example:

X Ltd. is a short film producer for a Bangla TV Channel. He is located in Kolkata and his annual turnover is always less than Rs. 20 lakhs. For using copyright of Y, a photographer, for his production house, he pays a royalty of Rs. 30,000. This royalty is chargeable to GST.

However, GST is payable by X Ltd., the recipient of supply, under reverse charge mechanism.  Consequently, X Ltd. is required to get registration. This rule is applicable even if aggregate turnover of X Ltd. is less than the threshold limit of Rs. 20 lakh/Rs. 10 lakhs.

4.     Every Electronic Commerce Operator

“Electronic Commerce Operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce. So Electronics Commerce Operator (as well as supplier to electronics commerce operator) are required to get GST Registration on compulsory basis in a few cases given by Section 24(iv)/(ix)/(x)/(xi).

5.     Non-Resident Taxable Person –

“Non-resident taxable person” means any person who occasionally undertakes transactions involving supply of goods/services (maybe as principal or agent or in any other capacity) but who has no fixed place of business or residence in India.

A non-resident taxable person making taxable supply in India has to compulsorily take GST Registration. There is no threshold limit for registration. A non-resident taxable person cannot exercise the option to pay tax under composition levy. He has to apply for GST Registration at least 5 days prior to commencing his business in India using a valid passport (and need not have a PAN number in India).

A business entity incorporated or established outside India, has to submit the application for GST Registration along with its tax identification number or unique number on the basis of which the  entity is identified by the Government of that country or its Permanent Account Number (if available).

6.     A Person Who is Required to Deduct Tax at Source (TDS) –

Section 51 prescribes the authority and procedure for tax deduction at source (TDS). The Government has instructed the following persons (the deductor) to deduct tax at source –

–           A department or an establishment of the Central Government or State Government.

–           Local authority.

–           Governmental agencies.

–           An authority / board / any other body set up by an Act of Parliament or a State Legislature.

–           An authority / board / any other body established by any Government with 51 % (or more) participation by way of equity or control, to carry out any function.

–           Society established by the Central Government or the State Government or a Local Authority under the Societies Registration Act, 1860.

–           Public sector undertakings.

The tax would be deducted @ 2 % of the payment made to the supplier (the deductee) of taxable goods / services, where the total value of such supply, under a contract, exceeds Rs. 2,50,000 (excluding the amount of GST).

If supplier (as well as the place of supply) are in State A and the recipient is located in State B, TDS is not applicable.

Registration of TDS Deductors –

A TDS deductor has to compulsorily register under GST without any threshold limit. The deductor has a privilege of obtaining registration under GST without requiring PAN. He can obtain registration using his TAN (issued under the Income-tax Act).

Provisions applicable from October 1, 2018 –

The aforesaid provisions of section 51 are applicable only from October 1, 2018.

7.     Agent –

A person makes taxable supply of goods/services on behalf of other taxable persons. He may be an agent or otherwise. Such a person is required to get compulsory register under GST without any threshold limit.

8.Input Service Distributor (ISD) –

Input Service Distributor (ISD) means an office of the supplier of goods / services which receives tax invoices towards receipt of input services and issues a prescribed document for the purposes of distributing the credit of CGST, SGST/UTGST or IGST paid on the said services to a supplier of taxable goods/services having same PAN as that of the ISD. ISD mechanism is meant only for distributing the credit on common invoices pertaining to input services only and not goods (inputs or capital goods).

An ISD is required to take a separate registration as ISD. There is no threshold limit for ISD.

9.     Online Information and Database Access Service –

A person supplies online information and data base access or retrieval services from a place outside India to an unregistered person in India. He is required to get compulsory register under GST without any threshold limit.

4.   GST Registration in Other Cases –

Other cases where registration is required are given below –

(1)   A Person who was Registered under Pre-GST Regime–

A person who is registered under pre-GST regime (i.e., under excise duty, VAT, service tax, etc.) is liable to be registered under GST. A person already registered under Pre-GST regime is migrated to GST by issue of provisional GSTIN. It can be converted into regular GSTIN by submitting necessary documents. If a person so migrated is not liable for registration in GST regime, he can apply for cancellation of registration. Application for cancellation of registration of migrated taxpayers can be uploaded in Form GST REG-29 on or before March 31, 2018.

See also  e-Way Rules 138 under Chapter XVI of CGST Rules, 2017 – Generation of e-Way Bill for Movement of Goods

(2)   GST Registration on Transfer of Business –

Where a business carried on by a registered taxable person is transferred, the transferee/successor is liable to be registered with effect from the date of transfer/succession. This rule is applicable whether the business is transferred on account of succession (or otherwise) to another person as a going concern.

(3)   GST Registration in the case of Merger / Amalgamation –

In a case of transfer, pursuant to sanction of a scheme for amalgamation/demerger of two or more companies, the resulting company or the amalgamated company is liable to be registered. This rule is applicable if amalgamation/demerger takes place in pursuant to an order of a High Court, Tribunal or otherwise. Registration is required by the transferee with effect from the date on which the Registrar of Companies issues a certificate of incorporation giving effect to such order of the High Court or Tribunal.

(4)   GST Registration is PAN based and State/UT specific

The registration in GST is PAN based and State/UT specific. Supplier has to register in each of such State or Union territory from where he effects taxable supply. There is no centralized registration under GST.

A business entity having its branches in multiple States will have to take separate State wise registration for the branches in different States.

Single registration within the State even if an entity has multiple branches

If an entity has multiple branches within a State, it would have single registration wherein it can declare one place as principal place of business (PPoB) and other branches as additional place(s) of business (APoB).

Separate registration can be taken for separate business verticals even within a State

However, a business entity having separate business verticals in a State may obtain separate registration for each of its business verticals otherwise a given PAN based legal entity would have one registration number – Goods and Services Tax Identification Number (GSTIN) per State.

Meaning of “business vertical” [Section 2(18) of the CGST Act, 2017]:

“Business vertical” means a distinguishable component of an enterprise that is engaged in the supply of individual goods or services or a group of related goods or services which is subject to risks and returns that are different from those of the other business verticals.

 Goods and Services Tax Identification Number (GSTIN):

In GST registration, the supplier is allotted a 15-  digit GST identification number called “GSTIN”, and a certificate of registration incorporating therein this  GSTIN is made available to the applicant on the GSTN (i.e. goods and service tax network) common portal.

>>        The first 2 digits of the GSTIN is the State code,

>>        Next 10 digits are the PAN of the legal entity,

>>        The next two digits are for entity code,

>>        And  the last digit is check sum number.

Single registration for CGST, SGST, UTGST and IGST:

Registration under GST is not tax specific, which  means that there is single registration for all the taxes i.e. CGST, SGST/UTGST, IGST and cesses.

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