Unit II Registration under GST SEM V

 

Goods And Services Tax (GST)

Unit:II

Registration under GST : Persons liable to get registered, Compulsory Registration, Registration Procedure, Reverse Charge Mechanism, Composition Scheme and assessment under composition scheme; Zero rated supply; Exemption from GST, GST tax rate

 

Need for registration: Registration under GST law provides the following benefits:

Ø If turnover of the person exceeds the threshold limit, registration is the mandatory requirement.

Ø It legally recognizes a person as supplier of goods and/or services.

Ø It authorizes collection of GST from customers.

Ø It allows claim of input tax credit of GST paid on purchases of goods and services and utilizing the same for payment of taxes due on supply of goods and services.

Ø It allows us seamless credit of the input tax from the manufacturer/imported to the last supplier in the claim.

Ø Proper accounting of taxes paid on the input goods and services.

 

Registration is mandatory for:

• Casual taxable person.

• Non-resident taxable person.

• Agents of a supplier.

• Text pairs paying tax under reverse charge mechanism.

• Input service distributor.

• E-commerce operator for aggregator and their suppliers.

• Person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person

 

Who is not liable to take registration?

The person is not liable for registration if he is:

1. Engage exclusively, in the business of supplying goods and services that are either not liable to tax; or are wholly exempt from tax under GST laws.

2. An agriculturalist, to the extent of supply of produce out of cultivation of land. Therefore, if the agriculturist is engaged in the business of goods, which are not produce out of cultivation of land e.g. dairy farming, sericulture, stock breeding etc., he shall be required to register under the GST laws.

3. The government may, buy notification specify the category of persons who may be exempted from obtaining the registration.

 

Mandatory registration: Every supplier shall be liable to be registered in the state/UT from where he made a taxable supply of goods or services or both if his aggregate turnover in a financial year exceeds the threshold limit of rupees 20 lakh.

 

Aggregate turnover

“aggregate turnover” for a person having the same PAN, to

be computed on all India basis, is aggregate value of:

I - All taxable supplies

II - Exempt supplies including non- taxable supplies

III - Exports of goods and/or services

IV - Inter- State supplies

V - supply of goods, after completion of job work, bi a registered job worker to be treated as a supply of goods by the “principal”, and the value of such goods not to be included in the aggregate turnover of the registered job worker.

Registration in each state: Person having same PAN is operating Every person, who is liable to take a registration, shall obtain registration separately for each of the states, wherever he has place of business and is liable to pay GST.

 

Deemed registration

Registration under GST is not text specific, which means that there is a single registration for all the taxes i.e. CGST, SGST/UTGST, IGST and cesses.

 

Voluntary registration

1. Any person, who is not liable to obtain registration mandatorily, main registered voluntarily. All provisions of GST law as are applicable to the registered person shall be applicable after registration.

2. The proper officer may, in the prescribed manner cancel the registration of taxable person who has taken voluntary registration and has not commenced business within six months from the date of registration.

3. However, no application for cancellation of registration shall be considered in case of taxable person who has been registered voluntarily before the expiry of a period of one year from the effective date of registration.

 

Who is a casual taxable person?

if you occasionally make supply of goods or services as a principal or agent or any other capacity in taxable territory, where GST applies but where you don’t have a fixed place of business. As per GST, you will be treated as a casual taxable person.

 

Who is a non - resident taxable person?

Non - resident is a taxable person residing outside India and coming to India to officially undertake transaction whether as principal, agent or in any other capacity, but has no fixed place of business in India. He shall apply for registration at least 5 days prior to the commencement of business.

For job worker: GST law does not prescribe any search condition for compulsory registration for job worker. However, since she is also a service provider, he shall require registration at the time when his aggregate turnover exceeds the threshold limit.

…..

Long answer type questions:

1. What are the benefits of registration under GST? What are

the types of registration under GST? Explain in details.

2. Under what circumstances registration under GST not required?

 

GST registration applies to all individuals and entities supplying goods or services in India. GST registration becomes mandatory when the aggregate value of supplying goods exceeds Rs.40 lakh. The Ministry of Finance (MoF) has simplified the GST registration procedure to ease the tax filing process. If the entity operates in a special category state, GST registration becomes applicable if the value exceeds Rs.20 lakh p.a.  In this article, let us look at the eligibility for obtaining GST registration. The article also coves documents required as well as the GST registration procedure online.

