GST Registration

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What is GST Registration?

GST registration is the process of obtaining a unique identification number for a business liable to pay Goods and Services Tax (GST). As per the Central Goods and Service Tax Act of 2017, businesses with an annual turnover of more than ₹40 lakh (or ₹20 lakh for some special category states) must register as normal taxable entities. In India, a GSTIN (Goods and Services Tax Identification Number), commonly known as a GST number, consists of 15 digits. These digits are unique to each taxpayer and serve as their identification under the GST regime. This identification number helps to share all the operations and data related to the transactions with authorities.

GST or Goods and Service Tax is a destination-based, multi-stage, indirect tax system. It substitutes for VAT and other collective taxes. GST registration refers to the process of registering a firm under the GST Act of 2017. Under the GST regime, any business required to pay service tax, excise duty, VAT, or central excise must register for Goods and Service Tax (GST). GST registration is mandatory for all eCommerce sellers. Citizens can apply for a new GST online without needing to visit a government office. The registration process can be initiated on the GST portal. Upon submission of the GST application, the portal will immediately generate an ARN status.

Note: This threshold can change from state-to-state, for the latest and accurate information to get in touch with our experts today.

"GST ACT"

The Central Goods and Services Tax Act of 2017, implemented to streamline taxation and curb tax evasion, establishes the framework for the Goods and Services Tax (GST) levied on intra-state and inter-state supplies of goods and services in India.

Key Components of GST Registration

The Goods and Services Tax (GST) in India is structured around three primary components:

Central Goods and Services Tax (CGST): This tax is levied by the Central Government on the supply of goods and services within a particular state. CGST applies to transactions carried out entirely within the boundaries of one state.
State Goods and Services Tax (SGST): SGST is charged by the State Government on the supply of goods and services within its jurisdiction. Similar to CGST, SGST is also limited to transactions happening within a specific state.
Integrated Goods and Services Tax (IGST): This tax is imposed by the Central Government on the supply of goods and services that occur between different states or between a state and a Union Territory. IGST is relevant for transactions where goods or services cross state or Union Territory boundaries.

Who is required to register for GST?

GST registration is essential for the following persons:

Business Entities: Any enterprise with an aggregate annual turnover exceeding Rs. 40 lakhs. For special category states under GST, the threshold is Rs. 20 lakhs.
Service Providers: Those with an aggregate annual turnover surpassing Rs. 20 lakhs. For special category states, this limit is Rs. 10 lakhs.
Exemptions: It’s important to note that entities dealing exclusively in GST-exempted goods or services are not bound by these thresholds.
Previously Registered Entities: Entities that were registered under older tax frameworks (like Excise, VAT, Service Tax, etc.) need to migrate and register under the GST regime.
Inter-State Suppliers: Any entity or individual involved in the supply of goods across state boundaries.
Casual Taxable Entities: Those who undertake taxable supply occasionally.
Entities under Reverse Charge Mechanism: Businesses obligated to pay tax under the reverse charge.
Input Service Distributors & Agents: Distributors of input services, including their representatives.
E-Commerce Platforms: Operators or aggregators of e-commerce platforms
Non-Resident Taxable Entities: Individuals or entities that are non-resident but engage in taxable supply within India.
Supplier’s Agents: Representatives who supply on behalf of a principal supplier.
E-Commerce Suppliers: Individuals or entities that offer goods or services through an e-commerce aggregator.
Online Service Providers: Entities delivering online information, database access, or retrieval services from outside India to an individual in India, excluding those already registered under GST.

GST Registration Turnover Limit

GST registration can be obtained voluntarily by any person or entity, irrespective of turnover. GST registration becomes mandatory if a person or entity sells goods or services beyond a certain turnover. For businesses that need to register, GST apply online allows for a quick and convenient process.

Service Providers: Any person or entity who provides service of more than Rs.20 lakhs in aggregate turnover in a year is required to obtain GST registration. In special category states, the GST turnover limit for service providers has been fixed at Rs.10 lakhs.

Goods Suppliers: As per notification No.10/2019 any person who is engaged in the exclusive supply of goods whose aggregate turnover crosses Rs.40 lakhs in a year is required to obtain GST registration. To be eligible for the Rs.40 lakhs turnover limit, the supplier must satisfy the following conditions:

Should not be providing any services.
The supplier should not be engaged in making intra-state (supplying goods within the same state) supplies in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripur and Uttarakhand.
Should not be involved in the supply of ice cream, pan masala or tobacco.

If the above conditions are not met, the supplier of goods would be required to obtain GST registration when the turnover crosses Rs.20 lakhs and Rs.10 lakhs in special category states.

Special Category States: Under GST, the following are listed as special category states – Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.

Aggregate Turnover: Aggregate turnover = (Taxable supplies + Exempt Supplies + Exports + Inter-State Supplies)*(Taxes + Value of Inward Supplies + Value of Supplies Taxable under Reverse Charge + Value of Non-Taxable Supplies).

Aggregate turnover is calculated based on the PAN. Hence, even if one person has multiple places of business, it must be summed to arrive at the aggregate turnover.

Advantages of GST Registration for Businesses

Registering for GST offers a range of benefits to businesses:

Legal Compliance: Ensures that businesses remain compliant with tax regulations, thus avoiding any potential penalties.
Input Tax Credit: Businesses can claim credits for the GST they’ve paid on purchases, which can then be set off against the GST charged on sales, leading to a reduction in tax liability.
Inter-State Trade Ease: Encourages businesses to transact across state boundaries without facing tax-related challenges.
Elimination of Cascading Effect: By removing the effect of tax being levied on an already taxed amount, the overall cost of products or services is reduced.
Competitive Edge: Being GST compliant can instil trust in potential customers, opening up more business opportunities.
Access to Larger Markets: Major corporations often prefer collaborating with GST-registered vendors.
Optimized Cash Flow: Efficient management and lower tax liability can enhance the cash flow within a business.
Enhanced Credit Rating: Maintaining a consistent and positive GST compliance record can boost a business’s credit profile.
Legal Safeguard: A GST registration protects businesses and ensures their rights are upheld.
Simplified Compliance: The GST process is streamlined, enabling businesses to file returns and make payments online easily.
Transparent Operations: Ensures businesses maintain accurate records, promoting a sense of trustworthiness and professionalism.

Penalty for Not Obtaining GST Registration

For Non-Payment or Underpayments: If a taxpayer either neglects to pay the requisite tax or mistakenly underpays, an acceptable equivalent of 10% of the outstanding tax amount is levied. It’s important to note that while there are no GST registration fees, penalties for non-compliance can be significant.
Intentional Tax Evasion: If an individual or business willfully avoids paying the due taxes, the penalty equals 100% of the evaded tax amount.

GST Registration

What is GST Registration?

"GST ACT"

Key Components of GST Registration

Who is required to register for GST?

GST Registration Turnover Limit

Advantages of GST Registration for Businesses

Penalty for Not Obtaining GST Registration

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