Do you need GST Registration and file GST Returns?

Compulsory GST Registration under Section 24 of CGST Act, 2017

People normally get confused about whether they need a GST registration or they can conduct business without enrollment into GST. The following are the reasons to obtain GST registration in India.

GST registration for an E-commerce seller & E-commerce operator

E-commerce Seller

Persons who supply goods and services through an e-commerce operator who collects TCS (Tax collected at source) are required to take GST registration.

Provided further, GST registration is required only if turnover has crossed the threshold limit of Rs. 20 lacs (Rs. 40lacs for some states and Rs. 10 lacs for special category states).

However, eCommerce sellers mandatorily require GST registration to sell on e-commerce giants like Flipkart and Amazon. The eCommerce giants don’t allow any seller registration without a GST number.

E-commerce Operator

An eCommerce operator who is required to collect tax at the source is compulsorily required to take GST registration. For example, Flipkart and Amazon.

Obtain GST Registration for Casual and Non-Resident Taxable person.

casual taxable person in gst

The casual taxable person and Non-resident taxable both require GST registration to undertake the supply of goods and services.

Difference between Casual Taxable Person & Non-resident taxable person

Who is a Casual taxable person?

A casual taxable person is a person who occasionally undertakes transactions involving the supply of goods and services.

The transaction is taken in the course of the furtherance of business whether a principal, an agent, or in any other way.

The transaction should take place in a state or union territory where he has no fixed place of business.

Who is a Non-resident Taxable Person?

A Non-resident taxable person is a person who occasionally undertakes transactions involving the supply of goods and services.

The transaction is taken in the course of the furtherance of business whether a principal, an agent, or in any other way but who has no fixed place of business in India.

A compulsory registration is required for both of them. There is no threshold limit for them to take GST registration. The registration should be taken atleast 5 days prior to undertake the transaction involving supply.

To read more about Casual taxable person

Interstate Supply of Goods and Services

Persons making taxable supplies to the buyers located in different states on which IGST is levied are required to compulsory take registration in GST.

However, if the buyer is located in the same state and turnover has not crossed the threshold limit taxpayer is not required to take GST registration.

For example, Mr. A is located in Haryana and he supplied goods worth Rs. 5 lacs to a buyer located in Punjab. This is an interstate transaction on which IGST should be levied. Although the threshold limit has not crossed still supplier would be required to take registration in GST.

If the buyer would have been located in Haryana only, the transaction would be an intrastate transaction and supplier would not have required GST registration.

Persons who are required to pay tax under Reverse charge Mechanism

A GST registration is required for the person who received services specified under reverse charge. Under the reverse charge mechanism, a service recipient is liable to pay tax, not the service provider like in forwarding charge.

For example, Mr. A received services from an advocate amounting to Rs, 10,000. Advocate service is a specified reverse charge service. Under this transaction, Mr. A would be liable to pay tax, not the advocate. Here, Mr. A is a service recipient and the advocate is the service provider.

Advocate will not levy any GST on the invoice. Mr. A would need to create a self invoice on which GST would be levied. Howver, Mr A can take input tax credit on the GST levied on self invoice.

The following is the list of Reverse charge services. This list is not exhaustive. It contains more services as well.

  • Supply of services in relation to transportation of goods by road.
  • Renting of motor vehicle 
  • Legal services are supplied indirectly or directly by individual advocates or firms of advocates to any business entity located in the taxable territory.
  • Services provided or agreed to be provided by the Arbitral tribunal to a business entity in the taxable territory.
  • Recovery agent services are supplied to a banking company or a financial institution or a Non-banking financial company.
  • Services supplied by an Insurance agent to any person carrying insurance business.

The above list is for an explanation of Reverse charge services.

Input Service Distributor required to take GST Registration

Compulsory GST registration is required for the Input tax distributor.

