When you talk about tax laws, there is one thing you can never do away with, registration under the law. The registration helps in identifying you as a taxpayer and ensures that you are in compliance with the law. The similar registration requirements are also described extensively in the GST law. During the issue of GST notification by government, announcing the applicability of the law, the notification, amongst other things, gave out in full details regarding the period in which the taxpayers shall have to register themselves under the law.
The registration is very necessary for you to run your business smoothly without inviting any troubles for yourselves. The registration authorizes you to collect tax under GST on behalf of the government. If you do not have a GST registration, you have no rights to collect GST, neither you can claim the input tax credit on the tax you are paying. So, it is critical that you take your GST registration without making any delays.
What is GST Registration?
GST Registration helps you create your identity as a taxpayer under the GST Regime. The registration simply means taking your unique identification number, which is the GST fifteen digits number every business needs.
GST Number is a 15-digits unique code based on your PAN. The number is allotted state-wise, and it is for this reason that the first two digits of the number contain your state-code. The next ten digits will be your PAN. The next digit right after PAN is the entity number of the PAN. Then comes the alphabet “Z” by default. And the last digit is a code for detecting errors. This digit may be an alphabet or a numeral. This combined forms your GSTIN, which expands as GST Identification Number.
Advantages of having GST Registration
Not only is a GST Registration mandatory, but it comes with a whole lot of advantages too.
The registration will give an identification as a taxpayer to the person or business supplying goods or services.
The registration gives legal authority to the business to collect tax on goods supplied or services provided by it.
The registration makes the business eligible for claiming the Input Tax Credit on the tax it has already paid.
However, there are certain guidelines as well for registration that exempts some of the businesses from getting registration.
Guidelines for GST Registration
As per the guidelines of GST registration, although every supplier needs to be registered, it does not apply for small businesses. However, they may register voluntarily if they like.
The persons who are exclusively in the business of providing goods or services or both are also not required to take registration.
An agriculturist need not take registration if the only income he generates is from supplying the goods produced out of cultivation the land.
If the goods are chargeable to tax under the reverse charge mechanism, then also the taxpayer need not take registration.
Who Must Take GST Registration?
The law has specified various categories of persons who must take GST registration. The registration is mandatory for them, and there can be repercussions of not taking the registration. The categories are:
- People who supply taxable goods or provide taxable services or both and the transactions are inter-state. The registration, in this case, needs to be taken only when the turnover is more than 20Lakhs. However, in the case of states of special categories, the registration will become mandatory if the turnover is more than 10lakhs.
- The taxpayers who are registered under any other tax law must get a GST registration immediately on the notification of the law.
- If a person already having GST registration transfers his/her business to any other person, then the new owner of the transferred business must get a fresh registration under GST.
- If the tax is payable on a transaction according to the reverse charge mechanism, then the person who is receiving the supplies must take the GST registration.
- Any person who is not having a permanent place of business, but is engaged in the supply of goods and services, must take a GST registration in the state or UT where he/she is supplying the goods and services. However, the registration is mandatory only when the turnover from such a supply is more than Rs 20 lakhs.
- Any person who is a non-resident Indian and supplies goods and services in India without a place of business in India shall have a registration under GST.
- An agent who supplies goods or services on behalf of a Principal shall register itself under GST.
- E-commerce operators, TDS deductors, and Input service distributors must take a GST registration. Also, any person who collects tax in lieu of supplies made through e-commerce operators beyond Rs.20 lakhs shall take GST registration.
- Any person outside India, if he supplies any information to a person in India who is not registered under the GST Act, shall take a GST registration.
Consequences of Not Taking Registration
If you fail to take GST registration, you shall lose the benefit that can come as Input Tax Credit. Besides that, you might face penalties, and such penalties shall come as a great loss for your business. This loss can be as big as higher of Rs. 10000 or the amount of tax you have managed to save from non-registration.
The same penalty shall apply even if you get late in taking your registration. So, first, the registration is mandatory. Second, you need to take it on time.
So, GST registration is a very important requirement for your business to comply with. The registration has considerable advantages, and you, of course, do not want to face the repercussions of non-registration.