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Who are all required to Register under GST law?
The Goods and Services Act (also known as GST) is a new take of the government on the Indian taxation system. Long story short, it is aimed to merge an array of various taxes imposed on Indian consumers into a single tax. The 101st Amendment of the Indian Constitution introduced the GST Act in 2016. Mr Arun Jaitley, the Union Finance Minister of India, and the GST Council govern the GST Act. GST comprises of a calculated amalgamation of various indirect taxes such as a tax on sale, manufacture, consumption of goods and services across India. It is intended to replace the taxes imposed by the central government, and various autonomous state governments.
The Significance of GST
GST-registered business entities can now claim the credit on the tax to the value of GST paid by them while buying goods or services as a portion of the usual commerce-based activity. The responsibility for the administration would lay generally with a single entity responsible for imposing taxes on goods and services.
No tax would be imposed on inputs to the items to be exported (i.e. zero-rated supply), and the same amount of taxes would be imposed on imports as in the case of the taxes imposed on domestic goods and services, Sticking to a destination principle adding to Customs Duty. However, the Customs Duty will not be included within the GST.
Importance of GST
The Goods and Services Tax is a crucial step towards exterminating the taxes levied on the consumers at various levels and by the central and the state governments in India. Integrating various multi-level taxes into a single form of taxation would eliminate redundant taxes and double of taxes, thus adding to a similar form of market and prices throughout the nation.
Moreover, with the taxation made simple, the administration and the enforcement of the tax would be a breeze for the government. From a costumer’s perspective, the GST would be hugely advantageous in terms of huge decrease in the total tax burden on various goods, which is now estimated to be around 25% to 30%.
Moreover, there would be a hurdle-free movement of goods, as no state tax or entry tax would be imposed upon goods while being transported from one state to another. As a result, this would lead to a marginal reduction in hours-long stoppage of goods, and untidy paperwork while transporting goods between states.
When will GST be Applicable
Previously, the targeted date of the implementation of the Goods and Services Act was set to be 1st April 2017. However, due to various political reasons, the date of the implementation of the GST Act has been postponed to 1st July 2017, which is exactly three months after the previously determined date.
Who are liable to register for GST
The process for the registration of GST is a little different. This is in accordance with the registration type and the Constitution of the business. The various detail on the GST registration process and other matters associated with GST registration of organisations overseas and various joint ventures are mentioned below. The Section 19 of the GST Model law states everything regarding the registration of the Goods and Services Tax regime.
According to sub-section (1) of Section 19 of the GST law, every individual, who holds the liability to be registered under Schedule III of the GST Act has to apply for the registration of GST within a time period of thirty days from the date on which he holds the liability to register.
However, if the individual has already been registered under an earlier law, he may not necessarily apply for a fresh GST registration. But, Input Service Distributors are an exception and they have to apply for a fresh registration, regardless of them being registered under an earlier law.
Liability for Registration of GST
As specified in the first paragraph of Schedule III of the Goods and Services Act, each and every supplier will hold the liability to register for the Goods and Services Act within a state from where he conducts taxable supply of services and/or goods if the aggregate turnover associated with his business in a financial year surpasses a pre-set threshold limit as stated by the GST Council on the 24th of September, 2016 of:
- INR20 lakh
- INR10 lakh in Sikkim and other North Eastern States
According to section 2(6), “Aggregate Turnover” refers to the total value of:
- all supplies that may be either taxable or non-taxable
- non-liable supplies and
- exports of various goods and/or services
of an individual possessing the same PAN, to be calculated according to an all India basis and without taxes, if any, levied under the GST Act.
According to the definition of this subsection, it excludes the following:
- The total values of supplies upon which the tax is imposed based on a reverse imposition and
- The total values of the inward based supplies.
The supplier shall not hold the liability to register under the GST Act if his aggregate turnover comprises of the goods and/or services that do not hold any liability to be taxed under the Goods and Services Act.
All supplies that are conducted by the taxable person should be included within the taxable threshold. These supplies may either be made on the behalf of his principals or may be made on his own account.
Supplying goods, after a job work has been completed, by a job who has already registered for GST shall be considered to be a supply of goods according to the term “principal” referred under section 43A, and the net worth of such kind of goods shall be excluded from the aggregate turnover associated with the registered job worker.
According to section 2(97), “taxable supply” refers to a supply of goods and/or services which are liable to the imposition of tax under the Goods and Services Act.
Inapplicability of Threshold Limit
According to the fifth paragraph of Schedule III of the GST Act, the aforementioned threshold limit is not applicable in the following cases:
- If a person is making any inter-state taxable supply
- If an individual is causally taxable
If an individual is required to pay tax under reverse charge
- If a taxable person is non-resident
- If a person who is required to deduct TDS u/s 37 of the Goods and Services Act
- If an individual supplies various goods and/or services on behalf of other registered taxable individuals whether as an agent or otherwise
if a person is an Input Service Distributor
If a person supplies goods and/or services, excluding branded services, via electronic commerce operators
- If a person is an electronic commerce operator
- If the person is an aggregator who is responsible for the supplies services under either his brand name or his trade name.
- Any other person or a certain class/classes of persons as may be mentioned
According to the section 9 of the Goods and Services Act, a person for whom, it is required to be registered under the first paragraph of Schedule III of the GST Act shall not be regarded as a person liable for taxation until his aggregate turnover in a certain financial year crosses INR20 Lakh or INR10 Lakh as the case may be.
This refers to the fact that if a person registers himself under the GST Act on complying with the limit mentioned under the first paragraph of Schedule III of the GST Act, but his turnover does not cross INR20 Lakh then it is not required for him to pay taxes under the GST Act on outward supplies of goods and/or services.
For Individuals in Multiple Businesses
The Section 19(2) of the GST Act states that in spite of anything mentioned in subsection (1) of Section 19 of the Goods and Services Act, an individual possessing multiple business verticals within a certain state may acquire a different registration for each vertical subject to conditions. He can also pursue a single GST registration for all such business verticals within a certain state.
Voluntary Registration
According to section 19(3), an individual is free to volunteer to get himself registered under GST. However, he does not hold the liability to be registered under Schedule III of the Goods and Services Act, and all provisions of the Act shall be applied in a similar manner on such a person as are applied on taxable persons. Individuals registering voluntary are entitled with the liability to pay tax from the date of registration.
Mandatory PAN
According to section 19(4) of the Goods and Services Act, every individual is mandated to have a Permanent Account Number issued under the Income Tax Act, 1961 for being eligible for registration under the GST Act. According to sub-section (4A), a non-resident taxable person may be allowed registration based on any other prescribed document.
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