Compulsory Registration Under GST

According to the goods and Services Tax (GST) Act, 2017, certain taxpayer categories are required to register for GST, no matter their sales or the threshold limits of Rs.20 lakhs for services and Rs.40 lakh for goods. This requirement ensures sure that all taxpayers who engage in certain transactions are registered in GST and pay their taxes. The CGST Act‘s Section 24 lists the conditions under which compulsory registration is required.

What is Compulsory Registration under GST?

Business in India which have turnover more than threshold limit is required to register under GST, this is known as compulsory registration under GST, and however there are some exceptions where the compulsory registration under GST is required even if turnover is less than the threshold limit.

Casual Taxable Person

An individual or entity that occasionally or irregularly supplies the taxable goods or services is known as a casual taxable person. In case the total turnover from these casual supply above Rs. 20 lakhs within a financial year, the casual taxpayer is required to obtain compulsory registration under GST.

Non-resident taxable person

An individual or entity that makes taxable supply in India but is ordinarily resident in India is known as a non-resident taxable person. Regardless of their turnover, non-resident taxable persons are required to obtain compulsory registration under GST.

Interstate taxable goods supply

Irrespective of their sales, every person making an interstate supply of goods is required to register for GST. Both taxable and non-taxable goods are included in this. There is, however, an exemption for suppliers of handcrafted goods. Suppliers of handicraft goods are exempt from GST registration requirements under Notification No. 07/2017-IGST, provided that their total revenue from interstate taxable supplies exceeds Rs. 20 lakhs within a given financial year.

Person required to pay tax under RCM

Certain taxable supplies have a reverse charge mechanism (RCM) wherein the recipient is required to pay GST rather than the supplier. Regardless of their turnover, an individual is required to obtain compulsory registration under GST if they are liable to tax liability under RCM.

Input service distributor (ISD)

A person who receives taxable services from number of suppliers and supplies the same services to their clients as a single invoice is known as an ISD. Regardless of turnover, anyone working as an ISD is required to obtain compulsory registration under GST.

E-commerce operator

Regardless of their turnover, each e-commerce operator who allows the supply of goods or services through their electronic platform must obtain compulsory registration under GST.

E-commerce operator required to collect TCS

Regardless of their turnover, all e-commerce operators that are responsible for collecting TCS from buyers for taxable supplies made through their platform are required to obtain compulsory registration under GST.

Person required to deduct TDS

Regardless of their turnover, every person who is liable to deduct TDS from payments made to suppliers for taxable services is required to obtain compulsory registration under GST.

Person supplying on behalf of another person

Regardless of their turnover, every person who makes taxable supplies on behalf of another taxable person is required to obtain compulsory registration under GST.

Person supplying goods/services through e-commerce operator collecting TCS

Regardless of their turnover, every person who supplies goods or services through an e-commerce operator collecting TCS under section 52 is required to obtain compulsory registration under GST.

Person supplying OIDAR services

OIDAR services means Online Information and Database Access and Retrieval services. Regardless of their turnover, every person who supplies OIDAR services from a place outside India to an unregistered person in India is required to obtain compulsory registration under GST.

Person supplying online money gaming

Regardless of their turnover, every person who supplies online money gaming services from a place outside India to a person in India is required to obtain compulsory registration under GST.

Other person notified by Central Government or a State Government

The Central or the State Governments may issue notifications time to time to specify any additional categories of taxpayers who are required to obtain compulsory registration under GST.

You can also read Leave Travel Allowance (LTA)

Benefits of Compulsory Registration Under GST

Reducing the number of taxes

Businesses that register for GST can avoid paying multiple taxes. The majority of the indirect taxes levied by the central and state governments have been replaced by the GST system. This implies that businesses will just have to pay one tax rather than multiple.

Input Tax Credit in GST

Input tax credits on the taxes paid on inputs are available to businesses that have registered for GST. As a result, companies may reduce the tax burden on their output.

Higher Profits

Businesses that register for GST may reduce their tax expenses and maximize their revenue. This is because businesses may reduce their overall tax burden by claiming input tax credits on the taxes they have already paid on inputs.

Transparency

The entire taxing system is more transparent when GST registration is used. The GST system makes it easier for the government to identify cases of tax fraud by keeping track of all the taxes businesses pay.

Simple Compliance

Tax filing is made simpler with GST registration. Instead of filing numerous returns each month or quarter, businesses are only need to file one return.

Failure to obtain compulsory registration under GST

Heavy fines and possible legal consequences may arise for failure to get compulsory registration under GST which include:

Paying late fees and interest on unpaid GST;
Penalties for violating GST laws.
Asset or good seizures;
Serious criminal prosecutions

Conclusion

In order to maintain tax revenue and ensure compliance with the GST system, compulsory registration under GST is important. The GST authorities make sure that all parties participating in taxable transactions are properly registered and fulfil their GST duties by requiring registration for certain types of taxpayers. Taxpayers should carefully assess the circumstances to see if they are liable to the compulsory registration under GST.

Frequently Asked Questions (FAQ)

What is the compulsory registration limit for GST?

To register for GST and pay taxes on their taxable goods and services, an individual must have an annual income of Rs. 40 lakhs for goods and Rs. 20 lakhs for services. Companies with annual sales under Rs. 40 lakh are not compelled to register for GST, although they are free to do so on a voluntary basis.

Who is liable to register under gst?

Businesses that have turnover”Casual taxable person” refers to an individual who, in a State or Union territory where he has no regular place of business, periodically engages in transactions involving the supply of goods or services, or both, in the course or furtherance of business, whether as principal, agent, or in any other capacity.
exceeding the threshold of Rs. 40 lakh, Rs. 20 lakh, or Rs. 10 lakh, according to the circumstances, are required to register as regular taxable persons under the Goods and Services Tax (GST). It is known as GST registration.

Who is a casual taxable person?

“Casual taxable person” refers to an individual who, in a State or Union territory where he has no regular place of business, periodically engages in transactions involving the supply of goods or services, or both, in the course or furtherance of business, whether as principal, agent, or in any other capacity.

Who is a non resident taxable person?

Any individual who periodically engages in transactions involving the supply of goods or services, or both, whether acting as principal, agent, or in any other role, and who does not have a fixed place of business or residence in India is referred to as a “non-resident Taxable Person.”

Who is input service distributor

An input service distributor (ISD) is a company office that distributes the applicable input tax credit to other branch offices of the same company after receiving tax invoices for input services.

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Compulsory Registration Under GST – 12 Number of Cases

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