Register for GST, if you pay indirect, service tax

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The Goods and Services Tax (GST) rates are finally out. While consumers will be impacted by either higher or lower prices for various commodities and services, the question is who, among entrepreneurs and professionals, is liable to register for it? And how will things change for them after the GST rollout in July 1?

Who should register under GST?

It is mandatory for anyone running a business or a professional to pay GST, if the aggregate turnover exceeds Rs 20 lakh in a financial year computed on an all-India basis. For special category states, which includes the North East, Jammu and Kashmir, Himachal Pradesh and Uttarakhand, the limit is lower at Rs 10 lakh.
“The aggregate turnover will include the value of taxable supplies, exempted supplies, exports and inter-state supply of goods and or services but excludes the value of taxes (GST) on such supplies,’’ said Anita Rastogi, Partner, Indirect Taxes, PwC.

The GST legislation prescribes that all businesses and service providers registered under the exsiting indirect tax laws including the Value Added Tax (VAT), the Central Sales Tax (CST), excise duty and service tax, among others should migrate to GST.

“Such a migration would entail obtaining a provisional number where all conditions are satisfied and it would be replaced by a final certificate of registration under the GST regime,’’ said Abhishek Jain, Tax Partner, Ernst & Young India.

People belonging to certain other categories will have to register as well and therefore, will have to file returns. People under this category include inter-state suppliers, deductors of Tax Deductible at Source (TDS), e-commerce operators and suppliers using e-commerce operators for supply.

According to Naveen Wadhwa, General Manager,, every registered dealer is required to file sales return and purchase return on a monthly basis as well as an annual summary return. Composition dealers are exempted from the process and will have to file a single quarterly return instead.

“The dealer will have to file return even if there is no business activity (that is, nil return) during the relevant period. A registered dealer, not carrying out any business activity during the year, will have to surrender his registration so as to avoid the monthly compliance of GST return filing,’’ he added.

How to register?

Currently, the government has fixed April 30 as the deadline to migrate to GST. “As of now, there is no clarity if an additional migration window would be provided for those who have missed the migration date,’’ said Suresh Rohira, Partner, Grant Thornton India. Further, a casual taxable person or a non-resident taxable person shall apply for registration at least five days prior to the commencement of business.

In case of fresh registration, the person should apply in the specific state or union territory within 30 days from the date on which he becomes liable for registration. Before applying, the person should declare his PAN details, mobile number, e-mail address and data about the state or union territory in Part A of Form GST REG-01 on the common portal.

Once these details are verified, a temporary reference number is generated and communicated to the applicant through mobile and e-mail. Using the reference number, the applicant should electronically submit an application in Part B of Form GST REG-01, which is to be duly signed along with documents specified in the said form at the common portal either directly or through a facilitation centre notified by the Commissioner. On receipt of an application, an acknowledgement shall be issued electronically to the applicant in Form GST REG-02.

“GST common portal has been made available to enable taxpayers enrol with GST. Paper-based enrolment option is not available. This portal will enable taxpayers to meet the compliance requirements, like filing returns and making tax payments,” said Rohira.

If you don’t register, experts said the new dealers, who are currently registered under VAT, excise duty and service tax after January 30, cannot migrate to GST as provisional IDs for migration hasn’t been provided by the government, yet. Therefore, there is a high chance that migration will continue even after missing the deadline of April 30. The good part is that even if the migration date is missed, there will not be any legal action. However, there may be penal consequences for delayed registration and the person will not be able to pass on the benefit of GST paid on his outward supplies to the customer. “Also, in case the tax authorities initiate an enquiry for non-obtaining of registration, the same may entail application for registration being initiated suo-moto by the tax authorities, best judgement assessment of the tax liabilities, etc,” said Abhishek Jain, tax partner, PwC.

How will the process work?

Ordinarily, a business would be required to file three returns per state per registration followed by an annual return. In the case of non-filing, there is a late fee of Rs 100 per day that cannot exceed beyond Rs 5,000. “The late fee exceeds to the extent of quarter percentage of his turnover in the state, where the annual return is not filed,” said Rustogi.