The Goods and Services Tax (GST) is an indirect taxation system that came into force in India on July 01, 2017. According to the legal provisions governing this taxation system, businesses whose turnovers exceed ₹20 lakhs in a year are required to mandatorily get themselves registered.
Only those businesses who have successfully completed their GST registration are allowed to collect the tax from their customers and claim the tax credit for the GST paid by them to other GST-registered businesses.
If you’re a business whose turnover exceeds ₹20 lakhs in a year or is about to exceed this limit, you will have to get yourself registered on the GST portal. That said, before you proceed with the GST registration, here are a few things that you would have to keep in mind.
- Special Category States
Only individuals whose turnovers exceed ₹20 lakhs in a year are required to get registered as per the provisions governing GST. However, the act also contains a provision that states that taxpayers residing in certain special category states are required to get themselves registered under GST if their turnover exceeds ₹10 lakhs in a year. The specified special category states are as follows
- Arunachal Pradesh
- Himachal Pradesh
The GST registration limit of ₹20 lakhs in a year would continue to apply for businesses based out of other states apart from these 10 special category states, including those living in Jammu and Kashmir.
- Compulsory GST Registration
The provisions of the Central Goods and Services Act, 2017 have notified certain businesses that are compulsorily required to obtain registration under GST irrespective of what their turnover during a financial year is. Here’s a quick look at the people to whom this is applicable.
- Service providers who are engaged in providing inter-state services, i.e., supply of services from one state to another
- A casual taxable person providing GST services
- Businesses and individuals that are required to pay GST under the reverse charge mechanism
- Businesses and individuals involved in e-commerce operations
- Non-resident taxable entities
- Individuals and businesses that are required to deduct GST under section 51 of the Central Goods and Services Act, 2017
- Input service distributors
- Service providers outside India offering online information, database access, and database retrieval services to unregistered persons in India
- Service providers supplying services on behalf of another taxable service provider in the capacity of an agent
- Types of GST Registration
When it comes to GST registration, there are four different categories that you need to be aware of normal taxpayer, casual taxpayer, non-resident taxpayer, and composition registration. Here’s a closer look at each of these categories.
- Normal Taxpayer
All individuals and businesses exceeding their respective turnover limits as specified under the Central Goods and Services Tax Act, 2017 are required to get themselves registered as normal taxpayers.
- Casual Taxpayer
Individuals whose business is occasional or seasonal in nature are required to opt for GST registration as casual taxpayers. While the validity of such registrations is only 3 months, the concerned person may choose to extend or renew their registration.
- Non-Resident Taxpayer
Individuals residing outside India, but providing GST services and goods to Indian citizens and businesses are required to get themselves registered as non-resident taxpayers. As with casual taxpayers, the validity of their registration is only 3 months, which they can choose to extend or renew.
- Composition Scheme
Businesses with annual revenues of up to ₹75 lakhs (₹50 lakhs in the case of businesses based out of special category states) can choose to register themselves under the composition scheme. Under this type of registration, the taxpayer is required to pay GST at a fixed percentage on their turnover. That’s not all. The regulatory and compliance requirements are also very minimal for taxpayers registered under this scheme.
- Documents to be Submitted for GST Registration
As part of the GST registration process, every taxpayer is required to submit a list of documents. Getting to know what they are can help streamline and reduce the time taken to register. Here’s a quick look at the documents that you would have to submit.
- PAN of the taxpayer
- Aadhaar of the taxpayer
- Latest bank account statement including details like IFSC
- Document acting as proof of registration of business
- Address proof document for the place of business
- Identity and address proof of authorised signatory
- Exemption from GST Registration
The Central Goods and Services Act exempts certain individuals from having to go through the GST registration process. Here’s a quick look at the people exempted from such registration.
- Individuals involved in agriculture
- Individuals supplying goods and services exempted from GST
- Individuals supplying non-taxable goods and services
- Individuals supplying goods and services where GST is payable under the reverse charge mechanism by the recipient
Now that you’re aware of some of the key factors that you need to keep in mind, you shouldn’t find much difficulty in applying for GST registration anymore. Individuals and businesses that are found to have not registered under GST are liable to pay hefty fines, which shall be ₹10,000 or 10% of the tax payable, whichever is higher.
So, if you’re someone who exceeds the turnover limit specified under the act, get yourself registered under GST right away and avoid getting into trouble with the tax authorities.