Eligibility for GST

Several criterias apply to the registration for Goods and Services Tax (GST) within India with the primary criteria for eligibility being the annual turnover of a business. The current limit up to which registration is compulsory is ₹40 lakhs for most enterprises, ₹20 lakhs for service sector enterprises and ₹10 lakhs for special category states. Moreover, any company that is involved in inter-state sales, e-commerce services, or any other notified categories are mandated to obtain a GST registration even if the turnover is below the threshold amount specified above. One needs to understand various criteria in order to meet the requirements and also to be able to derive benefits from the GST system.

What is GST Registration?

GST registration is the formal act of becoming a registered legal entity under the Goods and Services Tax regime in India for the purpose of collecting taxes legally on the supplied goods and services and avail the credit of input tax paid on the purchased goods and services legally. It involves applying and getting a new Government Sales Tax Identification Number commonly known as the GSTIN. Any business entity that meets the prerequisites, which may include achieving a certain level of turnover, or engage in specific activities such as inter-state supplies or e-commerce, is compelled to fulfill GST registration in order to adhere to the tax laws, such entities can also seek help from GST Billing Softwares.

Who is Eligible for GST Registration ?

Interstate Suppliers: Companies selling products or services in different states.
E-commerce Operators: Entities dealing in the sale of products through online storefront or web portals or apps akin to Amazon, Flipkart, etc.
Casual Taxable Persons: People who make a few transactions within another state where they do not have a physical address for operations.
Agents of a Supplier: People who are agents or brokers that purchase and resell goods or services for other taxable entities.
Input Service Distributors (ISD): Companies who deal with the distribution of the input tax credit of goods and services to their branch with the same PAN number.
Non-Resident Taxable Persons: It relates to persons or companies who are supplying products or services in India but not establishing their business in India.
Persons Required to Deduct Tax (TDS): Installments which are mandatory to collect tax at source under GST.
Persons Required to Collect Tax (TCS): This would mean that e-commerce operators shall be expected to collect tax at source from their sales.
Businesses Supplying Goods on Behalf of Other Taxable Persons: Such as agents, distributors and other persons who are appointed to represent firms.
Persons Supplying through E-commerce Platforms: They do not need to meet any specific turnover threshold to be exempt from GST registration.

Such entities have to register for GST since they operate a business with a turnover equal to or beyond the prescribed threshold limit for GST registration in India regardless of the fact that the actual turnover is less than the specified GST threshold limit.

Who is not Eligible for GST Registration?

Small Businesses Below the Threshold: Small dealers with a combined turnover of less than ₹40,000 for goods and ₹20,000 for services per annum are exempted from the GST registration but can register voluntarily in certain conditions.
Agriculturalists: Farmers who are involved only in the agricultural industry and have no other form of business are also excluded from the GST registration.
Exclusively Dealing in Exempt Goods or Services: Some of the businesses that do not need to register for GST include those in the business of selling only exempt goods or services.
Employees: Employees, those who earn income only from a job or employment, do not pay GST and therefore do not register.
Services Covered Under Reverse Charge Mechanism (RCM): Entities providing services that come under the reverse charge mechanism where the responsibility to pay the tax rests with the recipient do not need to register for GST.
Entities Not Engaged in Economic Activity: Some activities of an organisation or individual, for instance, non-profit organisation, government departments, or agencies that offer non-business related services may not require GST registration if they are not involved in any GST related operations.
Personal Income Earners: People earning personal income from transactions that are not of commercial nature, for instance, income derived from hobbies, infrequent sale of personal property, barter or gifts does not require registration for GST.

These exemptions and exclusions enable selected persons and organisations to conduct their business without having to deal with GST matters.

GST Registration threshold limit

The threshold limit for GST registration in India varies based on the type of business and location. Below are the key threshold limits:

For Goods Suppliers:

General Category States: Businesses with an annual aggregate turnover exceeding ₹40 lakhs are required to register for GST.
Special Category States: In certain northeastern and hilly states (like Arunachal Pradesh, Meghalaya, Sikkim, etc.), the threshold is ₹20 lakhs.

2. For Service Providers:

General Category States: Service providers must register for GST if their annual aggregate turnover exceeds ₹20 lakhs.
Special Category States: In special category states, the threshold for service providers is ₹10 lakhs.

3. For Mixed Suppliers (Goods and Services):

The applicable threshold limit will depend on whether the predominant supply is goods or services, aligning with the above-mentioned limits for goods or services suppliers.

These thresholds help determine whether a business or individual must register for GST. Businesses below these limits are generally not required to register, though they may choose to do so voluntarily for benefits like input tax credit.