 

Types of GST Registration

The following details the types of GST registration:

 

Normal Taxpayer

This category of GST registration applies to taxpayers operating a business in India. Taxpayers registering for normal taxpayer does not require a deposit and also provided with unlimited validity date.

 

Composition Taxpayer

To register as a Composition Taxpayer, the individual should enroll under GST Composition Scheme. Taxpayers enrolled under the Composition Scheme can pay a flat GST rate. However, the taxpayer would not be allowed to claim the input tax credit.

 

Casual Taxable Person

Any taxpayer establishing a stall or seasonal shop shall register under Casual Taxable Person. To register as a casual taxable person, the taxpayer shall pay a deposit equal to the amount of GST liability. The liability should match the active registration periods. The registration remains active for a period of 3 months.

 

Non-Resident Taxable Person

The category non-resident taxable person applies to individuals located outside of India. The taxpayers can supply taxable goods or services to residents in India only after obtaining registration. To register as a non-resident taxable person, the taxpayer shall pay a deposit equal to the amount of GST liability. The liability should match the active registration periods. The registration remains active for a period of 3 months.

 

The following details the types of GST Registration procedure:

 

GST Registration for Non-Resident Online Service Provider

UN Body /Embassy/Other Notified Person

Special Economic Zone Developer

Special Economic Zone Unit (SEZ)

GST TDS Deductor-Government Entities

GST TCS Collector -E-commerce Companies

What are the List of Documents Required for GST Registration?

The following is the checklist of documents required for obtaining GST registration:

 

 

Proof of Constitution of Business (Any One)	Certificate of Incorporation
Passport size photo of the applicant	Passport size photo of Promoter/Partner
Photo of the Authorised Signatory	Photo
Proof of Appointment of Authorised Signatory (Any One)	Letter of Authorisation
	Copy of Resolution passed by BoD/ Managing Committee and Acceptance letter
Proof of Principal Place of business (Any One)	Electricity Bill
	Legal ownership document
	Municipal Khata Copy
	Property Tax Receipt
Proof of Details of Bank Accounts (Any One)	The first page of Pass Book
	Bank Statement
	Cancelled Cheque

 

 

Step 1: Go to the GST Portal

Access the GST Portal ->https://www.gst.gov.in/ > Services -> Registration > New Registration option.

GST Registration – Step 1

 

Step 2: Generate a TRN by Completing OTP Validation

The new GST registration page is displayed. Select the New Registration option. If the GST registration application remains incomplete, the applicant shall continue filling the application using TRN number.

• Select the Taxpayer type from the options provided.
• Choose the state as per the requirement.
• Enter the legal name of the business/entity, as mentioned in the PAN database. As the portal verifies the PAN automatically, the applicant should provide details as mentioned in the card.
• In the Permanent Account Number (PAN) field, enter PAN of the business or PAN of the Proprietor. GST registration is linked to PAN. Hence, in the case of a company or LLP, enter the PAN of the company or LLP.
• Provide the email address of the Primary Authorized Signatory. (Will be verified in next step)
• Click the PROCEED button.

GST Registration – Step 2

Step 3: OTP Verification & TRN Generation

On submission of the above information, the OTP Verification page is displayed. OTP will be valid only for 10 minutes. Hence, enter the two separate OTP sent to validate the email and mobile number.

• In the Mobile OTP field, enter the OTP.
• In the Email OTP field, enter the OTP.

Step 4: TRN Generated

On successfully completing OTP verification, a TRN will be generated. TRN will now be used to complete and submit the GST registration application.

GST Registration – Step 3

Step 5: Log in with TRN

Upon receiving TRN, the applicant shall begin the GST registration procedure. In the Temporary Reference Number (TRN) field on the GST Portal, enter the TRN generated and enter the captcha text as shown on the screen. Complete the OTP verification on mobile and email.

GST Registration – Step 4

Click on the icon marked in red to start the GST registration process.

Step 6: Submit Business Information

Various information must be submitted for obtaining GST registration. In the first tab, business details must be submitted.

