Situated in the southern part of India, Karnataka is a major hub for Information Technology and is also the home to the world’s fourth-largest technology cluster. With 23 operational ITes, Special Economic Zones, 5 software technology parks, and dedicated IT investment regions, Karnataka offers a robust infrastructure. The state is equipped with skilled labour, superior infrastructure, and a commendable economic growth rate, all contributing to the dynamic progress of the industrial and business sectors.
Given these advantages, Karnataka emerges as an optimal destination for initiating ventures in software, engineering, biotechnology, telecom, textiles, and apparel businesses. However, a crucial step before commencing any business in the state is obtaining GST registration in Karnataka.
Understanding the Threshold Limit for GST Registration in Karnataka
The Goods and Services Tax was introduced on July 1, 2017, accompanied by a set of rules and regulations.
Maintaining high levels of compliance in business operations can leave a positive impact on the GST ecosystem, facilitating the swift processing of credit and refund claims.
GST is applicable at each stage of the supply network, covering various steps such as the procurement of raw materials, manufacturing, wholesale and retail distribution, and the final sale to consumers. Notably, Goods and Service Tax is levied at all three critical stages, namely:
1. Exceeding the Threshold Limit of Aggregate Turnover
2. Compulsory Registration
3. Voluntary Registration
Mandatory GST Registration in Karnataka: Who Should Register?
In Karnataka, several categories of individuals and entities are obligated to register under the Goods and Services Tax regime. The following are the specific groups that fall under this requirement:
1. Businesses with Aggregate Turnover exceeding Rs 20 Lakhs (Rs 10 Lakhs for special category states):
Note: This criterion is not applicable if the entity exclusively deals in the supply of goods/services exempt under GST.
2. Persons Registered under Previous Taxation Laws (Excise, VAT, Service Tax, etc.):
Individuals or entities registered under earlier taxation laws are required to undergo registration under GST.
3. Entities Engaged in Inter-State Supply of Goods:
Businesses involved in the cross-border supply of goods are mandated to register under GST.
4. Casual Taxable Person:
Individuals conducting occasional or irregular taxable transactions are required to register.
5. Non-Resident Taxable Person:
Non-residents engaged in taxable transactions within the country must undergo GST registration in Karnataka.
6. Agents of a Supplier:
Agents representing a supplier in transactions are obligated to register.
7. Persons Paying Tax under Reverse Charge Mechanism:
Individuals or entities liable to pay tax under the reverse charge mechanism are required to register.
8. Input Service Distributor and its Agent:
Entities acting as input service distributors and their agents need to undergo GST registration in Karnataka.
9. E-Commerce Operators or Aggregators:
E-commerce operators or aggregators, including individuals supplying through them, must register under GST.
10. Entities Providing Online Information, Database, or Retrieval Services from Outside India to a Person in India:
This includes entities offering online information services from locations outside India to individuals in India, excluding registered taxable persons.
Documents Required for GST Registration in Karnataka
When applying for Goods and Services Tax registration in Karnataka, the necessary documents vary depending on the type of business entity. Mentioned below are the documents required for different business structures:
1. For Sole Proprietorship/Individual:
- PAN Card of the owner
- Aadhar card of the owner
- Photograph of the owner (JPEG format, maximum size – 100 KB)
- Bank account details
- Address proof
2. For Partnership Firm/LLP:
- Identity Proof of the partners
- Address Proof of the partners
- Copy of partnership deed
- Photograph of the partners
- Photograph of the authorised signatories
- ID and Address Proof of the person authorised by the partners
- Proof of appointment of authorised signatory
- In the case of LLP, registration certificate and Board resolution of LLP
- Bank account details
- Address proof of the principal working place
3. For Company:
- PAN Card of the Company
- Certificate of incorporation
- MOA and AOA of the company
- Identity Proof and Address Proof of authorised signatory
- Note: The authorised signatory must be an Indian, even in the case of foreign companies/branch registration.
- Identity Proof and Address Proof of all directors of the Company
- Photograph of the directors and authorised signatory
- Board resolution appointing authorised signatory
- Bank account details
- Address proof of the working premise
4. For HUF (Hindu Undivided Family):
- PAN card of HUF
- Identity Proof of Karta (head of the family)
- Address Proof of Karta
- Photograph of the Karta
- Bank account details
- Address proof of the working premise
Procedure for GST Registration in Karnataka
The process for GST registration in Karnataka involves several steps, ensuring a seamless transition into the Goods and Services Tax system. The procedure for GST Registration in Karnataka involves:
Step 1: Online Application
- Visit the GST portal (www.gst.gov.in) and create a username and password.
- Click on ‘New User Login’ and accept the displayed declaration form.
- Choose ‘New Registration’ and log in to initiate the registration procedure.
Step 2: Fill Requisite Details
- Select ‘Taxpayer’ from the drop-down menu.
- Specify the state and district.
- Enter business details, PAN, email ID, and mobile number.
- Enter the Captcha and click ‘Proceed.’
Step 3: OTP Verification
- Enter the OTP sent to the registered email ID and mobile number.
- Click ‘Proceed’ after entering the details.
Step 4: Temporary Reference Number
- Note the Temporary Reference Number displayed on the screen.
- Open the GST portal again, click ‘Register’ under ‘Taxpayers,’ and choose ‘TRN.’
Step 5: TRN Entry and OTP Verification
- Enter the TRN and captcha details.
- Receive and enter the OTP sent to the registered email ID and mobile number.
- Click ‘Proceed.’
Step 6: Application Details
- Check the application status and click on the Edit icon if needed.
- Complete the 10 sections with relevant details.
Step 7: Document Submission
- Upload required documents, including photographs, business address proof, HSN Code, bank details, and more.
Step 8: Verification and Submission
- Click on the ‘Verification’ page and review the declaration.
- Submit the application using Electronic Verification Code, e-Sign method, or Digital Signature Certificate for company registrations.
Step 9: Completion and ARN Generation
- Upon completion, a success message will be displayed.
- The Application Reference Number will be sent to the registered mobile number and email ID.
Step 10: Check ARN Status
- Verify the status of the ARN on the GST portal.
Following these steps ensures a systematic approach to GST registration in the state of Karnataka, facilitating a successful and compliant registration process.
Final Thoughts
GST registration in Karnataka is a vital step for businesses, offering a myriad of advantages. Beyond ensuring legal recognition and fostering trust, it enables access to Input Tax Credit, facilitates interstate transactions, and promotes market competitiveness. Compliance with GST regulations not only avoids legal consequences but also streamlines tax procedures, enhancing ease of doing business. The registration opens doors to government tenders and schemes, making businesses more credible. Overall, the simplified tax structure, access to the GST Network, and the ability to claim refunds contribute to a more efficient and cost-effective business environment, positioning GST registration as a strategic imperative for enterprises in Karnataka.
