Importance of GST registration for businesses

GST registration ensures compliance, builds credibility, and enables interstate trade. Here's how it benefits your business:

• Legal Compliance: Required by enterprises with turnovers beyond the notified sums. Non-compliance attracts charges and court fees.
• Input Service Distributors (ISDs): ISDs distribute input tax credits between branches or offices. These entities are required to register themselves under GST.
• Interstate Trade Facilitation: Registration helps enterprises carry on interstate transactions under the law.
• Business Credibility: GSTIN increases the business credibility with customers, suppliers and banks.
• Access to Government Contracts: GST registration is usually a prerequisite for some government tenders and schemes.
• Digital Compliance: GST Paved businesses into a digital tax era, enhancing transparency, efficiency and compliance.

Who Needs to Register for GST?

Certain categories of persons and business entities are mandated to register and apply for a GST number. They are:

• Businesses with turnover above thresholds: If a business's entire turnover exceeds the prescribed limit (determined in the following section), GST registration is required.
• Casual Taxable Person: A person who supplies taxable goods or services from time to time in India without a permanent place of business. Temporary traders or those who conduct short-term transactions are some of the examples included under this category.
• Non-Resident Taxable Persons: Foreign companies or firms that sell goods or services in India are required to have a goods and services tax registration even though they may not have any turnover. They may not have a permanent establishment in India, but are subject to GST for taxation by India.
• E-commerce Operators: All the e-commerce operators, such as Amazon, Flipkart and others, must register for GST irrespective of the turnover. Such operators need to collect and pay GST on behalf of the platform sellers.
• Entities liable to tax under the reverse charge mechanism (RCM): Certain businesses are liable to pay tax under the reverse charge mechanism, in which the receiver of the goods or services (and not the seller) is liable to pay the GST.
• Input Service Distributors (ISDs): ISDs are organisations that distribute input tax credits between various branches or offices. These entities are required to register themselves under GST.
• Interstate Suppliers: Any supplier or individual who is engaged in supplying services or goods state-wise has to register under GST. This is mandatory irrespective of turnover.
• Agents of Suppliers: If the business is an agent for any other supplier, then it needs to follow the Goods and Services Tax registration online.

GST Registration Eligibility

GST registration eligibility depends on a business's turnover, operational nature, or specific activities. Below are the criteria for mandatory and voluntary registration.

a. Turnover Threshold for Mandatory Registration

Businesses must register for GST online if their aggregate turnover, total value of taxable supplies, exempt supplies, exports, and inter-state supplies, excluding GST and cess, exceeds the following limits:

For Goods:

• ₹40 lakh in normal states (e.g., Maharashtra, Karnataka).
• ₹20 lakh in special category states (Arunachal Pradesh, Assam, Himachal Pradesh, Jammu & Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Uttarakhand).

For Services:

• ₹20 lakh in normal states.
• ₹10 lakh in special category states. Turnover is summed across all states where the business operates. For example, a business with ₹25 lakh sales in Maharashtra and ₹20 lakh in Gujarat (total ₹45 lakh) must register in normal states.

Businesses with turnover up to ₹1.5 crores (₹75 lacks in special category states) may opt for the composition scheme, paying a flat GST rate (e.g., 1% for traders) with simplified compliance, provided they meet eligibility (e.g., no inter-state supplies).

b. Voluntary Registration Criteria

Even though the company turnover is lower than the set limit, it may register voluntarily. The reasons for voluntary registration are as follows:

• Availing ITC: With voluntary registration, companies are eligible to get an input tax credit on GST charged on inward procurements regardless of turnover below the threshold limit.
• E-commerce Selling: Companies selling their products on e-commerce websites like Amazon, Flipkart, etc., are required to register under GST.
• Improved Credibility: Registration helps improve the firm's credibility and is viewed positively by consumers and suppliers.

c. Special Registration Situations

A few businesses have to register despite turnover, for example:

• Interstate Suppliers: Businesses supplying goods or services across states.
• E-commerce Operators: Platforms like Flipkart or sellers on such platforms.
• Casual Taxable Persons: Temporary suppliers, e.g., trade fair vendors.
• Non-Resident Taxable Persons: Foreign entities supplying in India.
• Reverse Charge Mechanism (RCM) Payers: Businesses liable for GST on specific services (e.g., legal, transport).
• Input Service Distributors (ISDs): Entities distributing ITC across branches.

GST Registration Online Procedure

GST registration is conducted online via the official GST portal, ensuring a streamlined process for businesses. Below is a step-by-step guide, portal details, and verification process.

a. Step-by-Step Guide for Online Registration

The process of GST registration is entirely online, and the following is to be pursued:

Step 1: Log in to the GST Portal

Visit the GST registration portal at www.gst.gov.in, navigate to Services > Registration, and select “New Registration.”