Incorporations in the Aggregate Turnover under GST

In GST, the aggregate turnover has many important applications starting with the eligibility for registration, the correct tax rate, and compliance requirements. It is defined simply as the aggregate of the taxable value of all supplies as well as exempt supplies, exports and inter-state supplies made by a business in the course of its activity on an all India basis but does not include taxes such as GST itself.

Components Included in Aggregate Turnover:

Taxable Supplies: Sum total of all components which are subjected to GST other than the taxes such as CGST, SGST, IGST etc.
Exempt Supplies: Total area of goods and services which are under the ambit of zero rated and these include items like unprocessed food stuffs, health care services, and education services.
Exports: The sum of value of all exports of goods and services whether zero rated or non zero rated.
Interstate Supplies: Amount of supplies made to other states including intra-state supplies, which has crossed the threshold limit or exceeded the limit of reverse charge mechanism.
Supplies Under Reverse Charge Mechanism (RCM): The value of supplies, which is subject to the reverse charge (wherein the recipient is responsible for the GST) is also included in the supplier’s aggregate turnover.
Non-GST Supplies: Some of the supplies which are not under the GST ambit like alcohol for human consumption are also taken into the computation of turnover.
Value of Supplies Made on Behalf of a Principal: If an agent makes any supplies on behalf of the principal it forms the part of the total business turnover of the agents.

Components Excluded from Aggregate Turnover:

Central, State, and Union Territory Taxes: Here the actual CGST, SGST and IGST collected are not included in the computation of the Aggregate Turnover.
Inward Supplies on Which Tax is Paid Under Reverse Charge: Supplier’s gross-value of the supply does not include purchases made under reverse charge mechanism.

Knowing what is included in the calculated turnover assists business entities in knowing when to register for GST among other things.

GST Registration Fees

It is worth noting that there is no registration fee for GST in India. There is no cost involved for the GST registration and the process can be completed through the online GST website. Likewise, there is no government fee charged when businesses or individuals are applying for GST registration.

However, where a business decides to engage the services of a tax consultant or any other professional in the registration process there may be charges for services rendered. But from the government, only the registration itself does not cost anything.

Things to Keep in mind before applying for GST Registration

Before registering for GST in India, a person/ business needs to remember the below-mentioned points to ensure smooth and error-free registration:

Know Your Eligibility:

Be sure to check if your business is over the threshold/ limit of compulsory registration and you come under required categories of compulsory registration in GST (e.g. interstate supply, e-commerce).
Check whether you can opt for voluntary registration, in case it would assist you in claiming ITC.

Document Preparation, To Be Uploaded:

Upload of soft copies of documents; these shall be dependent upon the individual but, in general, are as follows:

PAN of Applicant
Aadhaar Card
Business Registration/ Incorporation Certificate
Identity and Address Proof of Promoters/Directors
Business Address Proof: Rental agreement, electricity bill, etc.
Bank Account: Cancelled cheque bank statement
DSC: In case of company and LLP

Constitutional Scenario:
Clearly specify your business structure (sole proprietorship, partnership, LLP, company, etc.). This will have an impact on the steps for registration and the documents to be provided.
Registration for Multiple States:
For instance, if a person has a business establishment in a state of his choice other than his native state, then, in such an instance, there will be an additional requirement for GST registration in the state where the business location is situated.
Selection of Correct HSN/SAC Code:
Determine the correct HSN (Harmonized System of Nomenclature) code for goods or SAC (Service Accounting Code) for services that are relevant to your business. This will help in the proper classification of your goods or services while being taxed.
Right Scheme :
The second last step is to decide whether you want to opt for the regular scheme or composition scheme. Note that the composition scheme is a simple tax structure for small businesses with certain restrictions. It, among others, doesn't allow the input tax credit and limits the interstate trades.
Verify Email ID and Mobile Number:
Ensure that the email ID and mobile number entered in the application form are active and accessible because you will receive the OTPs and important communications on them.
Digital Signature Certificate (DSC):
In the case of companies and LLPs, the DSC is mandatory. The DSC should be proper and valid and duly linked to the application.
Keep the Deadline in Mind:
Immediately after registration, compliance readiness of GST includes the timely filing of returns. Ready the due dates, and you should likewise have a system readiness for you to comply with your filing requirements.
Look for Professional Help, As Needed:
The procedures may appear to be too cumbersome, or you might have questions to be sure it will be better to look for professional help, like a tax professional or GST Billing Software to avoid variations during registration.