Under the Goods and Services Tax Act of 2017, there are criteria for businesses that have been given to take the GST registration. It is not applicable to all businesses. There is a certain tax limit that has been fixed by the GST department; only those businesses that fall under this limit have to take registration from the GST department. This GST registration mandatory for those businesses which fall under the limit prescribed. Hence, it can be said that registration of GST is not mandatory for all businesses, but those who fall under its ambit must register themself with the Department of GST. If it is found that they did not register themselves with the department, then heavy penalties can be imposed, or they might have to face penal action. There is a GST registration mandatory requirement for certain businesses, and they cannot escape from the same.
What is GST?
Goods and Services Tax, whose abbreviation is GST, is an indirect tax that can be levied on the supply of prescribed goods as well as services. Supply here means all forms of supply of goods or services or both. Supply of goods and services includes the sale, transfer, barter exchange, licence, rental, lease, as well as disposal made or agreed to be made against some consideration by an individual in the course of business. Import of services will also be considered as supply. With the above two categories, all the activities which have been specified in schedule one of the Goods and Services Tax Act or made or agreed to be made without consideration will be considered as supply.
Businesses for which GST Registration Mandatory
Under the GST Act of 2017, there are certain businesses for which GST registration mandatory. The list of such businesses is given below:
Businesses Deals in Goods
In India, most businesses deal in goods. They are supplying goods in the market. Suppose the turnover of such kinds of businesses that deal in goods will reach up to or more than Rs. 40 lakhs, then GST registration mandatory for them. If it is found that they are supplying goods without the registration of GST even after meeting the turnover limit, then in such a scenario, heavy penalties can be imposed against such businesses.
Businesses Provide Services
Any kind of business that is providing services in the market to consumers having a turnover of up to or more than Rs. 20 lakhs needs to make GST registration mandatory. After meeting the turnover limit, such kind of businesses cannot be run without the registration of GST. Hence, to save themselves from fines, penalties or penal action, they must register for GST from the Department of Goods and Services.
E-commerce Businesses
Any kind of business, either related to goods or services or both, involved in business activities through e-commerce websites has to register for goods and services tax from the respective department as it is mandatory for them. There is no need for any turnover limit for such kinds of businesses that are running through e-commerce websites.
Interstate Transactions
If you are dealing in goods, services, or both in a particular state, then it is not mandatory to register for goods and services tax with the Department of GST until you fall under the turnover limit for the same. But if you are a business that is interstate and you are dealing in the goods and services or both in multiple states, then in such a condition, you have to take GST registration. For such kinds of businesses, there is no need to fall under any turnover limit. GST registration mandatory for them.
Components of Goods and Services Tax
In the table given below, the components of GST have been given with their applicability:
| Components | Applicability | Example |
| State Goods and Services Tax or SGST | When any business is within the limit of one single state, then SGST will be applicable. | “T” businessman deals in electronic items in Madhya Pradesh only and changes 18% GST on the same. Then, in that 18% GST, he will take 9% as SGST and 9% as CGST. |
| Union Territory Goods and Services Tax or UTGST | When any business is within the limit of one single Union Territory, then UTGST will be applicable. | “A” businessman deals in bicycles in Delhi only and changes 28% GST on the same. Then, in that 28% GST, he will take 14% as UTGST and 14% as CGST. |
| Central Goods and Services Tax or CGST | CGST is applicable in equal amounts with both SGST and UTGST | It is always taken with the SGST and UTGST, as you can see in the above two examples |
| Integrated Goods and Services Tax or IGST | When the transaction of the business is interstate, then this IGST will be applicable. | “C”, a businessman, has a manufacturing plant in Uttar Pradesh, and he sells his goods in Madhya Pradesh. Here, the IGST will be applicable. If a 12% GST slab is applicable here, then 6% will go to central and 6% to Madhya Pradesh. It is going to Madhya Pradesh because GST is a destination-based tax. It means where the goods and services will be consumed, GST will be applicable there. |
Why is GST Registration Mandatory?
Some of the key benefits due to which GST registration mandatory for businesses are given below:
- Gets access to various government schemes
- Uniformity in the tax system
- The government can keep track of the business
- Give recognition to the business
- Helps in building trust among the consumers in the market
- Gives reliability to the business
- Offers credibility to the business
- Easy management of tax
- Compliance with law
- Safety against penalties and fines
Two Important Aspects of Goods and Services Tax
Two very important aspects of the registration of GST are mentioned below in detail, must check for a better understanding of the same:
Documents Required for GST Registration
As the entire process of GST registration is online, proper and complete documents play a great role while filing applications for registration of goods and services before the GST Department. Some of the key documents required while registering a business under the GST Department are given below:
- A PAN Card, Aadhaar Card and one passport-size clear and recent photograph of the applicant will be required
- Business Address Proof as per the registered address of the business will be required
- Bank statements and address proof of the promoters and directors of the entity are mandatory while completing the registration procedure.
- The authorisation letter and board of resolution for the authorised signatory will be needed.
Process of Registration of GST
Follow the steps given below to get your goods and services tax registration:
- Collect all the documents required for the registration
- Visit the government portal of the GST Department
- Create login credentials and login through the same
- Complete the application form
- Check it twice after completing it
- Submit it before the Department of GST
- Verification of application by the Department of GST
- If everything is correct, GST registration will be granted
Conclusion
Under the Goods and Services Tax Act of 2017, GST registration mandatory for specific businesses based on their turnover and nature of operations. For businesses dealing in goods, registration becomes mandatory when their turnover exceeds Rs. 40 lakhs, while service providers are required to register if their turnover crosses Rs. 20 lakhs. E-commerce businesses are obligated to register regardless of turnover, and interstate transactions also necessitate registration.
GST registration offers several advantages, such as access to government schemes, tax system uniformity, enhanced business recognition, consumer trust, and credibility. Furthermore, it aids in tax management and compliance with the law, safeguarding businesses against penalties and fines. Overall, GST registration is a crucial requirement for businesses falling within its ambit, ensuring both legal compliance and opportunities for growth in the dynamic Indian market.
