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Writer's pictureCA Vishnu Agarwal

GST Registration in India: Who Needs to Register and Why?

Updated: Jun 23



The Goods and Services Tax (GST) is a comprehensive indirect tax levied on the supply of goods and services throughout India. While it aims to streamline the tax system, it also mandates that certain businesses and individuals register under GST. In this blog post, we'll delve into the details of GST registration, outlining who needs to register, the threshold limits, and the benefits and consequences of registration.


Who Needs to Register for GST?


Businesses Exceeding Threshold Limit:


  • Regular Taxable Person: Any business with an aggregate turnover exceeding ₹40 lakhs in a financial year (₹20 lakhs for special category states) must register as a regular taxable person under GST.

  • Supplier of Services: The threshold limit for service providers is ₹20 lakhs (₹10 lakhs for special category states). Mandatory Registration Regardless of Turnover:


  • Inter-State Suppliers: Anyone making inter-state supplies of goods or services must register, regardless of turnover.

  • Casual Taxable Person: Someone who occasionally supplies goods or services in a state or Union Territory where they don't have a fixed place of business.

  • Non-Resident Taxable Person: A person who occasionally undertakes transactions involving the supply of goods or services but is not a resident of India.

  • E-commerce Operators: Any person supplying goods or services through an e-commerce platform.

  • TDS/TCS Deductors: Businesses liable to deduct tax at source (TDS) or collect tax at source (TCS) under GST.

  • Input Service Distributors: Entities that receive invoices for input services and distribute the credit to their branches or units.

  • Agents of a Supplier: Agents who make or receive supplies on behalf of other registered persons.


Voluntary Registration:


  • Businesses below the threshold limit can also voluntarily register for GST. This may be beneficial to claim input tax credit (ITC) on purchases and enhance their business credibility.


Special Category States:

States in North-Eastern India, Jammu & Kashmir, Himachal Pradesh, and Uttarakhand have lower threshold limits for GST registration.


Benefits of GST Registration:


  • Legal Recognition: Registered businesses are recognized as legitimate entities, enhancing their credibility and trustworthiness.

  • Input Tax Credit (ITC): Registered businesses can claim ITC on GST paid on purchases, reducing their overall tax liability.

  • Expanded Market: Registration allows businesses to expand their market reach by engaging in inter-state transactions.

  • Ease of Doing Business: Registered businesses can enjoy a simplified tax compliance process and access various government schemes and benefits.


Consequences of Non-Registration:


Failure to register for GST when required can lead to:

  • Penalties: Heavy penalties can be imposed on businesses that fail to register on time.

  • Legal Issues: Non-compliance can lead to legal action and reputational damage.

  • Loss of Business Opportunities: Unregistered businesses may lose out on opportunities to work with large companies that prefer to deal with GST-registered entities.


How to Register for GST:


The GST registration process is entirely online and can be completed through the GST portal. You will need to provide your PAN, Aadhaar, business details, bank account information, and other relevant documents.


Conclusion:

Understanding the GST registration requirements is crucial for businesses and individuals involved in the supply of goods or services in India. Registering for GST not only ensures compliance with the law but also unlocks various benefits for your business. If you fall under any of the categories mentioned above, it is advisable to register for GST promptly to avoid penalties and leverage the advantages of this unified tax system.


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