Compulsory registration under GST

As per section 24 of the CGST Act, it is mandatory for certain persons to take registration under GST whether their aggregate turnover is less than the specified exemption limit. Non-compliance with compulsory GST registration criteria may result in heavy penalties.

Recent updates related to GST registration

28th May 2021

The last date for filing application for revocation of canceled GSTIN falling between 15th April 2021 to 29th June 2021 extended to 30th June 2021.

5th March 2021

The search ARN functionality for registration on the common portal has been enhanced for taxpayers.

31st January 2021

(i) SEZs while applying for GST registration will have to provide the validity period as per the letter of authorisation (LOA).

(ii) Aadhaar authentication has been implemented on the Common portal for existing taxpayers.

31st December 2020

(i) For new registrants who opted for Aadhaar authentication, the authentication would be required only for one Primary Authorized Signatory and one Promoter instead of all.

(ii) Now, GST practitioners can apply cancellation of GST registration in Form GST PMT-06.

List of persons who compulsorily required to take registration in GST

Following persons have to take compulsory registration under GST no matter what is frequency and amount of turnover in a year.

1. A person making Inter-state supplies
2. A taxpayer under reverse charge mechanism
3. Casual taxable person
4. Non-resident taxable person
5. E-commerce operator
6. A person who requires to deduct tax under section 51 of the CGST act, 2017
7. Input service distributor
8. A person who engaged in supplies on behalf of another taxable person whether as an agent or otherwise.
9. Every person supplying online information and database access or retrieval services (OIDAR services) from a place outside India to an unregistered person in India
10. Other persons may be notified by the government

There are also exceptions of compulsory registration criteria which means the above-mentioned persons are not required to enroll under section 24 of the GST act in some cases. Let's take up each case one by one. 

Inter-state supply

Inter-state supply means the location of the supplier and the place of supply are in different states or different territories. Persons engaged in such supplies shall be covered under compulsory registration criteria and they have to take GST number before making inter-state supplies.

Exceptions of inter-state supply -

Any person making the following inter-state supplies shall not be cover under compulsory registration eligibility criteria:

• Inter-state supply of services and the aggregate value of such supplies not exceeding the exemption limit.
• Inter-state supply of hand-crafted goods and the aggregate value of such supplies does not exceed the exemption limit
• Job-workers having a turnover of less than the exemption limit. This clause shall not be applicable to jewelry, goldsmiths, and silversmiths wares, and other articles manufactured on a job work basis. 

Taxpayer under reverse charge mechanism

Under the reverse charge mechanism (RCM), the recipient of goods or services is liable to pay tax and all provisions of GST law shall applicable to him as he is a person who liable to pay tax. It is compulsory to get registered under GST provisions for a person, who is liable to pay tax under the reverse charge mechanism (RCM).

It is relevant to note that a supplier who is making only reverse charge supplies is not required to register if his aggregate turnover of supplies is less than the exemption limit. 

Casual taxable person

Casual taxable person is defined under section 2(20) of CGST Act, 2017. As per GST law, “casual taxable person means a person who occasionally undertakes transactions involving supply of goods or services or both in the course or furtherance of business, whether as principal, agent or in any other capacity, in a State or a Union territory where he has no fixed place of business.”

GST registration is compulsory for a causal taxable person (CTP) before supplying goods or services in the taxable territory. However, CTP is exempted from this requirement if he is engaged in the supply of hand-craft goods and the aggregate turnover of such supplies does not cross the GST threshold.

For example, Mr. Ravi, a tax consultant, having a place of business in Gurgaon. He is providing tax consultancy in Mumbai where he does not have a fixed place of business. In the given case, as per section 24, Mr. Ravi has to take compulsory registration in Mumbai before providing such services. 

E-commerce operator

“Electronic commerce” and Electronic operator” is defined under section 2(44) and 2(45) of CGST act.

As per section 2(44) of the CGST Act, “Electronic commerce means the supply of goods or services or both, including digital products over a digital or electronic network”

As per section 2(45) of CGST Act, “Electronic commerce operator means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce”

It is mandatory to take GST registration for an e-commerce operator if he is required to collect tax at source under section 52. Moreover, any person, who engaged in the supply of goods or services through such an e-commerce operator, also required to obtain compulsory registration under GST.

Exception:

However, Supplies through e-commerce operator in the following cases shall not be covered under compulsory registration criteria

•  Supplies notified under section 9(5) of CGST Act.
• Any person who provides services and the aggregate value of such services does not exceed the threshold limit. 

Non-resident taxable person

”Non-resident taxable person” is defined under section 2(77) of the CGST Act 2017. ”Non-resident taxable person means any person who occasionally undertakes transactions involving supply of goods or services or both, whether as principal or agent or in any other capacity, but who has no fixed place of business or residence in India”

Registration under the Goods and Service Tax is compulsory for the non-resident taxable person if he is engaged in any kind of taxable supply in the taxable territory. Please note that every NRI individual or company making taxable supply has to register under the GST regime irrespective of frequency and amount of transaction.

Person who is required to deduct tax under Section 51 of CGST act

Following persons are required to deduct tax under section 51 of CGST act-

1. Local authority
2. A department or an establishment of the Central Government or State government
3. Government Agencies
4. Such persons or categories of persons may be notified by the government.

Input service distributor

Input Service Distributor (ISD) is an office of the supplier which receives the invoice of its branches and distributes the input to such branches proportionately by raising an ISD invoice. ISD is required to obtain compulsory registration under GST no matter what is the amount of turnover in a year.

OIDAR services from a place outside India to an unregistered person in India

OIDAR services refer to services provided through the medium of the internet without the physical interaction of the supplier and recipient of services. For example - advertising on the internet, providing cloud services, online supplies of digital content, digital data storage, online gaming, etc.

Every non-resident service provider providing OIDAR services to the unregistered person in India is required to obtain GST registration compulsorily. Further, such service providers have to appoint an authorised signatory (Indian) in India possessing a valid PAN.