GST registration enables goods and service providers to collect GST from their customers.
Under India's GST law, it is mandatory for businesses and individuals to register for the GST if they are supplying, producing, or trading in goods with an aggregate value of supply exceeding INR 40 lakh (US$57,496) per financial year.
For businesses and individuals engaged in the supply of services, the aggregate turnover limit is INR 20 lakhs (US$28,748) per financial year. For entities involved in the supply of goods in a special category state, the aggregate turnover limit for GST registration is INR 10 lakhs US$(14,374) per financial year.
The special category states in India are Arunachal Pradesh, Assam, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, and Uttarakhand.
GST registration is mandatory for the following categories of persons, irrespective of their turnover:
- Any individual or entity that is required to deduct tax deducted at source (TDS) under the GST Act;
- Any non-resident taxable person (including foreign entities doing business in India) – or individuals and entities registered outside India that are liable to pay tax in India due to businesses operations in the country;
- Agents supplying on behalf of a taxable person;
- Input service distributors;
- E-commerce operators and sellers on e-commerce platforms;
- Taxable persons carrying out interstate supplies.
The following persons are not liable to obtain GST registration if they engage exclusively in the following supplies:
- Supply of goods, services, or both that are not liable to tax;
- Supply of goods, services, or both that are wholly exempt from tax; or
- Agriculturist to the extent of supply of produce out of cultivation of land.
GST registration for businesses located in different states
If a business operates from more than one state, then it is mandatory for the company to register for GST separately in every state of operations.
GST registration for branches within a state
In case of multiple branches in multiple states, businesses can register one particular branch as the main branch and the remaining as additional branches.
For different GST registrations within a state, the following conditions must be satisfied:
- The business must not be registered to pay tax under the GST composition scheme;
- All separately registered business verticals must pay tax on supply of goods or services to each other and issue a tax invoice for such supply;
- The business verticals must have a distinguishable component of an enterprise that is engaged in the supply of individual goods or services or a group of related goods or serviced that are subject to risks and returns that are different from those of the other business verticals.
How to register for GST
Eligible businesses can register for GST online on the government GST portal, either directly or through a facilitation center notified by the government.
Documents required for GST registration
- Proof of constitution of business;
- Address proof of business address;
- PAN card;
- Aadhar card;
- Identity card and address proof of directors/promoters along with their photographs;
- Bank accounts details including a bank statement or a cancelled check;
- Digital signature;
- Letter of authorization; and
- Board resolution for authorized signatory.
Steps for GST registration
- Use your PAN, mobile number, and e-mail address to fill out Part-A of form GST REG-01 on the government's GST portal online.
- Verify the mobile number and the email address with a one-time password after PAN verification.
- Note down the Temporary Reference Number (TRN) sent to the mobile number and email ID after verification is complete.
- Put your TRN number on the GST portal and attach supporting documents where required.
- Fill out the automatically generated GST REG-03 form in case additional information is required.
- Once the government verifies all the information, a certificate of registration will be issued within three working days.
Penalties for non-compliance
Under GST, every transaction is recorded and tracked between the source and destination. Therefore, it is obligatory for the taxpayers to maintain and declare information with precision.
Below are the applicable penalties for some key offences:
Businesses that fail to register and pay GST are liable to a penalty of 10 percent of their tax amount, subject to a minimum of INR 10,000 (US$144). If the businesses are found to be deliberately withholding GST payments, then a 100 percent penalty is levied on the tax amount. A defaulter may claim relief from a penalty by paying the tax due, with interest as and when the GST authority issues a show cause notice or demand order. The penalty must be paid only in cash. An ITC cannot be used to pay the tax due.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.