• In the Trade Name field, enter the trade name of the business.
• Input the Constitution of the Business from the drop-down list.
• Enter the District and Sector/ Circle / Ward / Charge/ Unit from the drop-down list.
• In the Commissionerate Code, Division Code and Range Code drop-down list, select the appropriate choice.
• Opt for the Composition Scheme, if necessary
• Input the date of commencement of business.
• Select the Date on which liability to register arises. This is the day the business crossed the aggregate turnover threshold for GST registration. Taxpayers are required to file the application for new GST registration within 30 days from the date on which the liability to register arises.

GST Registration – Business Information

Step 7: Submit Promoter Information

In the next tab, provide promoters and directors information. In case of proprietorship, the proprietors’ information must be submitted. Details of up to 10 Promoters or Partners can be submitted in a GST registration application.

The following details must be submitted for the promoters:

• Personal details of the stakeholder like name, date of birth, address, mobile number, email address and gender.
• Designation of the promoter.
• DIN of the Promoter, only for the following types of applicants:
• Private Limited Company
• Public Limited Company
• Public Sector Undertaking
• Unlimited Company
• Foreign Company registered in India
• Details of citizenship
• PAN & Aadhaar
• Residential address

In case the applicant provides Aadhaar, the applicant can use Aadhaar e-sign for filing GST returns instead of a digital signature.

GST Registration – Promoter Information

Step 8: Submit Authorised Signatory Information

An authorised signatory is a person nominated by the promoters of the company. The nominated person shall hold responsibility for filing GST returns of the company. Further, the person shall also maintain the necessary compliance of the company. The authorised signatory will have full access to the GST Portal. The person shall undertake a wide range of transactions on behalf of the promoters.

Step 9: Principal Place of Business

In this section, the applicant shall provide the details of the principal place of business. The Principal Place of Business acts as the primary location within the State where the taxpayer operates the business. It generally addresses the books of accounts and records. Hence, in the case of a company or LLP, the principal place of business shall be the registered office.

For the principal place of business enter the following:

• Address of the principal place of business.
• Official contact such as Email address, telephone number (with STD Code), mobile number field and fax number (with STD Code).
• Nature of possession of the premises.

If the principal place of business located in SEZ or the applicant acts as SEZ developer, necessary documents/certificates issued by Government of India are required to be uploaded by choosing ‘Others’ value in Nature of possession of premises drop-down and upload the document.

In this section, upload documents to provide proof of ownership or occupancy of the property as follows:

• Own premises – Any document in support of the ownership of the premises like Latest Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill.
• Rented or Leased premises – A copy of the valid Rent / Lease Agreement with any document in support of the ownership of the premises of the Lessor like Latest Property Tax Receipt or Municipal Khata copy or copy of Electricity Bill.
• Premises not covered above – A copy of the Consent Letter with any document in support of the ownership of the premises of the Consenter like Municipal Khata copy or Electricity Bill copy. For shared properties also, the same documents may be uploaded.

GST Registration – Place of Business

 

Step 10: Additional Place of Business

Upon having an additional place of business, enter details of the property in this tab. For instance, if the applicant is a seller on Flipkart or other e-commerce portal and uses the seller’s warehouse, that location can be added as an additional place of business.

Step 11: Details of Goods and Services

In this section, the taxpayer must provide details of the top 5 goods and services supplied by the applicant. For goods supplied, provide the HSN code and for services, provide SAC code.

Click here to find HSN code and SAC code.

GST Registration – Goods & Services Supplied

Step 12: Details of Bank Account

In this section, enter the number of bank accounts held by the applicant. If there are 5 accounts, enter 5. Then provide details of the bank account like account number, IFSC code and type of account. Finally, upload a copy of the bank statement or passbook in the place provided.

GST Registration – Bank Account

Step 13: Verification of Application

In this step, verify the details submitted in the application before submission. Once verification is complete, select the verification checkbox. In the Name of Authorized Signatory drop-down list, select the name of the authorised signatory. Enter the place where the form is filled. Finally, digitally sign the application using Digital Signature Certificate (DSC)/ E-Signature or EVC. Digitally signing using DSC is mandatory in case of LLP and Companies.

