Mar 26

A Comprehensive Guide to GST Registration

GST has undoubtedly transformed the business environment in India. Many businesses have become more organised as their business partners prefer dealing with organised businesses to ensure that input tax credits are not lost. This means that you can survive in the market only if you are registered. Here is a comprehensive guide to GST registration process.

Benefits of registering a business under GST

Registration under Goods and Service Tax (GST) law will confer following advantages to your business:

  • You will be more competitive in comparison to your unregistered competitors since you will carry valid tax registration.
  • You cannot sell products or services on e-commerce platform without GST registration. If you’re planning to give a blow on e-commerce platform like Flipkart, Amazon, Paytm, Shopify or through your own website, you must need a GSTIN.
  • Only registered person can avail Input tax credit on the input goods or services which can be utilized for payment of GST due on the supply of goods or services or both by the business.
  • Only registered person is authorized to collect tax from his buyers and pass on the credit of the taxes paid on the goods or services supplied to purchasers or recipients.
  • Various government tenders requires GSTIN to apply tender. If you don’t have you may miss the business opportunity.
  • If you are a sole proprietor, GST registration can help you open a current bank account in the name of your business as it acts as a valid proof for your business.

Registration of business under GST

Section 22 of CGST Act, 2017 explains about persons who are liable for registration.

  • Every supplier making taxable supply of goods or service or both whose aggregate turnover exceeds Rs.20 lakhs shall be liable for registration. In case of special category states like Assam, Arunachal Pradesh, Jammu & Kashmir, Mizoram, Manipur, Meghalaya and so the threshold limit is Rs.10 lakhs. The aggregate turnover includes all supplies made by a person to be calculated on all India basis and also includes value of supply of exempted and non-taxable supply also.

Analysis– A supplier making supply of exempt or non-taxable goods or service or goods above Rs.20 Lakhs need not get registered. But if he makes a taxable supply of single rupee over and above the exempt or non-taxable supply, he will be liable to take a GST Registration. This is because aggregate turnover includes exempt and non-taxable supply.

  • Every person who was registered or holds a license under the previous law was liable to be registered under GST with effect from 1st July 2017. However if his turnover is less than the threshold limit of Rs.20 lakhs, he can cancel his GST registration.
  • Where a business carried on by a taxable person registered under this Act is transferred, whether on account of succession or otherwise, to another person as a going concern, the transferee or the successor, as the case may be, shall be liable to be registered with effect from the date of such transfer or succession.
  • in a case of transfer pursuant to sanction of a scheme or an arrangement for amalgamation or de-merger of two or more companies pursuant to an order of a High Court or Tribunal, the transferee shall be liable to be registered, 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.

Persons not liable for Registration under GST

Section 23 of CGST Act, 2017 explains Persons not liable for registration:

  • Any person engaged exclusively in the business of supplying goods or services or both that is not liable to tax or wholly exempt from tax under CGST or IGST Act. As discussed earlier the moment he makes a taxable supply, then he would be liable to get registered as the aggregate turnover includes supply of exempt and non-taxable supply.
  • An agriculturist, to the extent of supply of produce out of cultivation of land. Agriculturist means individual or HUF who undertakes the cultivation of land-
  1. a) by own labour
  2. b) by the labour of family
  3. c) by servants on wages payable in cash or kind or hired labour under his personal supervision or personal supervision of any member of the family.
  • The Government may, on the recommendations of the Council, by notification, specify the category of persons who may be exempted from obtaining registration under this Act.

Exemption from registration under section 23(2) of the CGST Act 2017 of –

  1. Notification No.  5/2017 – Central  Tax  dated  19.06.2017regarding  exemption from registration  to  persons  engaged  only  in  making  taxable  supplies  where total  tax  is  liable to  be  paid  on  reverse  charge  basis.
  2. Notification No.  32/2017 – Central Tax dated 15.09.2017(amended by Notification  No. 38/2017 Central  Tax  dated  13.10.2017)  regarding  exemption from registration  to  a casual  taxable  person  making  taxable  supplies  of handicraft goods.
  3. Notification No.  65/2017 Central  Tax  dated  15.11.2017 regarding  exemption from compulsory  registration  to  suppliers  of  services  through  an  ecommerce platform.
  4. Notification No.56/2018 Central Tax dated 23.10.2018Seeks to supersede  Notification No. 32/2017-Central Tax, dated 15.09.2017 (ii) such persons making inter-State taxable supplies of specified products, when made by the craftsmen predominantly by hand even though some machinery may also be used in the process.
  1. Notification No. 10/2019-Central tax dated 07.03.2019 seeks to exempt any person from obtaining registration, who is engaged in exclusive supply of goods and whose aggregate turnover in the financial year does not exceed Rs.40 lakhs. However this notification does not apply to persons engaged in making supplies of ice cream and other edible ice, Pan Masala and all tobacco goods.

