GST registration is a process by which dealers dealing with taxable goods or services or both are allotted a 15-digit PAN-based identification number for billing, assessment, payment of taxes, and other documentation.
GST registration number is required for the following process
- Billing to the customer for passing on GST credit.
- Payment of taxes, penalties, and any other fees payable under GST ACT 2017.
- Assessment of tax payable for the period
- Claim of GST refund
- Claim of GST input tax credit
Registration of GST is not mandatory for all businesses, registration is mandatory only for dealers who cross the threshold limit of turnover during the financial year, apart from the threshold limit mandatory registration is applicable for certain dealers.
Compulsory GST registration based on turnover
- Every dealer whose aggregate turnover in the financial year exceeds Rs.40,00,000 in the case of trading business and Rs.20,00,000 in the case of a supplier of services is required to apply for GST registration.
- Application for GST registration need to be filed within 30 days from the date of crossing the threshold limit.
- This is a once-in-a-lifetime exemption based on PAN, therefore once turnover in PAN exceeds the threshold limit GST is applicable for all taxable supply of sales and services.
- From the next financial year collection and payment of GST is applicable from Rs.1, which means that the exemption is a one-time exemption, and it is not available for each financial year.
- So once registration of GST is applicable, collection and payment of GST is applicable for all succeeding financial year without any limits.
- If GST registration is required to be applied on a mandatory basis on exceeding the threshold limit, then it can be cancelled by the taxpayer only if business is discontinued.
Who is required to apply for GST registration even if turnover is below the threshold limit?
Dealers whose supplies are considered interstate supplies are required to apply for GST registration without any threshold limits.
- Sales of goods or services are considered interstate supplies when supply is made to a person outside the state, an export outside the country, or supply to a unit in a special economic zone, any sales made to a unit in the special economic zone is deemed to be exports therefore the supply is interstate supply.
- Every E-commerce operator
- Every E-Commerce supplier of Goods, if the supplier is making an exclusive supply of services through e-commerce operator, then the GST threshold exemption limit is applicable for a supplier of services.
- Casual taxpayer who does not have a fixed place of business in the state and wants to carry on the business in the state for a short period, for example, trade fair, exhibition, etc.
- Every franchise business using the brand of others
- Non-resident dealer who makes a taxable supply of goods or services.
- Input service distributor
- Persons who are required to pay tax under the reverse-charge mechanism.
- Dealers in Imports or exports business
How to calculate the threshold limit for GST registration?
The threshold limit for GST registration is calculated on an India basis for a PAN, therefore registration applicability is calculated as the total turnover in the country using the same PAN.
Aggregate turnover includes the following
- Value of taxable supplies
- Value of exempted supplies
- Value of exports
In which state we should apply for GST registration if aggregate turnover crosses the threshold limit?
Once aggregate turnover calculated on an all-India basis exceeds the threshold limit, then the application for GST registration should be made in all states from where taxable supplies are made.
Therefore, if the dealer carries on business of supply of taxable supplies in Chennai Tamil Nadu and states and exempted supplies in Kerala , then application of GST registration in Chennai is to be made only in the state of Tamil Nadu and in Kerala registration is not required.
When can we apply GST registration on a voluntary or optional basis
There may be instances where GST registration is required to be applied for practical purposes but not required as per the GST Act. To provide benefits to the dealers who are not required to register GST on a compulsory basis, the GST Act has provided the option of Voluntary registration.
- Voluntary registration can be applied by any dealer, there is no restriction for the same
- Voluntary registration cannot be cancelled within one year after approval of GST registration.
- Once GST registration is approved, all the rules applicable to normal dealers are applicable to dealers registered on a voluntary basis.
- Once GST registration is approved dealer cannot supply goods without applicable taxes, because the threshold exemption limit is only for applicability of registration, and it is not applicable for charge, collection, and payment of GST.
- It is advisable to analyse the benefits of voluntary GST registration before application. Factors such as the impact on profitability, cost, and additional administrative work for the maintenance of GST records shall be considered.
Important points to be noted before application for GST registration
- There is no concept of centralized registration for all states, when GST registration is mandatory registration applications should be submitted in all states from where taxable supplies are made.
- In case where there is a branch in the state centralized registration for a state should be opted for, separate registration for each branch should not be applied.
- Separate registration for the same PAN can be applied if the business vertical is different from the already existing GST registration in the state. Therefore, Additional GST registration can be approved in a state if the nature of business is different from the existing business.
- The option to choose a composition scheme or normal scheme should be selected at the time of the new GST registration application.
- If the option for a composition scheme is opted in a state, additional GST registration can be applied only in the composition scheme.
- GST registration application will not be approved if there are any defaults in previous GST registration such as return not filed, GSTR-10 final return not filed, etc. In such case, a NEW application will be approved only after clearing past defaults.
- GST registration of partnership firm or private limited company will not be approved if any defaults in proprietorship GST registration of partners or directors is pending.
- There are no government fees for GST application, if the dealer is aware of GST rules and regulations then they can file GST registration online application at GST online registration website. Professional fees for consultation of GST registration applicability, preparation of GST registration documents, and filing of GST registration application will range from Rs.1000 – Rs.3000.
- Once the GST registration application is applied it cannot be withdrawn or cancelled, cancellation can be applied only after approval of registration, or in case if query is not replied application will be rejected by the officer after the expiry of the time limit for response to query.