GST Registration

Goods and Services Tax (GST) is an indirect tax (or consumption tax) used in India on the supply of goods and services.

Registration under the GST law implies obtaining a unique number from the GST authorities to collect tax on behalf of the government and to avail Input Tax Credit for the taxes on his 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 being a tax on the event of “supply”, every supplier needs to get registered. However, as per Section 22 of the Central Goods and Service Tax Act (CGST), small businesses having all-India aggregate turnover below the prescribed threshold need not register:

• Suppliers of goods: ₹40 lakh (₹20 lakh if the business is in Arunachal Pradesh, Himachal Pradesh, Uttarakhand, Manipur, Mizoram, Sikkim, Meghalaya, Nagaland or Tripura).
• Suppliers of services: ₹20 lakh for normal category states and ₹10 lakh for special category states.
• Small businesses having turnover below the threshold limit can, however, voluntarily opt to register.

As per the changes in the 32nd GST Council meeting, and by virtue of Notification No. 10/2019 – Central Tax, dated 7th March 2019, the threshold limit for GST registration is ₹40 lakh for the supplier of goods and ₹20 lakh for the supplier of services. Along with that, the North-Eastern States have an option to choose between ₹20 lakh and ₹40 lakh.

In accordance with sub-section (3) of Section 25, any person or entity irrespective of business turnover can obtain GST registration at any time. Hence, GST registration is obtained by many businesses despite not reaching the aggregate turnover limit.

Compulsory registration irrespective of turnover — Section 24: In addition, categories prescribed in Section 24, irrespective of the provisions of Section 22, are required to be mandatorily registered, such as persons:

• Making interstate taxable supply. However, persons making inter-state supplies of taxable services and having an aggregate turnover, to be computed on all-India basis, not exceeding twenty lakh rupees (ten lakh rupees for special category states except J & K) are exempted from obtaining registration vide Notification No. 10/2017—Integrated Tax dated 13.10.2017 (as amended by Notification No. 3/2019—Integrated Tax dated 29-1-2019).
• Casual taxable persons making taxable supply. A casual taxable person is one who has a registered business in some state in India but wants to effect supplies from some other state in which he is not having any fixed place of business. Such person needs to register in the state from where he seeks to supply as a casual taxable person. A non-resident taxable person is one who is a foreigner and occasionally wants to effect taxable supplies from any state in India, and for that he needs GST registration. However, casual taxable persons making supplies of specified handicraft goods need not take compulsory registration and are entitled to the threshold exemption of ₹20 lakh. Handicraft goods are specified in Notification No. 33/2017—Central Tax dated 15.09.2017 as amended by Notification No. 38/2017—Central Tax dated 13.10.2017.
• Persons required to pay tax under reverse charge.
• Non-resident taxable persons making taxable supply.
• Input service distributor.
• Electronic commerce operator, who provides a platform to suppliers to make supply through it.
• Persons who supply goods through an electronic commerce operator who is liable to Tax Collection at Source under Section 52. Persons supplying services through e-commerce operators need not take compulsory registration and are entitled to avail the threshold exemption of ₹20 lakh as per Notification No. 65/2017—Central Tax dated 15.11.2017 (as amended by Notification No. 6/2019—Central Tax dated 29-1-2019).
• Persons making taxable supply of goods, services or both on behalf of other taxable persons acting as agent or otherwise.
• Those e-commerce operators who are notified as liable for GST payment under Section 9(5) of the CGST Act, 2017.
• TDS Deductor.
• Those supplying online information and database access or retrieval services from outside India to a non-registered person in India.

This should be opted at the time of registration. The Composition Scheme under the GST law is for small businesses. This is to bring relief to small businesses so that they need not be burdened with the compliance provisions under the law. Thus, an option has been provided where they can opt to pay a fixed percentage of turnover as fees in lieu of tax and be relieved from the detailed compliance of the provisions of law. Composition levy would generally be opted by persons who are supplying goods & services or both to the end consumer.

Composition turnover limits (32nd GST Council Meeting, 10th January 2019; Notification No. 14/2019 – Central Tax dated 7th March 2019):

• The GST composition scheme limit for states was increased to ₹1.5 crore, i.e., businesses / individuals with annual turnover of up to ₹1.5 crore can opt for registration under the GST composition scheme (applicable from 1st April 2019 onwards).
• A lower limit applies to the North-Eastern States and hill states such as Sikkim or Himachal Pradesh, which is ₹75 lakh.

Extension to service providers (Notification No. 02/2019 – Central Tax (Rate) dated 7th March 2019): The Composition Scheme is now also available for suppliers of services or mixed suppliers, having an annual turnover in the preceding financial year of up to ₹50 lakh, with a tax rate of 6% (3% CGST + 3% SGST).