Definition of Input Tax distributor under GST

“Input Service Distributor means the office of the supplier of goods and services or both which receives the tax invoices issued under Section 31 towards the receipt of input services and issued a prescribed document for the purpose of distributing the credit of

  • Central tax
  • State tax
  • Integrated tax
  • Union territory tax paid on the said services

to a supplier of taxable goods or services or both having the same Permanent Account Number as that of said office.”

For distributing the credit of GST registration is required. Think from a normal perspective how can credits be distributed if there is no GST registration. This is the reason to obtain registration in GST.

A person who is required to deduct tax (TDS) under Section 51 of the CGST act

In GST, some persons are required to deduct TDS and are liable to take compulsory take GST registration in India. The following persons specified under Section 51 combined with the notifications are as follows are compulsorily required to take registration.

  • A department or an establishment of the Central Government or State Government;
  • Local authority
  • Governmental agencies
  • An authority or a board or any other body which has been set up by Act of Parliament or a State Legislature or by a government, with 51% equity or control owned by the government.
  • A society established by the Central or any State Government or a Local Authority and the society is registered under the Societies Registration Act, 1860
  • Entities controlled by government companies are required to deduct TDS.

Agents of a supplier

Persons who make a taxable supply of goods and services or both on behalf of other taxable persons whether as an agent or otherwise are required to compulsorily take GST registration.

Persons supplying OIDAR services

OIDAR stands for Online Information Database Access and Retrieval Services. These services are provided by way of the Internet and there is no physical interface between service receiver and service provider.

For Example, Any Advertisement through Internet, Downloading of Softwares, E-books, Movie, Music or Provided cloud services. This list is not exhaustive just illustrative.

Every person supplying OIDAR services from a place outside India to a person in India, other than a registered person is required to mandatorily take GST Registration in India.

Other Reasons To Obtain GST Registration

Voluntary GST Registration

Some taxpayers register voluntarily which is on their own even no criteria are applicable to them for GST registration. The reason to obtain GST registration on a voluntary basis can be as follows.

  • The new business does not want to reveal its taxable turnover. To gain business in new entities most businesses are required to provide their GST details to new clients. To avoid the embarrassment of turnover is less than 20 lacs or threshold limit. A new business takes GST registration voluntarily.
  • It is beneficial to take GST registration in case of an inverted tax structure. Inverted tax structure simply means the output tax is lower than Input tax. This will reduce the output tax liability due to the higher input credit claims.
  • Some businesses only deal with the registered taxpayers, the otherwise unnecessary burden of Reverse charge compliance will apply to them for dealing with unregistered taxpayers.

Merger, Amalgamation of two or more registered persons

In case of transfer of business by the transferor, the transferee shall be liable to obtain fresh GST registration from the date of such transfer or succession.

Demerger or Change in the constitution or ownership of the business

In the case of a demerger or change in the constitution of business, the demerged company needs to take credit for the remaining Input Tax credit. To claim Input Input tax credit or to pay any old tax liability. These are the prime reasons to obtain registration in GST.

Death of Proprietor and Successor is not registered

In case of death of the proprietor, the tax liability and Input tax credit are transferred to the successor. The transfer can only be made if the successor is registered in GST.

Under Section 22 of the CGST Act, the successor shall be liable registered with effect from the date of succession. The successor needs to submit a death certificate of proprietor and succession certificate as evidence to the GST officer. The officer will then add the authorized signatory as the authorized signatory for a deceased person.

The registration would be made under the Form GST REG-01.

Read: How to register for GST in India?

The above are the reasons to obtain registration in GST. In case you need help regarding GST Registrations you can write to us at [email protected] or via phone at +918588918033.

Frequently Asked Questions

No, GST Registration is not mandatory for eCommerce sellers it is mandatory for e-commerce operators. It becomes compulsory when the threshold limit crosses.

However, most of the e-commerce operators require GST Registration of sellers irrespective of turnover.

For wholly exempted goods and services, no GST registration is required. Hence, eCommerce operators like Flipkart allow sellers to sell through them without obtaining GST Registration.

No, GST Registration is not mandatory for all.

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