Registration Process under Goods & Service Tax
Registration is the first step to deal with the Tax Department and one should be very careful in approaching Department as non-registrations might invite penalties. Registration Process under Goods & Service Tax also makes us issue Tax Invoice or Transfer of Input Tax Credits.
1. First Step in the direction of Registration under GST
Registration Process under Goods & Service Tax of a business with the tax authorities implies obtaining a Unique Identification Code (UID) from the concerned tax authorities so that all the operations of and data relating to the business can be agglomerated and correlated. In any tax system, this is the most fundamental requirement for identification of the business for tax purposes or for having any compliance verification program.
Registration under Goods and Service Tax (GST) will provide the following advantages to the business:
- Legally recognized as a supplier of goods or services.
- Proper accounting of taxes paid on the input goods or services which can be utilized for payment of GST due on the supply of goods or services or both by the business.
- Pass on the credit of the taxes paid on the goods or services supplied to purchasers or recipients.
But Registration under Goods and Service Tax (GST) has following disadvantages to the business:
The taxable person will have to take a separate registration, even though the taxable person may be supplying goods or services or both from more than one State as a single legal entity.
2. Benefits to taxable persons taking Registration
Registration Process under Goods & Service Tax explains the benefits under GST:
- Unique Identification
- Link All Transactions
- Proper Accounting
- Passing of Tax Credit
- Ease in Compliance
Manner of taking Input Tax Credit, Section 16(2)
A person who has applied for Registration Process under Goods & Service Tax within 30 days from the date on which he becomes liable to registration and has been granted such registration shall, subject to such conditions and restrictions as may be prescribed, be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date of which he becomes liable to pay tax under the provisions of this Act.
FAQ on Registration Process under Goods & Service Tax:-
1 ABC Ltd applies within 30 days but Registration is granted after 30 days. Will he be able to take Credit?
Yes, as an application was made within specified time i.e. 30 days though registration is granted later. Because application should be filed within 30 days. Later approval of registration will not affect its status to take credit.
2 ABC Ltd applies within 30 days but Registration is Rejected by Department. Can ABC Ltd eligible for the credit?
No, both conditions are not satisfied. The application was made within 30 days but there was no approval as an application was rejected.
3. if he in point number 2 above re-applies and that is approved by the Department then can he take credit from beginning?
No, as re-applies will be considered the new application and in such case, such approval will not make eligible ABC Ltd take credit since the beginning.
In such case ABC Ltd should file an appeal against rejection order and go with Original Application and get Registration from original date then only ABC Ltd will be eligible to take credit from beginning.
4. Who are liable to be registered
Registration Process under Goods & Service Tax explains that Section 19 deals with Normal Registration covered under Schedule III, Voluntary Registrations etc. whereas Section 19A deals with Special Provisions for Registration of Casual Taxable Person and Non-Resident Taxable Person.
The following Dealers providing services are required to be Registered:-
- Persons registered to pay Existing indirect taxes
- All India Gross Turnover more than Threshold Limit
- Making Interstate Supplies
- Casual & Non-Resident Suppliers
- Making Voluntary Registration
- Specific Class of Persons
4. Assumptions for Registration under GST
Registration Process under Goods & Service Tax explains the certain assumptions:
- A person can neither collect GST from customers nor claim any input tax credit of GST without registration.
- There will be a threshold of Gross Annual Turnover including exports and Inter-state supplies above which any person engaged in the supply of Goods or Services or both will not be required to take registration if its supply is below the threshold of Gross Annual Turnover.
- Any dealer exceeds the threshold limit is required to take mandatory Registration under GST regime.
- The effective date of registration will date of application in all cases.
- A person can take voluntary registration under GST & can also enter the input chain even prior to crossing the threshold limit, provided that he does not opt for compounding scheme.
- There will be a higher threshold limit for persons opting for compounding scheme & hence can opt to pay tax at a specified percentage of the turnover without entering the credit chain.
- Irrespective of turnover, if a taxable person carries out any inter-state supply and/or is liable to pay GST under reverse charge, he will be compulsorily required to take registration.
- An individual importing services for personal consumption will not be liable to pay GST under reverse charge or register under GST.
- All UN Bodies seeking to claim the refund of taxes paid by them would be required to obtain a unique identification number (ID) from the GST portal.
- A Unique Identification Number (UID) will be given by the respective state tax authorities/ PSUs not making outwards supplies of GST goods (thus not liable to obtain GST registration).
- The Input Services Distributor are required to obtain GST Identification Number (GSTIN) for distributing the credit of GST paid on services proposed to be used at multiple locations which are separately registered.
- All registered persons, whether with the Centre or State under any of the tax statues being subsumed in GST, would be allotted a GST registration number called Goods and Services Tax Identification Number (GSTIN) on the voluntary basis. Dealers who are below the GST threshold will have the option to remain in GST chain.
- Tax Authorities, in the case of enforcement cases, may grant suo-moto registration. If such person does not have PAN, the registration would be initially temporary and later converted into a PAN based registration.