Compulsory registration under GST

As per the section 24 of CGST Act 2017 there are certain cases when GST registration is required to be taken by the supplier of goods or services or both. In this section supplier has to get itself registered irrespective of the fact that he has aggregate turnover is less than 20 lakhs (10 lakhs in case of special category of states). There have been certain notifications through which certain persons have been given relief by the government from compulsory GST registration.

  • Any person making inter-state taxable supply of goods or service or both irrespective of his turnover has to get himself registered.

Exemption from compulsory registration-

  1. Notification No.10/2017 Integrated  Tax  dated  13.10.2017 regarding exemption from to  persons  making  interstate supplies of taxable services not exceeding Rs.20 lakhs is exempt from obtaining registration.
  2. Notification No.7/2017 Integrated Tax dated 14.11.2017regarding exemption for job worker engaged in making interstate supply of job work services except jewelers business.
  3. Notification No.8/2017 Integrated  Tax dated 14.09.2017regarding  exemption  from registration to  a  person  making  interstate  taxable  supplies  of  handicraft  goods.
  • A casual taxable person is required to obtain compulsory registration irrespective of the aggregate turnover in the previous year. Casual taxable person means a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business.
  • A person who is required to pay tax under reverse charge has to take compulsory registration as he has to take registration to submit tax under reverse charge.

Analysis– It is pertinent to note that Section 24 overrides only section 22 and not section 23. Therefore any person engaged exclusively in the business of supplying goods or services not liable to tax or wholly exempt from tax then he is not required to get himself registered even if he is required to pay tax under reverse charge.

  • Any person who is required to submit tax under section 9(5). As per section 9(5) specific categories of intra-state services through e-commerce operators then e-commerce operators are required to pay GST hence they are compulsorily required to get registered as they have to pay tax under reverse charge mechanism.
  • A non-resident person who is making any kind of taxable supplies in the taxable territory then he has to take compulsory registration. Non-resident taxable person means any person who occasionally undertakes transactions involving supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India;
  • A person who is required to deduct TDS the authorities as notified a department or establishment of the Central Government or State Government; or local authority; or Governmental agencies.
  • A person who is working as an agent or otherwise and also making taxable supply then as per section 24 of CGST Act 2017 he has to compulsorily get registered so any kind of agent who is making taxable supply needs to get registered under GST immediately.As per section 2(5) of CGST Act 2017 “agent” means a person, including a factor, broker, commission agent, arhatia, del credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another.
  • Input service distributor has to get compulsory registration under GST. As per 2(61) of CGST Act 2017 “Input Service Distributor” means an office of the supplier of goods or services or both which receives tax invoices issued under section 31 towards the receipt of input services and issues a prescribed document for the purposes of distributing the credit of central tax, State tax, integrated tax or Union territory tax paid on the said services to a supplier of taxable goods or services or both having the same Permanent Account Number as that of the said office;
  • A person makes supplies through electronic commerce operator other than supplies specified under section 9(5) then the supplier is also required to get compulsorily registered under GST.
  • Electronic commerce operator has to get GST registration irrespective of the turnover in previous year.  “Electronic commerce” means the supply of goods or services or both, including digital products over digital or electronic network. “Electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.
  • If a person is supplying online information and data base access or retrieval from outside India then that person has to get itself registered under GST irrespective of the turnover in the previous year. E.g. If Netflix is providing services outside India then Netflix has to get it registered and pay taxes under forward charge.
  • Such other person or class of persons as may be notified by the Government on the recommendations of the Council.

DISCLAIMER: While every effort has been taken to provide correct information, the authors/ publishers will not be liable for any loss, expense, liability, detriment or deprivation suffered arising out of any action based on the information provided above. The readers are expected to cross-check the facts and information with government circulars and notification.

ByPadmanathan KV

A Qualified Chartered Accountant based at palakkad. He is a partner at K.V.Venkitaraman & co., Chartered Accountants, specializing in the field of Income Tax and GST advisory, audit and litigation. He has represented his clients before various forums such as Income tax and GST officers, Comiissioner (appeals), Income Tax tribunal, Authority for Advance Ruling and so on. He has written numerous articles, some of which are published in reputed law reports such as GST Law times, taxmanagementindia, etc. He has delivered various papers on Income Tax and GST on various forums such as ICAI, ICMAI and other professional bodies. He is also a Faculty for ICMAI Chapter, palakkad for Direct and Indirect Taxes.