Any business into the supply of goods or services with a specific turnover needs to register under GST.
A business which is supplying goods and/or services and their annual turnover crosses a certain threshold limit stated by the government then it is necessary for the business to register under GST and file GST returns as per the decided guidelines in order to avoid penalties.
In this article, we cover the basics of who needs to register under GST and who does not, what is the GST threshold, who is exempt, the documents required and so on.
Who needs to register under GST
- Businesses involved in the supply of goods with turnover in a financial year exceeding Rs.40 lakhs (Rs.20 lakh in some states such as those in the North East).
- Businesses involved in the supply of services with turnover in a financial year exceeding Rs.20 lakhs (Rs.10 lakhs for Special Category states).
- Every person who was registered under an earlier law (i.e., Excise, VAT, Service Tax etc.) Non-resident persons making taxable supply also known as casual taxable person
- Persons who make taxable supply on behalf of other taxable persons whether as an agent or otherwise
- Input Service Distributor – ISD
- TCS Deductor (Tax Collected at Source) and TDS Deductor (Tax Deducted at Source)
- A Person selling goods or services through an e-commerce operator
- Every e-Commerce operator who is required to collect tax at the source
- A Person making interstate supply of goods
Is every person required to be registered in GST?
No, not every person is required to get registered under GST. The applicability of GST registration is dependent on your Aggregate Annual Turnover (AATO). A person or a business needs to get registered for GST only if their AATO crosses Rs. 40 lakhs (Rs.20 lakh in some states such as those in the North East).
There are several forms (or returns) that need to be filed at varying frequencies to reveal your sales and purchase data to the Government. However, there are specific cases wherein GST registration could be needed, irrespective of turnover. Ensure to check the Registration rules under GST.
Is GST compulsory for Service Providers?
Yes, GST is compulsory for those Service providers/Businesses involved in the supply of services whose turnover in a financial year exceeds Rs.20 lakhs (Rs.10 lakhs for Special Category states). This can include coaching services, freelance services, beauty and hospitality services etc.
Can an individual register for GST?
Yes, an individual can register under GST with his/her personal PAN.
Can a salaried person apply for GST?
Salaried employees do not have to pay goods and services tax (GST). But if you are a freelancer i.e. working as a freelance designer, writer, lawyer, architect, developer, sales professional, etc. then you may be required to pay GST as it falls under the ‘services’ category.
Is GST compulsory for small businesses?
It is mandatory to get registered under GST if your annual aggregate turnover exceeds the stated limit. Under current GST laws, any person supplying taxable goods and services must be registered in the state from where they are providing such taxable services. If the person’s aggregate turnover in a financial year is more than Rs. 40 lakh (Rs.20 lakh in some states such as those in the North East) then the GST registration becomes compulsory.
Is GST compulsory for MSME?
Yes, as stated above, if a company exceeds the threshold then it has to be registered under GST. However, MSMEs have another option to register under the composition scheme.
The composition scheme is a simple and easy scheme under GST for small taxpayers. It is available only for taxpayers whose turnover is less than Rs. 1.5crores (75 lakhs for North-Eastern states and Himachal Pradesh).
And, if your annual turnover exceeds Rs. 1.5 Cr. but is not more than Rs. 5 Cr., you can opt to file QRMP (Quarterly Returns with Monthly Payments). Under the QRMP scheme, registered persons are allowed to furnish their GST returns on a quarterly basis, with effect from January 01, 2021.
What are the Documents Required for GST Registration?
Now that we know who needs to register under GST, let us understand what it takes to get the registration process done. As with every official process, a person needs to provide certain proofs, bank account details and documents to complete the registration. Depending upon the type of GST registration, the set of documents required may change. These documents are based on the nature of activities processed by the business.
Read here: List of Documents Required for GST Registration
How to Register for GST Online?
GST Registration is a two-step process. A Temporary Registration Number can be generated without submitting documents. The same remains valid for 15 days, before which you have to upload your business existence documents to complete the process and get a permanent GSTIN. Here is a step-by-step guide for registering for GST online: Register for GST Online
Are there any Late Fees and Penalties under GST?
Businesses and individuals who are registered under GST need to consistently file their GST returns monthly or quarterly as per the applicability. In order to simplify and organise Indian Indirect Taxation System, a host of prerequisites for return filings have been laid by the CBIC, and any delay and/or error in the same can result in late fees and penalties, and even cancellation or revocation of GST Registration.
Read about all the penalties and late fees under GST which is imposed if a person fails to file their returns on time.
Who is exempt from GST registration?
Businesses or individuals whose annual aggregate turnover does not exceed the decided limit are exempted from paying GST. Goods and services that are under the Non-GST Supply, Nil rated or Zero Rated are also exempted from GST registration.
The supply of a good may not attract GST in the following cases:
- If the goods are non-covered under GST. This applies to goods such as petrol and alcohol for human consumption which are not taxable under the GST Act. This can change at a later date by the government.
- The goods are a part of the zero-rated list which means the tax rate for the good has been fixed at 0%. For Example – fresh milk, fresh vegetables, etc.
- The government declared certain goods as GST exempt through a notification. Such as exports and supply of goods made to SEZ (Special Economic Zone) or SEZ developer.
What is UIN and who needs to register for UIN?
The UIN stands for Unique Identification Number. It is a type of GST registration which is reserved for foreign diplomatic missions and embassies that are not subject to taxes in India. Any tax (direct or indirect) collected from these organisations is reimbursed to them.
The following Institutions/ agencies can register for UIN:
- A Multilateral Financial Institution or Organization that has been notified under the United Nations (Privileges and Immunities) Act of 1947 Consulate or embassy of another country.
- Any other individual or group of individuals as determined by the commissioner.
- A specialized agency of the United Nations Organization (UNO)
To claim a refund of the taxes paid on their inward supplies, every UIN holder must file GSTR-11 by the 28th of the following month. Details of such taxable products or services would be included in GSTR-11. Because the information will be auto-populated from the seller’s GSTR-1, a UIN holder will not be able to add or amend any details in GSTR-11 (sales).
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