Step 14: ARN Generated

On signing the application, the success message is displayed. The acknowledgement shall be received in the registered e-mail address and mobile phone number. Application Reference Number (ARN) receipt is sent to the e-mail address and mobile phone number. Using the GST ARN Number, the status of the application can be tracked.

Reverse Charge Under GST

 

What is Reverse Charge Mechanism?

Typically, the supplier of goods or services pays the tax on supply. Under the reverse charge mechanism, the recipient of goods or services becomes liable to pay the tax, i.e., the chargeability gets reversed.

 

The objective of shifting the burden of GST payments to the recipient is to widen the scope of levy of tax on various unorganized sectors, to exempt specific classes of suppliers, and to tax the import of services (since the supplier is based outside India).

 

In some cases , GST is payable by the recipient of goods and services or both. The collection mechanism when recipient is made liable to pay tax is called reverse charge mechanism (RCM).

 

As per section 2(98) of CGST act, “The reverse charge means the liability to pay tax by the recipient of supply goods /services/both instead of supplier of goods/services/both under section 9(3) & 9(4) of the act or under section 5(3) & 5(4) of IGST act.

 

FEATURES OF RCM:

1). EXPANDED SCOPE:

In the GST law , the scope of reverse charge is expanded to include goods that may be notified, even if the supplier is registered.

 

2). NO PARTIAL REVERSE CHARGE:

Under service tax laws , there was scheme of partial reverse charge of joint charge on supplier and recipient . In GST , the concept has been discontinued.

3). COMPULSORY REGISTRATION:

The person who are required to pay tax under reverse charge are required to be registered ,irrespective of the threshold limit specified in section 22(1).

4). CONCESSIONAL COMPOSITE RATE NOT APPLICABLE:

the composition suppliers being recipients of supplies on which tax is payable on reverse charge basis , will have to remit tax at the applicable rates , and not the concessional composition rates.

5). NOT INCLUDED IN AGGREGATE TURNOVER

 

 

Need to Introduce GST Composition Scheme:

Composition scheme under the law is for small businesses. This is to bring relief to small businesses so that they need not be burdened with the compliance provisions under the law. Thus, an option has been provided where they can opt to pay a fixed percentage of turnover as fees in lieu of tax and be relieved from the detailed compliance of the provisions of law.

 

Conditions for Opting for Composition Scheme under GST: Sec 10

The person opting for composition levy should be a registered person.

• A taxpayer whose turnover is below Rs 1.5 Crore can opt in for Composition Scheme. In case of special states the limit is Rs 75 lakhs.

• No Input Tax Credit can be claimed by a dealer opting for composition scheme

• The taxpayer can only make intra-state supply (sell in the same state) i.e. no inter-state supply of goods

• The dealer cannot supply GST exempted goods

 

Registration: can select composition plan or general plan.

• Eligibility: whose turnover in Previous F.Y is upto 1.5 crore and in 75 lakhs in special states.

• Special states: Arunachal Pradesh, Meghalaya, Manipur, Nagaland, Mizoram, Tripura, Sikkim, Uttrakhand

 

Persons would not be entitled to opt for Composition Levy

Supplier of services other than restaurant related services

• Manufacturer of ice cream, pan masala, or tobacco

• Casual taxable person or a non-resident taxable person

• Businesses which supply goods through an ecommerce operator

• Tax payers who make tax-free supplies only

• Tax payers supplying interstate

 

GST rates for a Composition Dealer

 

Zero rated supply

As per section 2(47) of the CGST Act, 2017, a supply is said to be exempt, when it attracts nil rate of duty or is specifically exempted by a notification or kept out of the purview of tax (i.e. a non-GST supply). But if a good or service is exempted from payment of tax, it cannot be said that it is zero rated.

 

The inputs and input services which go into the making of the good or provision of service has already suffered tax and only the final product is exempted.

 

What is Zero Rating?

By zero rating it is meant that the entire value chain of the supply is exempt from tax. This means that in case of zero rating, not only is the output exempt from payment of tax, there is no bar on taking/availing credit of taxes paid on the input side for making/providing the output supply. Such an approach would in true sense make the goods or services zero rated.

 

All supplies need not be zero-rated. As per the GST Law exports are meant to be zero rated the zero rating principle is applied in letter and spirit for exports and supplies to SEZ.

