Registration under GST Act
GST Law & Practice Notes
B.Com 6th Sem CBCS Pattern
Registration is the most fundamental requirement for identification of taxpayers ensuring tax compliance in the economy. Without registration, a person can neither collect tax from his customers nor claim any input tax credit of tax paid by him. Registration of any business entity under the GST Law implies obtaining a unique number from the concerned tax authorities for the purpose of:
a) Collecting tax on behalf of the government
b) To avail input tax credit for the taxes on his inward supplies.
Advantages of registration:
The following are advantages to a taxpayer who obtain registration under GST:
(i) He is legally recognized as supplier of goods or services or both.
(ii) He is legally authorized to collect taxes from his customers and pass on the credit of the taxes paid on the goods or services supplied to the purchasers/recipients.
(iii) He can claim Input Tax Credit of taxes paid and can utilize the same for payment of taxes due on supply of goods or services.
(iv) Seamless flow of Input Tax Credit from suppliers to recipients at the national level.
(v) Registered person is eligible to apply for Government bids or contracts or assignments.
(vi) Registered person under GST can easily gain trust from customers.
Who is required to take mandatory registration under GST?
Sec. 24: the following categories of persons shall be required to be registered under GST:
1. Person making any inter-state taxable supply;
2. Causal taxable persons making taxable supply;
3. Person who are required to pay tax under reverse charge;
4. Person who are required to pay tax under sec. 9(5) of CGST (i.e. Electronic Commerce Operator);
5. Non-resident taxable person making taxable supply;
6. Persons who are required to deduct tax under Sec 51, whether or not separately registered under this Act;
7. Persons who make taxable supply of goods or services or both on behalf of other taxable person whether as an agent or otherwise;
8. Input Service Distributor, whether or not separately registered under CGST;
9. Persons who supply of goods or services or both, other than supplies specified under Sec 9(5), through such electronic commerce operator who is required to collect tax at source under Sec 52;
10. Every electronic commerce operator “who is required to collect tax at source under section 52” shall be inserted as per the Finance Act, 2018 w.e.f. 1-2-2019.;
11. Every person supplying online information and database access or retrieval services from place outside India to a person in India, other than a registered person; and
12. Such other person or class of persons as may be notified by the Govt. on the recommendation of the Council.
Exemption from registration under GST:
(i) Sec 23(1)(a): Any person engaged exclusively in the business of supplying of goods or services or both they are not liable to tax or wholly exempt from tax under CGST or IGST i.e., aggregate turnover is less than Rs. 40 for goods and less than Rs. 20 for services.
(ii) Sec 23(1)(b): An agriculturist, to the extent of supply of produce out of cultivation of land.
(iii) Sec. 23(2): The Government may, on the recommendation of the GST Council exempt from registration under GST.
Types of GST Registration
1. Composition Scheme
Composite scheme is introduced for small businesses whose aggregate turnover is less than 1.5 crores (75 lakhs for north-eastern seven sisters together with Uttarakhand). GST rate under composite scheme is 1% for trader, 2% for manufacturers, 5% for restaurants and 6% for service providers. Rate of GST is fixed under composition scheme and dealer is not allowed to claim input tax credit. Also dealers are required to file less return under Composite scheme.
2. Regular scheme
The threshold limit for registration under GST Act is Rs. 40 lakhs for goods and Rs. 20 lakhs for services. An eligible registered person, whose aggregate turnover in the preceding financial year exceeds 1.5 Crores, may opt to pay tax under regular scheme. However, the said aggregate turnover shall be 75 lakh in case of persons registered under following States:
- Arunachal Pradesh
The tax payers under regular scheme is required to file monthly return and they can avail input tax credit. Also rate of tax chargeable under regular scheme is as per rate fixed under GST Act.
3. Voluntary Registration
If annual turnover of a dealer is less than threshold, he can opt for voluntary registration. Registration under GST is advantageous for all dealers whether or not they are liable to pay tax under GST. Some of the advantages for voluntary registration are given below:
(i) Legally recognized as supplier of goods or services; This helps in attracting more customers.
(ii) Provide input tax credit to customers. As they can issue taxable invoices, they can collect GST. Their customers can take input credit on their purchases.
(iii) They will be more competitive than other small business as buying from them will ensure input credit.
(iv) Voluntarily registered persons can take input credit on their own purchases and input services like legal fees, consultation fees etc.
(v) They can make inter-state sales without many restrictions.