Who Needs to Register for GST, Eligibility and Exemption
GST is a comprehensive indirect tax system levied on the supply of goods and services in India. Introduced in July 2017, GST has revolutionised the indirect taxation system, replacing multiple indirect taxes with a unified structure on the of One Nation One Tax. Not every individual involved in business or trade needs to register under GST. This is the eligibility criteria for GST registration that is crucial for businesses as non-compliance can lead to various types of penalties and disrupt operations. This article explores and knows the eligibility criteria for GST registration, the process, and key exemptions.
1. What is GST
Registration?
GST registration is the process by which a business is formally recognized under the Goods and Services Tax regime. It allows a business to collect GST from customers, claim input tax credit (ITC) on purchases, and comply with statutory obligations.
A GST registration number is popularly known as GSTIN (Goods and Services Tax Identification Number). GSTN can only be allotted on the basis of PAN Number then The GSTIN number allotted with 15 digits: it is also state a state-specific number based within.
2. Who Needs to Register for GST?
The GST Act has specified certain thresholds and categories of businesses which need to mandatorily register for GST. Eligibility for GST registration would depend on factors like turnover, type of supply, nature of business, and geographical location.
2.1. Businesses Based on Aggregate Turnover
Aggregate turnover is an important factor for GST registration. It includes all taxable supplies, exempt supplies and exports as well as inter-state supplies but excludes the value of inward supplies on which tax is payable under reverse charge.
Threshold Limits for Registration
For Goods
- Rs. 40 Lakhs: Applicable to trade and businesses in most states.
- Rs.20 Lakhs: Applicable to trade businesses in special category states (e.g., Easten state Manipur, Mizoram, Nagaland, Tripura).
For Services
- Rs.20 Lakhs: Applicable to service providers in most states.
- Rs.10 Lakhs: Applicable to service providers in special category states.
2.2. Mandatory
Registration
Certain businesses must register for GST irrespective of their turnover:- Inter-State Suppliers: Businesses, which are making inter-state supply of goods or services, are required to obtain GST registration. For example, a manufacturer located in Gujarat, making supplies to Maharashtra would require obtaining GST registration.
- E-commerce Operators: E-commerce sites, which enable supply of goods or services, such as Amazon or Flipkart, are to be registered. Moreover, sellers using these websites must also register if they are selling any goods online.
- Casual Taxable Persons The taxable person supplying goods or services at times in any territory from where he has no permanent business place shall be required to register as a casual taxable person. For example: Vendor selling goods at a trade fair set up by him in another state shall register temporarily.
- Non-Resident Taxable Persons: Persons or Companies staying outside India and supplying goods or services inside India are required to register as non-resident taxable persons.
- Persons Liable for Reverse Charge: In case a business is to pay GST on reverse charge basis, then it needs registration.
- Agents of Suppliers: Commission agents or brokers are supplying services or goods on behalf of the others must get registered under GST.
- Input Service Distributors (ISD): Those businesses which provide ITC to their locations in branches or across various units must get registered as ISD.
- Taxpayers Under the Composition Scheme: Its composition scheme is for small taxpayers whose turnover is below specified thresholds. Despite this, they ought to register to benefit from this scheme.
2.3. Voluntary Registration
Businesses below the threshold limit may
register on a voluntary basis. This is usually beneficial, because it enables
the businesses in question to:
- Claim
input tax credit.
- Increased
their credibility in the market.
- Supply goods or services to GST-registered buyers who prefer compliant suppliers.
3. Exemptions from GST Registration
The following persons and supplies are exempted from GST registration:
- Exempt Goods or Services: Individuals that carry out only exempted goods or services or not within the purview of GST do not require registration.
- Agriculturalists: Farmers involved in the supply of produce grown or cultivated through agricultural practices are exempted from GST registration.
- Businesses Below Threshold: Small businesses with an aggregate turnover below the prescribed threshold limit are exempted from registration.
- Supplies to SEZ:Supplies to Special Economic Zones (SEZs) would be regarded as exports and could attract zero-rating under GST.
4.1. Composition Scheme
Business with turnover up to Rs.1.5 crore can opt for composition schemes,
where there is a simplified tax regime with low compliance requirement.
Businesses under composition schemes cannot claim ITC and the particular
percentage of turnover shall be paid as tax.
Eligibility
Criteria
- Annual
turnover up to Rs.1.5 crore (Rs.75 lakhs for special category states).
- Engaged
in the supply of goods or restaurant services.
- Not
involved in inter-state supply or e-commerce.
4.2. QRMP Scheme
Quarterly Return Monthly Payment (QRMP) scheme is also available for taxpayers with an annual aggregate turnover up to Rs.5 crore. The scheme decreases the compliance burden by allowing the filing of returns every quarter with monthly payment of tax.
5. Process of GST Registration
GST registration is an online process facilitated
through the GST portal. Here’s a step-by-step guide:
- Go to the GST Portal
Visit www.gst.gov.in.
- Generate TRN (Temporary Reference Number)
Go to the registration section and fill out the basic details, including PAN, mobile number, and email.
- Submit the form to receive an OTP.
- Use the OTP to generate the TRN.
- Fill Out the Application Form
Log in with the TRN.
Complete the application form by providing business details, bank account information, and digital signature.
- Upload Documents
- PAN of the business.Proof of business address.
- Bank account statement.
- Aadhaar card of the proprietor or partners.
- Submit and Verify
Submit the application and verify using the Electronic Verification Code (EVC) or Digital Signature Certificate (DSC). Then GST officer will verify your profile and it will take normally 3 to 7 days.
- Receive GSTIN
After the GST officer approved your application,
you will receive your GSTIN through email and can download the registration
certificate.
6. Penalties for Non-Registration
Failure to register for GST when required can
lead to severe penalties:
- Tax
Evasion Penalty: If tax is unpaid, the penalty is 10% of
the tax due (minimum Rs.10,000).
- Willful Tax Evasion: A penalty of 100% of the tax due.
7. Importance of
GST Registration
GST registration is not just a legal
obligation/ compliance but also offers benefits:
- Enhanced Credibility: Registered businesses gain trust among suppliers and customers.
- Input
Tax Credit (ITC): Permits businesses to claim credit for
taxes paid on purchases and avail services.
- Market
Expansion: Registered businesses can venture into
interstate trade.
- Avoid
Legal Issues: Prevents penalties and compliance risks.
Conclusion
as the above about "Who Needs to Register for GST, Eligibility and Exemption" that GST registration: A crucial compliance, every
trading firm in India has to achieve. Even though eligibility criteria follow a
pattern of turnover, nature of supply, and also location, comprehension of
these rules is important so as not to draw penalties and for smooth running of
the business. Businesses below the threshold limit can also avail of voluntary
registration to make them appear more marketable and get input tax credits.
If you are unsure about your GST registration
requirements, consulting a tax expert or legal advisor can help you navigate
the complexities and ensure compliance.
Tags:
GST