 

The provisions for the refund of unutilised input credit are contained in the explanation to Section 54 of the CGST Act, 2017, which defines refund as below:

“refund” includes refund of tax paid on zero-rated supplies of goods or services or both or on inputs or input services used in making such zero-rated supplies, or refund of tax on the supply of goods regarded as deemed exports, or refund of unutilised input tax credit as provided under sub-section (3).

 

Features of GST

 

1. one indirect tax

GST is one indirect tax for the whole nation, which will make India one unified common market.

It is a comprehensive indirect tax on manufacture, sale, and consumption of goods and servicesthroughout India. It covers both goods and services.

Various types of Indirect taxes at the Centre and State level are being subsumedinto GST

 

2. Destination and Consumption based tax

GST is a Destination and Consumption based tax.

Under Destination based taxation, Tax shall be collected in the state where goods are soldor where the services are provided. Place of consumption will decide the state that will collecttax.

Whereas under Origin and Production based taxation, tax is levied where goods andservices are produced.

For example: A in Gandhinagar, Gujarat produces the goods and sells the goods to B in Jaipur,Rajasthan.

In case of Origin based taxation system, tax should be levied and collected inthe state ofGujarat where goods are produced and not in Rajasthan.

In case of Destination based taxation system, tax should be levied and collected andaccrue in the state of Rajasthan.

 

3. Multi-Stage Tax

An item goes through multiple change-of-hands along its supply chain: Starting from manufactureuntil the final sale to the consumer

 

Goods and Services Tax (GST) will be levied on each of these stages, which makes it amulti-stagetax. There is supply of goods at each stage and GST is levied on Supply of goods, or services or both.

 

4. Value Addition

GST is levied on value additions, i.e. the monetary value added at each stage to achieve the finalsale to the end customer.

It removes Cascading Effects, i.e. tax on tax.

 

5. Dual Model

India has adopted Dual GST model because of its unique federal nature.

Under this model, tax is levied concurrently by the Centre as well as the States on a common base, i.e. supply of goods orservices or both.

GST to be levied by the Centre would be called Central GST (CGST) and that to be levied by the States would be calledState GST (SGST).

State GST (SGST) would be called UTGST (Union Territory GST) in Union Territories without legislature.

 

6. The four-Tier rate Structure

GST has a 4-tier tax structure of 5%, 12%, 18%, and 28%besides the 0% tax onessentials.

All the goods and services can only be taxed as per this tax structure.

Essential commodities like food items are exempted from taxes under GST.

All consumption taxes tend to be regressive. But the four-tier rate structure madeIndia’s GST a bit less so.

By exercising Four-tier rate structure option puts certain goods in a lower rate category.

 

7. Outside the Purview of GST

i. Alcohol for human consumption: Alcohol for humanconsumption has been kept outside the purview of GST in India at present. However, the taxes imposed to alcohol for human  consumption will continue as per the structure before GST implementation.

ii. Petroleum products: Petroleum Products such as petroleum crude, motor spirit (petrol), high speed diesel, natural gas and aviation turbine fuel etc. are also kept outside the purview of GST in India. However, the taxes for these products will be charged as perthe structure before introduction of GST.

iii. Electricity: The electricity has been kept outside the purview of GST at present. However, the taxes applicable at present for electricity will continue as before.

 

What is a GST exemption?

 

Understanding the taxability of goods and services also includes knowing whether a good or service is exempted from GST registration. Upon knowing this, applicants can get clarity on several other factors. Essentially, the GST exemption limit for businesses depends on their annual aggregate turnover.

 

Previously, businesses with an annual turnover of up to Rs.20 lakhs did not need to register for GST. The amount was Rs.10 lakhs for North-eastern or hilly states like Meghalaya, Sikkim, Mizoram, Arunachal Pradesh, Nagaland, Himachal Pradesh, Manipur, Assam, Tripura, Uttarakhand, and Jammu & Kashmir.

 

However, as per the GST council meeting on 10th January 2019, the values doubled for Micro, Small, and Medium Enterprises (MSMEs) in both cases.

 

In addition to this, certain supplies of goods and services fall under the GST registration exemption list. Let’s understand this better by referring to the following section.

 

What is an exempt supply under GST?

