Who Needs GST Registration: GST Limits & Rules
In India, the Goods and Services Tax (GST) is a complete indirect tax levied on the manufacture, sale, and consumption of goods and services. Every business, from startups to established corporations, must understand the GST Registration process, including the criteria, fees, documents required, and the cancellation process. This guide provides detailed insights into who needs GST Registration, the applicable limits, and essential rules for compliance.
What is GST Registration?
GST Registration is the process of enrolling a business under the Goods and Services Tax Act. Once registered, the business receives a unique GSTIN (Goods and Services Tax Identification Number), which is necessary for tax filing and compliance. Businesses involved in the supply of goods or services and exceeding the specified turnover limits are required to register under GST.
Registration under GST is not only a legal requirement but also enhances the credibility of a business, allowing it to expand operations and participate in government tenders through platforms like the Government e-Marketplace (GeM).
Who is Required to Register for GST?
Not every business is required to register under GST. However, certain criteria and turnover limits mandate registration for specific entities.
1. Threshold Limit Based Registration: Businesses with an annual turnover exceeding ₹40 lakh for goods and ₹20 lakh for services in most states are required to register. For special category states, the limit is ₹20 lakh for goods and ₹10 lakh for services.
2. Inter-State Suppliers: Businesses supplying goods or services across different states are required to obtain GST Registration irrespective of turnover.
3. E-commerce Operators: Platforms that enable online transactions are required to register under GST. Moreover, businesses selling through these platforms must also be registered.
4. Casual Taxable Persons: Individuals occasionally supplying goods or services in a taxable territory where they have no fixed place of business must register under GST.
5. Agents of Suppliers: Persons acting as agents or intermediaries on behalf of other taxable persons must obtain registration.
6. Businesses Involved in Reverse Charge Mechanism: Entities liable to pay tax under the reverse charge mechanism must register under GST.
7. Non-Resident Taxable Persons: Non-resident individuals involved in the supply of goods or services in India must also register under GST.
8. LLP and OPC Registrations: Businesses registered as Limited Liability Partnerships (LLP) or One Person Companies (OPC) must also register for GST if they meet the prescribed criteria.
GST Registration Limit
The GST Registration limit is determined based on the nature of the supply and the geographical location of the business:
(a) For supply of goods in normal states, the threshold is ₹40 lakh.
(b) For service providers, the threshold is ₹20 lakh.
(c) For businesses in special category states, the limit is ₹20 lakh for goods and ₹10 lakh for services.
It is essential to monitor annual turnover closely, as exceeding the limit without proper registration can lead to penalties.
Process of GST Registration Online
The process for Online GST Registration is designed to be straightforward and accessible through the official GST portal. Here's how to complete the process:
1. Visit the GST Portal: Access the official website at www.gst.gov.in.
2. Start the Registration Process: Select the 'New Registration' option and choose the type of taxpayer (individual, business, etc.).
3. Fill in the Details: Provide essential details such as the legal name of the business, PAN, mobile number, and email address.
4. Verification: The portal will send an OTP to the provided mobile number and email for verification.
5. Temporary Reference Number (TRN): Upon successful verification, a TRN will be generated to proceed with the application.
6. Submission of Business Information: Log in using the TRN and fill in detailed business information, including bank account details and business address.
7. Upload GST Registration Documents: The system will prompt you to upload necessary documents to support your application.
8. Digital Signature: For companies like LLPs and OPCs, using a Digital Signature Certificate (DSC) is mandatory.
9. Application Submission: After submitting the details and documents, an Application Reference Number (ARN) is generated.
10. Status Tracking: You can check the GST Registration Status using this ARN on the GST portal.
GST Registration Documents Required
To successfully complete GST Registration online, ensure the following documents are ready:
(a) PAN Card of the applicant or business.
(b) Aadhaar Card of the owner or partners.
(c) Proof of Business Registration (especially for LLP, OPC, and Subsidiary Companies).
(d) Address Proof such as rental agreements or utility bills for the place of business.
(e) Bank Account Details like a canceled cheque or bank statement.
(f) Identity and Address Proof of directors or partners.
(g) The Digital Signature Certificate (DSC) for LLPs and companies.
GST Registration Fees
There is no official fee for GST Registration online if completed through the government portal. However, if you hire professional assistance or consultancy services for registration, the cost can vary depending on the complexity of the business structure and the services required. For example, LLP registration or Subsidiary Company Registration may involve higher consultancy fees due to the complexity of documentation and compliance procedures.
What is GST Registration Status?
GST Registration Status indicates the current progress or approval stage of a GST application on the official GST portal. After submitting the application, it is essential to keep track of the GST Registration Status to ensure timely processing. The status can be checked by:
(a) Visiting the GST portal.
(b) Selecting the 'Track Application Status' option.
(c) Entering the ARN to view the status of the application.
Promptly responding to any queries raised by the GST authorities ensures the registration process moves forward without delay.
Cancellation of GST Registration
Sometimes, businesses may no longer need to be registered under GST due to various reasons, such as business closure, falling below the turnover threshold, or restructuring. Understanding the GST Cancellation Process is essential for compliance.
GST Cancellation Process Explained
1. Log in to GST Portal: Use valid credentials to access your account.
2. Direct to Cancellation Section: Go to Services > Registration > Application for Cancellation of Registration.
3. Fill in the Cancellation Form: Complete Form GST REG-16, providing details such as the reason for cancellation, effective date, and closing stock details.
4. Submit the Application: Attach necessary documents and submit the form.
5. Acknowledgment: The tax officer will process the application, and if found satisfactory, will issue an order of cancellation in Form GST REG-19.
Cancellation for LLP, OPC, and Subsidiary Companies
For entities like LLP registration, OPC registration, and Subsidiary Company Registration, the cancellation process is similar. However, these businesses must ensure that all tax dues, filings, and compliance reports are submitted before applying for cancellation. Additionally, businesses registered on the Government e-Marketplace must update their registration status accordingly to avoid future compliance issues.
Voluntary Cancellation
Businesses that voluntarily registered under GST but later fall below the threshold limit can also initiate the cancellation process. However, they must ensure that all pending tax liabilities and returns are filed before applying.
Post-Cancellation Compliance
Post-cancellation, businesses must:
(a) File a final return within three months of cancellation.
(b) Settle any pending dues.
(c) Ensure that no GST invoices are issued after cancellation.
Conclusion
GST Registration is an essential process for ensuring business compliance with India’s taxation regulations. Whether it is a sole proprietorship, an LLP registration, an OPC registration, or even a Subsidiary Company Registration, understanding the registration limits, documentation, fees, and cancellation process is crucial. Moreover, businesses looking to expand into government procurement through platforms like the Government e-Marketplace must prioritize timely and accurate GST compliance.
Being well-informed about the Online GST Registration process, keeping track of the GST Registration Status, and understanding how to cancel, when necessary, can significantly ease regulatory compliance. By ensuring adherence to these procedures, businesses can operate seamlessly while avoiding legal complications.
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