5. Salient Feature of Registration
Registration Process under Goods & Service Tax try to explain the salient features of Registration:
- PAN will be mandatory for registration under GST
- Unified Application to both Tax Authorities-Central as well as State
- Application to filled within 30 days after crossing the threshold limit
- State-wise registration having presence in more than one state
- Approval for the application within 3 working days
- Within a PAN, separate registration for separate business verticals within a state is possible with respect to a certain condition:
- Input Tax Credit across the business verticals of such taxable persons shall not be allowed unless the Goods or Services are actually supplied across the verticals.
- All Business verticals, separately registered will be considered as a single legal entity for the purpose of recovery of dues.
- Rejection of application for Registration under CGST/SGST shall be deemed to be a rejection of an application for Registration under SGST/CGST Act.[Section 19(10)]
- Grant of registration under CGST/SGST Act shall be deemed to be a grant of registration under the SGST/CGST Act provided that the application for registration or the Unique Identity Number has not been rejected under SGST/CGST Act within the time specified in Section 19(7). [Section 19(11)]
- The application shall not be rejected without giving the notice to show cause and without giving the person a reasonable opportunity of being heard. [Section 19(8)]
6. Structure of GSTIN
- 15 Digit Assessee Code
- State-Wise Allocation
- Based on PAN
- 13 Digit for Business Verticals of entities with same PAN in the same State
- 14th Digit left blank for Future Use
- 15th Digit to Checksum
7. Switching over Compounding Scheme to Normal Scheme and Vice- Versa
It would be dealt in the manner described below:
- Any existing taxpayer not under Compounding Scheme under the present Act may opt for compounding scheme if eligible only from the beginning of the next financial year.
- Compounding dealer may be allowed to switch over to normal scheme even during the year if they so want with a condition that they cannot switch over to compounding scheme again during the same financial year.
- Any existing taxpayer under the Compounding scheme upon crossing the Compounding threshold will be switched over to the Normal scheme automatically from the day following the day of crossing the Compounding threshold.
- For the changes covered by 1st to 3rd Points above, the validation in the return module should change automatically under intimation to the concerned taxpayer and both the tax authorities.
8. How to obtain Registration under GST?
There are various forms for various entities depending upon the type of registration. A registration form is developed by GSTN as per the standard practices notified by the Govt. of India e.g. for digitally capturing a postal address, name etc. In case there is no standard practice for any of the field, the same should be developed by the GSTN and form designed accordingly.
A. Separate Application Forms for Registration
There are separate application forms are to be designed for:
- Multiple registrations for business verticals of same legal entity (it must be registered already) within a State
- Application for registration in more than one State (that can be filed at one go)
- Amendments to existing Registration(s)
- Option to avail / withdraw from the Compounding scheme
- Enrolment of Tax Practitioner or Facilitation Centre if provided for in the GST Law
- Assignment of Role (by a dealer) to TP/FC, as agent of the dealer if so provided for in the GST Law
- Application for new registration on account of Succession / Amalgamation / Demerger etc. of existing GST registrants
- Application by UN bodies for getting a Unique Identification Number (ID)
B. Persons Obtaining New Registration Under GST
Registration Process under Goods & Service Tax explains that for obtaining Registration all taxable persons are required to follow the following Steps:
- All taxable persons are required to interact with the Tax Authorities through the GST Common Portal set by the Goods and Service Network.
- The process for obtaining voluntary, as well as mandatory registration, is same under GST.
- Also, the Same applicant can file more than one registration for other states where the applicant seeks registration or for more than one business vertical located in a single or multiple states.
- Applications are not submitted through Digital Signature to be supported by sending a signed copy of a summary extract of the form.
- Processing of application and grant of registration even before signed copy received.
- Cancellation to be initiated if no signed copy received
- Email and SMS based alerts to the applicants.
- No application fee (Advance Tax in case of casual Suppliers)
- Application can also be filed through Facilitation Centres (FCS) or through Tax Return Preparers (TRPs)
- Documents Required under the GST Registration process are as follows:
- Proof for Constitution of Business
- Proof for Principal Place of Business
- Bank Details
- Details of the Authorized Signatory
- Photograph of the Authorized Signatory
9. Approval Process
The Approval process will go in the following format under Registration Process under Goods & Service Tax:
- Online verification of certain details like PAN, CIN, Bank Account (If possible) and Aadhaar
- Online communication of application to jurisdictional
- authority by the backend modules of tax authorities
- 3 common working days for tax authorities to respond
- Deemed approval after 3 days
- Single opportunity to tax authorities to raise query, if any – 7 days for response and 7 days for action
- Mostly post registration visits based on risk profile
- Online grant of registration
- Login id and temporary password communicated to the taxpayer
- Downloadable Registration Certificate to be provided by GSTN
- Refusal to register by one tax authority deemed as refusal by both
- Communication of reason for refusal of registration
10. Migration of Existing Tax Payers
All existing registered persons, whether with the Centre or State under any of the tax statues being subsumed in GST, would be allotted a GST registration number called Goods and Services Tax Identification Number (GSTIN) on a voluntary basis. Dealers who are below the GST threshold will have the option to remain in GST chain.
MIGRATION PROVISIONS ARE COVERED UNDER SECTION 142.