There are three types of supplies that can enjoy exemption under GST. They are as follows:

 

Supplies taxable at 0% tax or nil tax rate.

Whole or partial exemption of supplies under CGST or SGST.

Supplies under Section 2(78).

Note: One cannot utilise the input tax credit applicable to these supplies.

 

In addition to this, one must follow the list mentioned below to understand the differences between nil-rated, zero-rated, exempt and non-GST supplies.

 

Types of exemption in GST

 

Given below are the three types of exemptions in GST:

 

Absolute: Exemptions without any conditions are an absolute exemption. For example, services by the RBI.

Conditional: Certain conditions are applicable to some exemptions. Services by hotels, clubs, etc., with a statement of accommodation unit less than Rs.1000 per day, fall under a conditional exemption.

Partial: Unregistered persons supplying goods within states (intrastate) to a registered individual can enjoy tax exemption under reverse charge only if the aggregate value of a supply does not exceed Rs.5000 per day.

Now let us delve deeper into the GST exempt items.

 

List of GST exemption

Goods, services, supplies, businesses, and individuals must register for GST provided they fulfill certain conditions. However, there are few exceptions to this. In the following section, you will find a list mentioning all the items, businesses, and taxpayers who can avail of tax exemption under the Goods and Services Tax regime.

 

GST exemption from registration

The following category of taxpayers need not register for GST:

 

Individuals belonging to the threshold exemption limit.

Exempt suppliers of goods and services.

A person supplying non-GST goods and services.

Taxpayers engaging in activities other than the supply of goods or services.

Agriculturists.

Ones supplying goods covered under reverse charge.

Therefore, if you belong to the above list, you can enjoy a full GST exemption.

 

GST exemption for start-ups and small businesses

Individuals aspiring to start a business can benefit greatly from the latest regulations of the GST scheme. Here are a few pointers to keep in mind regarding GST exemption for start-ups.

 

Any business with a turnover of less than Rs.40 lakhs is recognised as a GST-exempt business.

Businesses that have a lower annual aggregate turnover than Rs.1.5 crores can avail of a composition scheme under GST. The scheme allows individuals to pay taxes at a fixed rate depending on the turnover amount. The rate may vary between 1-6%.

Also, small businesses are exempted from e-invoicing under GST. However, businesses with a turnover of more than Rs.50 crores have to apply for e-invoicing mandatorily.

Small businesses with an income below Rs.5 crores can opt for a quarterly filing system.

Hence, it is evident that small businesses can accrue several benefits under this new tax scheme.

 

Exempted goods under GST

In the following section, you will find a list of the GST exempted goods in India:

 

Fresh and dry vegetables like potatoes, onions, and other leguminous vegetables.

Non-GST goods include fish, egg, fresh milk, etc.

Grapes, melons, ginger, garlic, unroasted coffee beans, green tea leaves that are not processed, and more.

Food items that are not put into branded containers like rice, hulled cereal grains, wheat, corn, etc.

Components like human blood.

Unspun jute fibres, raw silk, khadi fibre, etc.

Hearing aid manufacturing parts, chalks, slates, handloom, etc.

Note: Certain non-GST items, once processed, will attract a GST.

 

Reasons for exemption under GST

The government decides on exempting goods from registering under GST in the following cases:

 

In case the GST council recommends the exemption.

 

The government might find certain exemptions from GST registration to be beneficial for the public.

Under exceptional or unforeseen situations, the government might grant exemption by special order.

Upon providing official notification, one can supply specific goods under a full exemption.

Therefore, from the points mentioned above, it is evident that several sectors can qualify for a GST exemption provided they fulfill some prerequisites. Knowing those criterias in detail will help a taxpayer to register under GST without any hassle.

 

GST Rates in India

The GST rate slabs are decided by the GST Council. The GST Council revises the rate slab of goods and services periodically. The GST rates are usually high for luxury supplies and low for essential needs. GST rates in india for various goods and services is divided into four slabs: they are 5% GST, 12% , 18% , & 28%.

 

The GST rates for various products have been revised several times by the GST council since the inception of the Goods and Services Tax (GST). The latest rate revision was brought into effect in the 41st GST Council Meeting which was held on Aug 27, 2020. Before that, there have been many GST Council Meetings in which certain rate revisions were introduced.