Step 2: Part A – Basic Details and TRN Generation

• Choose taxpayer type (e.g., Regular, Casual, Non-resident).
• Enter Legal name, PAN, email, and mobile details.
• Upon successful validation of the OTP sent via email and mobile, a Temporary Reference Number (TRN) is created. Store the TRN for later use.

Step 3: Part B – Detailed Information and Document Upload

• Login with TRN and enter business information like trade name, business category, business address, bank account information, etc.
• Upload documents supporting the same (PAN, address proof, bank statement, etc.)

Step 4: Submission and Verification

Choose any one of the below for submission:

• EVC (Electronic Verification Code): OTP on registered mobile.
• Digital Signature Certificate (DSC): In the case of companies/LLPs.
• Aadhaar-based e-signature: OTP on Aadhaar-registered mobile.

Step 5: GST Officer processing of the application

The GST application online will be addressed within 7 working days. The GST officer will contact the applicant if additional documents or clarification are required. Upon acceptance, a GSTIN is assigned and a registration certificate is given.

Online Portal Details

The official GST website is a one-stop facility for all GST businesses. It contains multi-step registration, document upload, tracking of registration status, and returning filing. It provides real-time data, FAQs and a helpdesk facility to users.

Related: How to File Annual Returns for Companies?

Verification and Submission Process

The system verifies important information using OTP and Aadhaar-based authentication. Authentication of the registration process is carried out using digital signatures and e-signatures. GSTIN is assigned after successfully verifying all the documents and details provided.

How to Check GST Registration Online?

a. GSTIN Verification Process

• Go to the GST portal.
• Click on Search Taxpayer > Search by GSTIN/UIN.
• Enter the 15-digit GSTIN or PAN to verify the registration.

b. Checking GST Registration Status Online

GST status will be displayed as Active, Suspended, or Cancelled on the portal.

• Active would indicate that the business is registered and compliant.
• Suspended/Cancelled would indicate that the business either broke non-compliance rules or voluntarily registered for cancellation.

Documents needed for GST Registration

The documents required for registering your GST number are:

1. PAN Card: Mandatory for a business or individual to confirm legal identity.
2. Proof of Business Registration: Documents like a partnership deed (for partnerships), an incorporation certificate (for companies), or an MSME registration certificate, depending on the business type.
3. Proof of Identification of Promoter/Partner: Aadhaar, Passport, Driving License or Voter ID in case of the promoters/partners.
4. Proof of Head Office Address: Electricity bill, rent receipt, or property tax receipt.
5. Proof of Bank Account: Cancelled cheque or bank statement detailing the account.
6. Authorisation Letter: Required if a third party files the GST application online on behalf of the promoter.
7. Photographs: 2–4 recent passport-size photographs of promoters or partners.

GST Registration Fees

The registration process for GST on the official portal is free, with no government fees. However, businesses may incur additional costs:

• Digital Signature Certificate (DSC): Mandatory for companies and LLPs, typically costing ₹1,000–₹2,000 for secure application submission.
• Professional Fees: Optional consultancy or tax advisory services, often used for complex registrations (e.g., e-commerce or multi-state businesses), vary by provider.

These costs ensure compliance with GST registration requirements, particularly for businesses needing specialised assistance.

Penalties for Not Registering Under GST

Late Registration Penalties

Businesses required to register for GST online but failing to do so face a penalty of ₹10,000 or the tax evaded, whichever is higher, per Section 122 of the CGST Act. For example, if a business evades ₹50,000 in GST, the penalty is ₹50,000.

Non-Compliance Consequences

Non-registration prevents businesses from:

• Claiming Input Tax Credit (ITC) or issuing GST-compliant invoices increases and deterred costs, deterring B2B clients who need ITC-eligible invoices.
• As registered businesses prefer compliant partners, participating in supply chains leads to lost contracts.
• Avoiding legal scrutiny, including audits or prosecution under Section 132 for willful tax evasion exceeding ₹5 crore.

How Penalties Are Calculated?

Penalties are based on the tax liability due to non-registration. If a business should have paid ₹50,000 in GST, the penalty is the higher of ₹10,000 or ₹50,000 (i.e., ₹50,000). Additionally, an 18% annual interest applies to unpaid tax from the date registration was required, compounding financial strain.

Related: GST Reconciliation for Businesses

Conclusion

GST registration is a legal and operational requirement for Indian companies. This detailed guide analyses the entire process, ranging from eligibility criteria to potential penalties. Familiarity with every detail helps companies navigate the GST terrain effectively, remain compliant and reap the advantages of the combined tax regime. Adherence to these norms helps companies avoid penalties, streamline operations and maintain growth