In recent years, the concept of a One Person Company (OPC) has gained popularity in India. It is a business structure that allows a single individual to operate a company without requiring a partner. The government has made it easier for individuals to register their OPC under GST by simplifying the registration process.
GST is a comprehensive tax levied on the supply of goods and services in India. Any individual or company engaged in the supply of goods and services with an annual turnover of more than Rs. 20 lakh must register for GST. Read more about the slabs here: GST Compliance. In the case of a One Person Company, the registration process is similar to that of other business structures.
What is one person company in GST?
The Company’s Act of 2013 introduced a novel approach on the One Person Company. (OPC). A one-person corporation (OPC) is a business that has only one owner. Before the Companies Act of 2013 went into effect, a single person was not able to start a company. If a person wished to start a business, he or she could only choose a sole proprietorship because a company could only be founded with a minimum of two directors and two members.
Now, a business can be incorporated under Section 2(62) of the business’s Act 2013 with just 1 Director and 1 Member. It is a type of corporation with fewer compliance obligations than a private corporation.
According to the Companies Act of 2013, a person can establish a business with just one member and one director. One person may serve as both the director and member’s role. Therefore, a one-person company is a business that has the characteristics of a corporation and the advantages of a sole proprietorship and can be incorporated by a single person.
Who is eligible to be a member of an OPC?
To serve as a member and nominee of an OPC, a natural person must be an Indian citizen and resident of India. For the aforementioned purposes, a person who has lived in India for at least 182 days in the immediately prior financial year is considered to be a resident of India.
What are the Legal Rights of One Person Company in GST?
The member grants the OPC independent legal entity status. The sole person who incorporated the OPC is protected by its distinct legal status. The member’s liability is restricted to the value of his or her shares; he or she is not personally responsible for the company’s loss. Therefore, the OPC and not the member or director may be sued by the creditors if need be.
How to register for GST as One Person Company in India?
As an One Person Company (OPC) in India, you are required to register for the Goods and Services Tax (GST) if your annual turnover exceeds the prescribed threshold. The process of registration for OPC is similar to a regular GST Registration process.
Here are the steps to register for GST as an OPC in India:
- Visit the GST portal: Go to the official GST portal at https://www.gst.gov.in/ and click on the ‘Services’ tab. From the drop-down menu, select ‘Registration’ and then click on ‘New Registration.’
- Fill in the details: On the ‘New Registration’ page, select ‘Taxpayer’ as the type of taxpayer and ‘State’ and ‘District’ in which your business is located. Then, fill in your legal name and Permanent Account Number (PAN) details.
- Enter contact details: Enter your email address and mobile number. You will receive an OTP on your mobile number, which you need to enter to proceed.
- Verify OTP: Enter the OTP received on your mobile number and click on the ‘Proceed’ button.
- Generate Temporary Reference Number (TRN): After OTP verification, you will be directed to the ‘Temporary Reference Number (TRN)’ page. Click on the ‘Proceed’ button to generate your TRN.
- Complete the registration form: After generating the TRN, log in to the GST portal using your TRN and the captcha code provided. Complete the registration form by filling in all the required details such as business details, bank account details, and authorized signatory details.
- Upload documents: Upload the required documents such as PAN card, identity proof, address proof, and business registration documents in the prescribed format.
- Submit application: Review the details entered and click on the ‘Submit’ button to submit your GST registration application.
- Await verification: After submitting the application, the GST officer will verify the details and documents provided. If there are any discrepancies or missing documents, the officer may ask for further clarification or documentation.
Then follow the standard registration application procedures to finish the process as mentioned above.
Is it mandatory to register for One Person Company in GST?
OPC Companies who sell goods or services and have annual sales aggregating more than Rs. 20 Lakhs for Services and Rs. 40 Lakhs for Goods are required to register for GST.
One Person’s GST Registration Regardless of annual turnover, a corporation must exist if it conducts business supplying goods or services outside of the state. As an example, if an OPC registered in Maharashtra supplies goods to Madhya Pradesh, GST registration is necessary.
Latest update related to One Person Company
The people registering as “One Person Companies” while obtaining GST registration have brought up a few concerns. Following research, it was discovered that the option to select a one-person company was absent from the forms made available under the CGST and SGST Acts, and was thus also absent from the GSTN portal.
As a workaround, it is advised that if the taxpayer intends to register for GST as a “One Person Company,” they should choose the option “Others” under the “Business Details” tab of the “Part B” of the GST Registration Form “REG-01”. The applicant must choose “Others” as an option, add “One Person Company” to the text field, and then follow the standard registration application procedures to finish the process.
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