GST India: Registration Process
GST Registration India:
Registration of a business under GST besides
being mandatory (after crossing certain threshold*) provides certain advantages
as below:
·
Legal recognition as a supplier of goods and
services
·
Eligibility to setoff GST liability against
input credits
·
Ability to pass-on GST liability to end
customer (i.e authority to collect GST)
·
Eligibility to transact inter-state
(*Threshold would be Gross Annual Turnover
including exports and exempt supplies)
Who has to register?
The following type of businesses need to
register under GST:
·
Any business crossing the threshold limit
·
Existing businesses registered with central (Excise
/ Service Tax) or state (VAT) authorities
·
Taxable person carrying on interstate supply
·
Businesses liable under reverse charge in GST
·
Businesses wanting to collect GST or claim
input (despite being below threshold) can take voluntary registration
Registration can be ‘Regular’ or ‘Compounding’
or ‘Casual’
Dealers falling below a higher threshold level
of turnover called Compounding Turnover, can opt for compounding scheme and pay
tax at fixed percentage of turnover without entering the GST input tax credit
chain. They cannot collect GST from customers.
Supplier considering conducting of business in
a state on temporary basis may obtain casual dealer registration for a limited
period and will be eligible for ITC.
Salient Features:
·
Businesses operating in multiple states would
need multiple registrations
·
Multiple registrations are permitted for those
operating in multiple business verticals within the state
·
Bodies of United Nations would be issued unique
identification number or UID
·
Government departments to be also issued unique
department identification number
Registration process for new dealer
A dealer has to file registration application
within 30 days of crossing the prescribed threshold* or starting of a business
and the date of application would be considered the effective date of
registration for obtaining Input Tax Credit (ITC).
Registration Process for existing dealer
All dealers registered with central or state
tax authorities would be migrated to GST by default and allotted Goods and Service
Tax Identification Number (GSTIN). Dealers below the GST threshold may continue
to be registered and get benefits of GST credit chain or opt out voluntarily.
GSTIN:
GSTIN will be a 15 digit PAN based number with
state code and business vertical details as depicted below:
State Code
|
PAN
|
Entity Code
|
Blank
|
Check Digit
|
||||||||||
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
|
10
|
11
|
12
|
13
|
14
|
15
|
State Code: To be based on India census 2011. Ex: 27 for
Maharashtra and 29 for Karnataka
Entity Code: Alphanumeric 1 to 9 and A to Z based on number
of business verticals in a state for the same PAN (i.e 9 digits plus 26
characters, a total of 35 business verticals per state is possible)
Blank: For future use
All registrations to be done through GST common
portal which in the backend would be integrated with central and state systems.
Registration can be amended, surrendered or
closed by following pre-defined process.
1.8 Impact of GST
Registration on Business Segments
New and existing dealers with pan-India
presence are likely to be most affected by the new GST registration process.
Some of the key impacts are as follows:
Pure service sector companies (Ex: Banks,
Telecom, Insurance, IT, Logistics etc.) under the present indirect tax regime
have a single centralized registration and accounting setup for their pan-India
operations. Billing is centralized, accounting and auditing also happen at head
office. However under the destination based-consumption concept of GST it
becomes imperative to identify the point of supply of service such that the
SGST component of IGST needs to be reallocated to respective states. This would
necessitate pan-India service providers to obtain registration in each of the 37
state and Union Territory and file 37 monthly returns.
Banks:
Banks provide services to customers who are
mobile not only pan-India but international as well. Ex: Credit cards issued by
Bank from central location to a customer may be swiped anywhere. With advent of
net banking the address of customer in account is not where he necessarily
stays and obtains banking services (Ex: Cheque book, Loans, Statements etc.) A
customer having his account in Bengaluru may during his vacation in J&K
transfer funds by mobile/net banking to somebody in Hyderabad. Determining
point of supply for services would add significantly to compliance costs. Under
such circumstance a bank having presence in only 10-15 states will have to take
registration for 37 states/UT.
Several services by bank to a customer are centralized
(Ex: Demat Account, Wealth Management services, bigger home loans etc.) while
several others are localized (Ex: Savings account, Personal loan, OD etc.). As
is evident these complexities add to compliance costs due to multiple
assessments and audits. Clarity on the requirement of single/multiple ISD
registration for distributing inputs across multiple states is needed.
Telecom:
Telecom operations and accounting are carried
out at circle level as determined by TRAI and services are provided at pan-India
basis with single registration. Many such circles are across multiple states
(Ex: WB circle excludes Kolkata but includes Andaman-Nicobar and Sikkim). Under
GST, state wise registration is required which is different from circle thus
adding to significant changes to IT systems for accounting, determining point
of supply etc. ISD registration may also be required state wise unless clarity
is provided that single ISD registration across nation is sufficient.
Registration requirements for additional place
of business would be arduous as all towers / cell sites (lakhs of them across
geographies) and all distributor/retailer locations (few thousands who sell SIM
cards and currency recharge vouchers) will have to be registered.
E-Commerce:
Ecommerce companies like Amazon and Flipkart operate
under the market place model, wherein they store the goods from sellers at
their warehouse and supply to end users upon receiving orders. These warehouses
are registered as additional place of business under local VAT by sellers and
e-commerce companies do not register under VAT.
Under GST both ecommerce companies and sellers
would have to simultaneously register these warehouses as Principal and
Additional Place of Business, respectively. This would be challenging as these
warehouses do not have dealer wise physically segregated or designated areas
within the warehouse.
Disclaimer: The views expressed in this blog post are strictly personal and do not in any way represent my employer.
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