GST is the biggest tax reform in India, tremendously improving ease of doing business and increasing the taxpayer base in India by bringing in millions of small businesses in India. By abolishing and subsuming multiple taxes into a single system, tax complexities would be reduced while the tax base is increased substantially. Under the new GST regime, all entities involved in buying or selling goods or providing services or both are required to register for GST.
Entities without GST registration would not be allowed to collect GST from a customer or claim an input tax credit of GST paid and/or could be penalized. Further, registration under GST is mandatory once an entity crosses the minimum threshold turnover of starts a new business that is expected to cross the prescribed turnover.
GST Turnover Limit
There are various types of GST registration and some types of entities like casual taxable persons, non-resident taxable persons, or persons supplying through eCommerce operators are required to mandatorily obtain GST registration irrespective of turnover limit. The GST turnover limit for regular GST registration for service providers and goods suppliers are provided below.
Service Providers: Any person or entity who provides service of more than Rs.20 lakhs in aggregate turnover in a year is required to obtain GST registration. In special category states, the GST turnover limit for service providers has been fixed at Rs.10 lakhs.
Goods Suppliers: As per notification No.10/2019 any person who is engaged in the exclusive supply of goods whose aggregate turnover crosses Rs.40 lakhs in a year is required to obtain GST registration. To be eligible for the Rs.40 lakhs turnover limit, the supplier must satisfy the following conditions:
Should not be providing any services.
• The supplier should not be engaged in making intra-state (supplying goods within the same state) supplies in the States of Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Puducherry, Sikkim, Telangana, Tripura, and Uttarakhand.
• Should not be involved in the supply of ice cream, pan masala, or tobacco.
If the above conditions are not met, the supplier of goods would be required to obtain GST registration when the turnover crosses Rs.20 lakhs and Rs.10 lakhs in special category states.
Special Category States: Under GST, the following are listed as special category states – Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, and Uttarakhand.
Aggregate Turnover: Aggregate turnover = (Taxable supplies + Exempt Supplies + Exports + Inter-State Supplies) – (Taxes + Value of Inward Supplies + Value of Supplies Taxable under Reverse Charge + Value of Non-Taxable Supplies).
Aggregate turnover is calculated based on the PAN. Hence, even if one person has multiple places of business, it must be summed to arrive at the aggregate turnover.
Voluntary GST Registration
Any person or entity irrespective of business turnover can obtain GST registration at any time. Hence, GST registration is obtained by many businesses in spite of not reaching the aggregate turnover limit. Some of the main reasons for obtaining voluntary GST registration are
• To improve the business credibility
• To satisfy the requirements of B2B customers
• To claim input tax credit benefits
GST Registration Responsibilities
Entities registered under GST have various responsibilities and compliance requirements from time to time. Failure to comply with the GST regulations or compliance requirements can lead to penalties and revocation of GST registration by the authorities. Some of the main responsibilities of a person registered under GST include:
• Collecting and remitting GST amount from customers
• Issuing proper GST invoice as per the GST rules and regulations
• Filing GST returns whenever due based on turnover – even if there is no turnover or business activity
• Filing annual GST return
• Maintaining all records pertaining to GST for a period of 8 years
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