FAQs on Applicability of GST Registration in India - CAclubindia
The Goods and Services Tax (GST) is a comprehensive indirect tax system that applies to the supply of goods and services across India. One of the most important compliance requirements under the GST regime is obtaining a valid registration. Whether you are a trader, service provider, professional, or e-commerce seller, knowing when GST registration becomes mandatory is critical to staying compliant. Below is a detailed FAQ covering the applicability of GST registration in India.
1. What is GST Registration and why is it required?/
GST registration is a legal process by which a business or individual becomes eligible to collect GST from customers and claim input tax credit on purchases. A registered person receives a unique 15-digit GSTIN (Goods and Services Tax Identification Number). Without registration, one cannot legally collect GST or avail input tax credits.
2. What are the standard turnover-based thresholds for GST registration?/
The requirement for GST registration primarily depends on annual aggregate turnover:
- Rs 40 lakh for suppliers of goods
- Rs 20 lakh for service providers
These thresholds are lowered to Rs 20 lakh and Rs 10 lakh respectively in special category states such as Mizoram, Nagaland, Tripura, and others.
3. Does GST registration depend on place of business?/
Yes. GST is administered state-wise. A person must register separately in every state or Union Territory from where taxable supply is made.
4. Is registration mandatory for inter-state supply of goods?/
Generally, Yes. Anyone supplying goods from one state to another is required to register, irrespective of turnover. However, certain small service providers enjoy relaxation from this rule.
5. Do online sellers need GST registration even with low turnover?/
Yes. Anyone supplying goods through an e-commerce operator such as Amazon, Flipkart, or Meesho must register compulsorily. This ensures proper tracking and application of TCS provisions.
6. What about service providers selling through online platforms?/
Small service providers supplying through platforms like Urban Company may be exempt up to the threshold limit, unless the platform is liable to pay tax under reverse charge.
7. Who is a Casual Taxable Person (CTP), and do they need registration?/
A Casual Taxable Person occasionally supplies goods or services in a taxable territory where they have no fixed place of business. Examples include stalls at exhibitions or fairs. CTPs must register regardless of turnover and must pay tax in advance based on estimated liability.
8. Do Non-Resident Taxable Persons (NRTPs) require registration?/
Yes. NRTPs who supply goods or services in India must obtain GST registration compulsorily. Like CTPs, they must also pay advance tax liability.
9. What is Reverse Charge Mechanism (RCM), and does it require registration?/
Under RCM, the recipient pays GST instead of the supplier. A business receiving supplies attracting RCM must register if it is otherwise liable. However, casual individuals receiving RCM supplies generally do not need registration.
10. Are agriculturists required to register under GST?/
Agriculturists supplying unprocessed produce from land directly are not required to register. This exemption supports the primary sector.
11. Are employees providing services to their employer required to register?/
No. Services provided by an employee to an employer in the course of employment do not constitute a supply under GST and hence do not require registration.
12. What happens if a business crosses the threshold limit mid-year?/
A business must apply for registration within 30 days of crossing the threshold. GST liability begins from the date the threshold is breached, not the date of approval.
13. Can businesses register voluntarily?/
Yes. Businesses may opt for voluntary registration for reasons such as:
- Eligibility for input tax credit
- Improved credibility
- Ease of dealing with registered customers
However, voluntary registrants must comply with full GST obligations like returns and payments.
14. Is GST registration mandatory even for exempt supplies?/
No, if a person deals exclusively in exempt or non-taxable supplies, registration is not required, regardless of turnover.
15. Does aggregate turnover include exempt supplies?/
Yes. Aggregate turnover includes:
- Taxable supplies
- Exempt supplies
- Export supplies
- Inter-state supplies
However, interest income on deposits is often excluded for threshold calculation purposes.
16. Do Input Service Distributors (ISD) require registration?/
Yes. An ISD must register compulsorily to distribute input tax credit among units within the same PAN.
17. Who else must mandatorily register regardless of turnover?/
The following categories must register:
- Persons required to deduct or collect TDS/TCS
- E-commerce operators
- Persons supplying on behalf of someone else (agents)
- Online data and database service providers located outside India
- Persons supplying inter-state services of certain categories
18. What are the consequences of not obtaining registration when required?/
Failure to register can result in:
- Tax liability on supplies made from the date threshold exceeded
- Penalties up to Rs 10,000 or the amount of tax evaded (whichever is higher)
- Denial of input tax credit to recipients
- Legal prosecution in extreme cases
19. Can multiple branches operate under a single GST registration?/
Yes. Multiple business premises within the same state can operate under one GSTIN. However, separate registration can be obtained for distinct business verticals under the same PAN.
20. Can GST registration be surrendered or cancelled?/
Yes, registration can be cancelled if:
- Business is discontinued or transferred
- Change in ownership occurs
- Person no longer meets registration criteria
After cancellation, taxpayers must file a final return and settle outstanding tax liabilities.
Conclusion/
Knowing when GST registration becomes applicable is essential to avoiding penalties and maintaining tax compliance. While turnover thresholds play a major role, several categories require compulsory registration irrespective of turnover. Proper registration ensures access to input tax credit, legal billing, and transparent business operations.