On July 1, 2017, the Indian Government introduced a new legislation called the Goods and Services Tax Act (GST Act). This act was formally passed in Parliament on March 29 of the same year.
GST is an indirect tax designed to replace several other indirect taxes in India, aiming to create a unified tax system for easier collection and enhanced efficiency.
Currently, new GST registration is mandatory for businesses with an annual turnover of Rs. 40 Lakh or more. In North Eastern and Hill states, registration is required for businesses with an annual revenue exceeding Rs. 10 Lakh.
The GSTIN registration process is straightforward and typically takes between 2 and 6 working days to complete.
Before proceeding, let’s explore the various types of GST applicable in India.
Types of GST
GST can be categorized into four different types, depending on the type of transaction. To determine your GST liability, you should first examine the table below.
| GST Types | Description |
| State Goods and Services Tax (SGST) | SGST is the tax applied to the sale of goods and services within a state.
It replaces previous taxes, such as Value Added Tax, Entry Tax, State Sales Tax, Entertainment Tax, surcharges, and cesses. |
| Central Goods and Services Tax (CGST) | CGST is the tax imposed on intra-state transactions. It is levied by the Central Government.
CGST replaced various taxes previously charged by the Centre, including Service Tax, Central Excise Duty, CST, SAD, Customs Duty, etc. |
| Union Territory Goods and Services Tax (UTGST) | UTGST applies to the sale of goods and services in Union Territories such as Andaman and Nicobar, Daman and Diu, Chandigarh, Dadra, etc. |
| Integrated Goods and Services Tax (IGST) | IGST applies to the sale of goods and services between states. This tax is applied when businesses transfer goods or services from one state to another, as explained in IGST. |
Who Needs to Register for GST?
Business operators who meet any of the following criteria must register for GST under the Goods and Services Act:
- Individuals and businesses already registered under the pre-GST laws must re-register under GST.
- Businesses with an annual turnover exceeding Rs. 40 Lakh (Rs. 10 Lakh for businesses in North-Eastern or hilly regions) are required to complete GST registration online.
- Any individual engaged in the supply of goods through an e-commerce aggregator.
- E-commerce aggregators themselves are required to pay GST.
- Non-resident and casual taxable persons.
- Individuals who pay taxes under a reverse charge mechanism, where the receiver of goods and services is liable to pay the taxes instead of the supplier.
All eligible individuals and businesses should familiarize themselves with the relevant clauses and documentation to ensure a smooth registration process.
Types of GST Registration
GST registration comes in different categories. Understanding these categories is crucial for a smooth registration process. Below is a table summarizing the various types of registration.
| Eligibility | Type of Registration |
| Regular taxpayer | No deposits are required from businesses or individuals in this category. Most companies in India fall under this type of registration. |
| Casual Taxable Person | Individuals running occasional or seasonal businesses need to register under this category.
A deposit equivalent to the GST liability of the occasional business is required. Registration is valid for 3 months, though businesses can apply for extensions or renewals. |
| Non-Resident Taxable Person | Individuals living outside India but occasionally supplying goods or providing services to Indian residents, as agents, principals, or in other capacities, are required to register under this category. The business owner must pay a deposit equal to the estimated GST liability during the registration period.
The registration is valid for three months, but extensions or renewals are possible. |
| Composition Scheme | Composition registration simplifies the GST process. Under this scheme, businesses pay a fixed annual fee, irrespective of their actual earnings.
This option is available for businesses with an annual turnover of up to Rs. 1 Crore. |
Documents Required for GST Registration Online
To complete the GST registration process, applicants must provide specific documents. The required documentation may vary depending on whether the applicant is a business or an individual.
Refer to the table below for a comprehensive list of required documents.
| Category | Required Documents |
| Sole Proprietors and Individuals |
|
| Hindu Undivided Families (HUF) |
|
| LLPs and Partnerships |
|
| Companies |
|
Upon submitting the necessary documents, a unique 15-digit GSTIN will be generated for the registered business. There are no fees associated with this registration process.
Penalties for Failing to Register for GST
If an eligible individual or business does not fully or partially pay the applicable taxes, a penalty will be imposed.
If the payment mistake is unintentional, a 10% penalty of the total tax owed will apply, provided the total tax liability exceeds Rs. 1 Lakh.
If the error is deliberate, the full amount of the tax due must be paid as a penalty.
Benefits of GST Registration
Registering under GST offers various advantages for businesses, such as:
- Elimination of cascading effect – GST eradicates the cascading tax effect previously seen in indirect taxation, which involved double taxation at each stage, thereby reducing the tax burden on businesses.
- Simple application process – The GST registration online process and GST filing can be conveniently completed through the GSTN portal, streamlining the process.
- Reduced compliance – Under the previous tax system, businesses were required to file multiple returns for various taxes like VAT, excise, and service tax. GST consolidates these taxes into a single filing, reducing the compliance burden on businesses.
- Composition scheme benefit – Small and medium-sized businesses with annual revenue below Rs. 1 Crore can benefit from lower tax rates and less stringent compliance conditions under the GST Composition Scheme.
- More flexible logistics – Compared to the previous tax structure, GST regulations on logistics are more relaxed, simplifying the process for businesses.
- Regulation of the unorganised sector – GST registration includes several provisions for tax payment and input credit, promoting transparency in the tax system.
These advantages significantly reduce the complexity of tax filing, ensuring more efficient indirect tax collection.
When Can GST Deregistration Take Place?
Businesses that have registered under GST may later need to cancel or surrender their registration.
Several conditions can lead to the cancellation or surrender of GST registration. These circumstances are explained below:
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Turnover Falls Below the Minimum Limit
If a business's turnover drops below the minimum threshold set by the state after registering for GST, it can apply for deregistration.
For example, Business A in Maharashtra initially had a turnover of Rs. 50 lakh at the time of GST registration. However, months later, its turnover decreased to Rs. 20 lakh. Since the threshold for GST registration in Maharashtra is Rs. 40 lakh, Business A has the option to cancel its registration.
However, businesses that supply goods across states must be registered under GST, regardless of their annual turnover.
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Business Discontinuation
If a business ceases operations, it must apply to cancel its GST registration.
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Changes in Business Ownership
If there is a change in the ownership status of a business, it may apply to cancel its GST registration.
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Changes in Business Constitution
If a business undergoes a structural change, it must cancel its current GSTIN registration and apply for a new one based on its new constitution.
For instance, if a business changes from a Partnership firm to a Private Limited Company, it must cancel the GST registration under the Partnership firm and register anew under the GST as a Private Limited Company.
How to Apply for GST Registration Cancellation?
To apply for GST registration cancellation, individuals need to file Form GST REG-29. The form must include the following information:
- Details of raw materials, work-in-progress, and finished goods in inventory on the cancellation application date.
- Liabilities as reflected in the Balance Sheet on the date of application.
Once the application is submitted, a designated officer will issue a formal cancellation order in Form GST REG-19 within one month. The officer will also decide the date when the cancellation will take effect and notify the applicant.
Both GST registration and cancellation procedures are detailed processes that require careful attention and understanding of the regulations. It is crucial for taxpayers to stay informed about the latest GST rules and remain compliant to avoid legal issues.
In addition to streamlining tax collection, many businesses benefit from lower tax liabilities due to changes in the indirect tax structure under the Goods and Services Tax Act. Therefore, GST registration can offer numerous advantages for businesses.