Guide on GST Registration in India

What is GST registration ?

GST registration is the process by which the person is required to apply for GSTN called as goods and service tax identification number, its is similar to pan number which service as identification number for income tax payer, in case of person who is required to be registered under GST act they are required to apply in FORM GST REG – 01 in gst portal through this link for self registration gst self registration .

Once gst application is submitted with all the required documents on gst portal it will be approved or further information will be asked through show cause notice is issued within 3- 7 working days.

GST number commonly called as GSTN is 15 digit number, the first 2 digit is state code represents state of registration of the dealer next 10 digits is person pan number, 13 th digit represents the number of total registration is granted to the dealer it also included cancelled registration, 14 th digit is time being kept as random digit which can be used for any purpose in future,  15 th digit is random check digit.

In above tabular column first 2 digits represents 33- Tamil Nadu as state code, next ten digit pan of tax payer, in 13 th digit the number is 2 it means that the dealer has applied and approved 2 gst numbers in the state, it also includes number of cancelled or suspended registration. Other 2 digits has no meaning as of now.

Who are required to apply GST registration ?

Compulsory GST registration Based on aggregate turnover in financial year.

All supplier of goods and services need to apply for gst registration with 30 days after they have crossed threshold limit as prescribed below, to explain more about the threshold limit let us classify state of registration  in 4 categories.

1. Special category states who had opted for threshold limit of 40 lakhs
   Jammu and kashmir, Ladakh, Assam.
2. Special category states who had opted for threshold limit of 20 lakhs
   Puducherry, Meghalaya, Mizoram, Tripura, Manipur, Sikkim, Nagaland, Arunachal Pradesh and Uttarakhand
3. Normal category of states who had opted for new threshold limit of 40 lakhs
   Kerala, Chhattisgarh, Jharkhand, Delhi, Bihar, Maharashtra, Andhra Pradesh, Gujarat, Haryana, Goa, Punjab, Uttar Pradesh, Himachal Pradesh, Karnataka, Madhya Pradesh, Odisha, Rajasthan, Tamil Nadu, West Bengal, Lakshadweep, Dadra and Nagar Haveli and Daman and Diu, Andaman and Nicobar Islands and Chandigarh.
4. Normal category of states who does not opt for new threshold limit of Rs.40 lakhs
   Telangana.

The above threshold limit is applicable only if the dealer deals only in sale of goods , while in case the dealer also provides services.

Aggregate turnover for the purpose of determining GST threshold  requirements is turnover calculated on all India basis.

Special category states   – 10 lakhs
Normal category States  – 20 lakhs.

So when the dealer first crosses the above limit in the state of registration he need to apply with in 30 days of crossing the limit, this limit is one time limit once they crossed the limit it is applicable in definitely in future even if sale is below threshold limit is succeeding years.

Example for threshold limit : 

Mr. Arun starts his textile business in the name of M/s. GOOD QUALITY GARMENTS (sale of goods) during financial year 2020-2021 in Tamil nadu so his threshold limit is Rs.40,00,000, in the whole financial year his aggregate turnover never crossed Rs.30,00,000,  in this case he had never crossed the threshold limit Rs.40 lakhs hence he not required to register during financial year 2020-2021.

In case of financial year 2021-2022 his turnover crossed Rs.40,00,000  on August 31 due to good customer relation and quality of products, so he need to apply for registration within 30 days which is falling on 30 th of September 2022.

Similarly if in the financial year 2022-2023 if his sales never crosses Rs.40,00,000, still he cannot cancel the registration in succeeding financial year as the threshold limit is onetime for the business.

Registration for tax payers who had already registered under old sales tax and other indirect tax laws

Every person who are already registered under old in direct tax law and required to apply for migration application from the date gst act comes in to force, so they need no apply new registration. If still the existing dealers under old indirect tax laws prefers to apply for new registration the benefit if existing input tax credit available unutilized will expire.

Mandatory Registration of suppliers whose sales are considered as interstate sales under various provisions

• Supplies of goods out of the state is called as interstate sale and registration of gst for interstate supply is mandatory irrespective of threshold limit
• Similarly in case of interstate supply of services, supplier is liable for registration only when aggregate turnover crosses prescribed threshold limit.
• Export of goods or services are considered as interstate sale, goods transported for exports are considered as interstate sale till reaches custom frontiers.
• Supply to SEZ are treated as interstate sale therefore supplier is bound to register gst for supplies to SEZ irrespective of threshold limit

Mandatory registration of E-commerce supplier

Every e-commerce supplier of goods or services is required to apply for GST registration irrespective of threshold limit. There for suppliers who are willing to tie up to sell goods through online E-commerce platform like amazon, flipkart shall apply for gst registration.

India is witnessing steady growth of “gig economy”  considering the fact of ground reality of those e commerce suppliers government have given exemption from compulsory gst registration  E commerce supplier.  Supplier of services through e commerce operator is required to apply for gst registration only when aggregate turnover crosses threshold limit when E- commerce operator “collects tax at source” as per section 52. Eg : E commerce supplier of taxi services through ola, uber.