Registration Process under Goods & Service Tax explains that existing Tax Payers who are either registered with states or with center or with both the system shall be designed to migrate cleaned and verified data from the existing database to the GST Common Portal and a GSTIN is generated. With regards to the migration of data of the existing registrants, following steps are necessary:
- The process of migration of data must be started sufficiently in advance so that the business of existing registrants does not suffer and transition from the present system to GST is smooth.
- State tax authorities will communicate the GSTIN/password to taxpayers, with instruction to log on the GST portal and fill up the remaining data.
- In case, PAN has been validated but the email or mobile numbers of dealers are not available, such dealers may be advised through newspaper advertisement to visit the GST portal and use the following data for user authentication:
-Date of Birth/Date of Incorporation in DDMMYYYY format. (This data is available with PAN Database)
- Date of birth of proprietor in case of Proprietorship firm.
- Date of incorporation in case of all other types of dealers
- In those cases where PAN has not been validated, State VAT department will have to collect the taxpayers
SECTION 143: AMOUNT OF CENVAT CREDIT CARRIED FORWARD IN A RETURN TO BE ALLOWED AS INPUT TAX CREDIT.
A registered taxable person shall be entitled to take, in his electronic credit ledger, the credit of the amount of CENVAT credit carried forward in a return, furnished under the earlier law by him, in respect of the period ending with the day immediately preceding the appointed day in such manner as may be prescribed.
12. Amendment in the Registration
Registration Process under Goods & Service Tax explains in Section 20 which deals with Amendment of.
(1) Every registered taxable person shall inform the proper officer of any changes in the information furnished at the time of registration, or that furnished subsequently, in the manner and within such period as may be prescribed.
(2) The proper officer may, on the basis of information furnished approve or reject amendments in the registration particulars in the manner and within such period as may be prescribed.
(3) The proper officer shall not reject the request for amendment in the registration particulars without giving the notice to show cause and without giving the person a reasonable opportunity of being heard.
Capturing registration information is not a one-time activity and any change in critical information should be entered at the common portal within a stipulated time period.
Amendment in the registration will be done in the following way:
- Changes to other registration data can be done on self-service basis
- Change to compounding scheme will require submission of reasons and prescribed relevant documents
- The same change is required to be approved by the Tax Authorities.
- All amendments in the details in registration application form will be retained in the
database of the GSTN and will be made visible to the tax authorities.
12. Cancellation or surrender of Registration
The Registration Process under Goods & Service Tax envisaged in Section 21 about Cancellation of Registration.
In the following cases, a registrant can either surrender or cancelled by the tax authorities:
- Closure of business of Tax Payer
- Gross Annual Turnover including exports and exempted supplies (to be calculated on all-India basis) falling below threshold for registration
- Transfer of business for any reason including due to death of the proprietor of a proprietorship firm
- Amalgamation of taxable person with other legal entities or de-merger
- Non-furnishing of Returns for three consecutive tax period by a Compounding Taxable Dealer U/s 8. [Section 20(2)(b)]
- Non-furnishing of Returns for continuous period of 6 months for dealers other than Composition Dealers. [Section 20(2)(c)]
- Non commencement of business by the voluntary tax payer within the stipulated time period (6 months) prescribed under the GST laws. [Section 21(2)(d)]
In case of surrender, the system will send an acknowledgment by SMS and e-Mail to the applicant regarding his surrender of registration and he will be deemed to be unregistered from the date of such acknowledgement. There will be a provision in the system to prompt such surrendered registrants to update their address and mobile number at a prescribed periodicity till all dues are cleared/refunds made.
The cancellation of registration may be done by tax authorities in the following situations:
- In case signed copy of the summary extract of submitted application form is not received even after a reminder;
- In case a tax payer contravenes specified provision of the GST law
- In case a taxpayer has not filed any return at all during a predetermined period (say six months). In case a taxpayer has filed a nil return continuously for this period, then the provisions of cancellation will not be applicable.
- The cancellation of registration may be preceded by system generated notice giving 7 days‟ time for furnishing reply by the taxpayer. Principle of natural justice to be followed before cancellation, i.e., giving an opportunity to taxpayer to be heard and passing of order.
If the taxpayer approaches the tax authority for revocation of surrendered or cancelled registration, the surrendered / cancelled registration can be revoked. The action for revocation would be initiated by that Authority which has cancelled the registration or had earlier accepted the surrender of registration. The action for revocation / cancellation of registration would have to be initiated by both Centre and State tax authorities. Once the registration is cancelled by one authority it would be deemed to be cancelled by other authority also. The cancellation or surrender of registration would always have prospective effect.
13. Consequences of Non Registration
Non-Registration of a business might have following consequences:
- Penalty of Rs. 10,000/- (Section 66(1)(x))
- Non eligible for Input Tax Credit (Section (Section 16(2)
- Non eligible for issue of Tax Invoice (Section 23)
- Non eligible for Transfer of Input Tax Credit (Section 37A)
- Detention of Goods & Conveyance (Section 69)
- Confiscation of Goods (Section 70)
- Confiscation of Conveyances (Section 71)