Mandatory registration of Casual taxable person

Casual taxable person is supplier of goods or services who does not have fixed place of business in the state or union territory from where he wants to make supply. In simple terms casual taxable person is supplier who does not have registered business address in the state but who want to sell goods in from the state.

Example :

Mr.Ravi is resident of Hyderabad plans to sell goods in “Chennai trade center furniture mega annual fair” but he does not have any place of business in Hyderabad and more over the event is short term event for which he feels that renting a office is not necessary, in this case he can apply as casual tax payer  with the period for which he like to register as casual tax payer.

Mandatory registration of other taxable person making taxable supply

1. Every non resident who supplies taxable supplies are bound to apply gst registration
2. Person who are required to deduct tax under section 51
3. Input service distributor
4. Persons who are required to pay tax under reverse charge mechanism
5. Every e commerce operator who are required to collect tax at source under section 52
6. Persons who are making supply of taxable goods on behalf of other taxable person eg : franchise business , in case Mr. Aditya starts Adidas showroom through franchise agreement he is liable to register for gst even though he does not crossed threshold limit

We had specifically avoided discussion of OIDAR services in mandatory registration as it requires in depth analysis and information to determine registration requirement which will be discussed separately elsewhere.

Important points regarding effective date of registration and revision of invoice

• Effective date of registration is date from which he is liable to apply for registration in case registration is applied with in 30 days from the date of applicability.
• In case registration is applied after the expiry of 30 days from the date on which the person is liable to register the effective date of registration is date of grant of registration certificate.
• Revised invoice shall be issued with in one month from the date of approval of registration for invoices already issued from date of applicability and up to date of grant of registration, and the taxpayer shall request their supplier to issued revised invoice so that it will enable the taxpayer to claim input ax credit.
• Revised invoice cannot be issued in the case of registration applied after the expiry of 30 days as the effective date of registration commences only on date of grant of registration.

Example for effective date of registration and revised invoice

• Continuing the same example above Mr.Arun liable to gst from 1 st September and he applies with in 30 days so effective date of registration will be from 1 st September 2022.
• If Arun applies for registration after the expiry of 30 days that is after on 1 st oct 2022 and certificate issued on 5 th October then effective date of registration is 5 th October being date of grant of gst registration number.
• Mr.Arun applied for registration on 05 th day of September 2022 and registration was approved on 10 th day of September 2022, in this case effective date of registration is from 1 st day of September 2022 as we applied with in 30 days of applicability (date of applicability 1 st September 2022) , and revised invoice shall be issued for the invoices already issued from 1 st September 2022.

Voluntary registration

In practical business environment when we are dealing with corporates for our business it will be demotivating in terms of marketing if we present ourselves as unregistered dealer because you are exposing yourself as small business.

In such a situation where there is no mandatory requirement we can get gst number as voluntary registration. Another reason for voluntary registration is pressure on registered dealers who purchases products from unregistered dealers.

Registered dealers should pay tax on supplies made by unregistered dealers on revers charge basis so in order to avoid unnecessary legal formalities it is better to opt voluntary registration if majority of customers are registered dealers.

Example on voluntary GST registration

1. Mr. Balaji runs small textile retail shop by purchasing textile materials in local market from unregistered dealers , obvious their customer are unregistered dealers as dress materials are usual purchased of personals purpose unless he decides to resell. So in this case it is not justifiable to opt for voluntary registration as there is no benefit of registration in fact if Mr.Balaji is opting for voluntary gst registration then he should be a generous man who earn low profits to pay taxes to government.
2. Mr. Siva is also in textile business but his business is supplying t shirts and other textile materials for corporate events, uniforms etc. So in this case the buyer would be obviously registered buyer and and he prefers to deal with registered gst supplier, in this case Mr.Siva can opt for voluntary registration if his aggregate turnover is below threshold limit. Decision regarding composition scheme or not should be analyzed based on profitability and pricing strategy or Mr.Siva.
3. Mr.Ramachandran does facility management business and his turnover turnover is about to touch first time so he decides to apply gst registration. Mr.Ramachandran has clients from apartment association and households so their customer is sensitive to price alone they done see taxable value and tax as separately. In this case as a gst registration consultant we advised to apply for gst registration registration for facility management business as composite dealer and the final price for clients will be less as well as profitability will be more due to reduced gst rate of 6 % rather than normal rate of 18%.

GST Composition scheme registration  

Small business will be having less turnover so the cost of monthly  gst return filing  , cost to prepare complete purchase and sales data will be very high for level of their activity,  therefore on considering the facts about genuine hardship of small business relaxation in form of composition scheme is provided to taxable person who is required to registered under the act.

Dealer who had registered under composition scheme need to pay tax less rate as compared to dealer registered under regular category.

So first we need to decide on does we need to apply for mandatory registration, if it is yes to the question then you have of composition provided taxable turnover will be less than prescribed limit.

Let us get out of confusion here,  regarding turnover if you  have crossed the threshold limit for mandatory registration or applying gst on voluntary basis you can apply as composite dealer if you are eligible and pay tax at lower rates than normal tax rate.