Introduction

Tax is a charge imposed on individuals, or corporates by the government at different levels

like local, state or union. The purpose of levying tax is to generate revenue for the
government and in turn use the same to finance various expenses like defence, education,
healthcare, infrastructure facilities etc. The government imposes two types of taxes i.e. Direct
and Indirect.

Direct Taxes: When the tax is directly imposed and collected from the one who is required
to pay, it is called direct tax. In other words, the person on whom the tax is imposed and the
person who pays the tax are the same. Examples for direct taxes are income tax, corporate
tax, estate tax, gift tax etc. Income tax is levied on the incomes of individuals or Hindu
Undivided Families (HUF) as per the applicable slab. Corporate tax is imposed on the profits
of the businesses or corporate. Estate tax is the tax on the estate or property of a person who
has died. It is also called inheritance tax. Gift tax is levied on the individuals who receive the
taxable gift.

Indirect Taxes: When the tax is indirectly paid by the person on whom it is imposed
through an intermediary, it is indirect tax. In this case, the person on whom the tax is imposed
and the person who pays the tax are different.

The various types of indirect taxes such as customs duty, excise duty, service tax, value
added tax (VAT) etc. were existent prior to Goods and Service Tax (GST) which came into
effect from July 1, 2017.

Indirect Taxes Subsumed Under GST:

The following indirect taxes levied by the Centre and States prior to GST have been
subsumed under GST:

Taxes by Central Government:

Customs Duty: It is the tax imposed on goods when they cross the customs frontiers of
India. In other words, it is the duty levied when goods are imported into India and are
exported from India, the burden of which ultimately passed on to consumers. There are
variants of customs duty based on the purpose for which they are levied like countervailing
duty (CVD), special additional duty of customs (SAD), anti dumping duty etc.

Excise Duty: It is the tax levied on the goods manufactured in India for domestic
consumption. The variants of excise duty are duties of excise (medicinal and toilet
preparations), additional duties of excise (goods of special importance, textiles and textile
products etc.)

Service Tax: The tax charged and collected by the service provider from the service receiver
for the services rendered and in turn paid to the government.

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In addition to the above, the Centre levies various cesses and surcharges in relation to supply
of goods and services.

Taxes by State Governments:

State Value Added Tax (VAT)/Sales Tax: The tax levied on the sale of goods within the
state is VAT.

Central Sales Tax: The tax levied by Central Government on the inter-state sale of goods
but collected by the States.

Luxury Tax: The tax on products or services that are non-essential. Example, tax on
provision of hotel rooms for more than Rs 1,000 a day, services from beauty parlour, spa,
swimming pool etc.

Entertainment and Amusement Tax: Tax on activities meant for entertainment and
amusement. For example, tax on movies, video shows, cable TV operators etc.

Octroi and Entry Tax: The tax levied by the state when the product enters the state.

In addition to the above, the various other taxes levied by the States include taxes on
advertisements, purchase tax, taxes on lotteries, betting and gambling, state surcharges,
cesses in relation to supply of goods and services.

Thus, the list of taxes subsumed under GST are summarised as follows:

Taxes by the Centre Taxes by the States

Central Excise Duty
Additional Excise Duty
Additional Customs Duty
Special Additional Duty of Customs
Service Tax
Excise Duty under Medicinal and Toilet Purchase Tax
Preparations
Central Surcharges and Cesses
Taxes not subsumed under GST:
State VAT/Sales Tax
Luxury Tax
Entry Tax of all Forms
Entertainment and Amusement Tax
Taxes on Advertisements
Taxes on Lotteries, Betting and Gambling
States Surcharges and Cesses

Taxes by the Centre Taxes by the States

Basic Custom Duty Stamp Duty
Export Duties Property Tax
Clean Energy Cess Tax on Liquor and Petroleum Products
Customs Cess

Note:
Thus, the GST would be applicable to all goods other than alcoholic liquor for human
consumption and five petroleum products, viz. petroleum crude, motor spirit (petrol), high
speed diesel, natural gas and aviation turbine fuel. Despite Tobacco and tobacco products are
subject to GST and GST compensation cess, the Centre has a right to levy Central Excise
duty on these products.
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Goods and Service Tax (GST):

GST is a single uniform indirect tax on the supply of goods or services as against to earlier
tax system on the manufacture or sale of goods or provision of services. Thus, the purpose of
introducing GST is to have single uniform indirect tax in place of the earlier system of
multiple taxes levied by the centre and the states which was ambiguous to the tax payers.

It is levied where goods and services are consumed as against to the earlier system of levying
tax where they are produced. Hence, it is a destination based consumption tax (DBCT). It
is a dual GST with the Central Government and State Government simultaneously levying
tax on a common tax base.

Why GST?

To understand why GST is required, we will look into the following example.

Prior to GST, a training institute offering coaching classes for Rs 1,00,000 used to charge
15% service tax of Rs 15,000. Say, it bought office stationery for Rs. 30,000 by paying 5%
VAT of Rs 1,500 (Rs. 30,000 × 5%). It had to pay output service tax of Rs 15,000 without
getting any deduction of Rs.1,500 VAT paid on office supplies. As a result, its total tax
payment was Rs.16,500. Thus, payment of double taxes led to cascading effect.

Under GST regime, say, GST is levied at 18% on coaching services and 12% on office
stationery. Hence, after deducting the tax paid on its input, the training institute pays only (Rs
18% of Rs. 1,00,000 – 12% of Rs. 30,000) Rs 14,400. As a whole, its tax liability came down
by Rs. 2,100 (Rs. 16,500 – Rs.14,400).

Thus, GST would reduce cascading effects of double taxation, as it allows the set-off of tax
paid on input at the time of payment of output tax. Physical interface between the tax payer
and tax authorities is negligible under GST, as all activities starting from registration, filing
returns, tax payment, refunds etc. are made online. It helps in achieving improved
transparency & tax compliances and seamless flow of credit.

Dual GST:
Under GST, as the Centre and the States jointly decide and simultaneously levy tax on
common tax basis, it is called dual GST. The various types of taxes under GST are as
follows:

GST

Intra-State Supplies Inter-State Supplies

CGST SGST / UTGST 3 IGST

Intra-State Supply of Goods or Services: When the location of the supplier and the place of
supply (location of the buyer) are in the same state, it is intra-state supply. Intra-state supplies
attract Central GST (CGST) and State GST (SGST) (UTGST in case of Union Territories)).
It means in this case, seller collects both CGST and SGST (UTGST) from the buyer and
deposits CGST with Central Government and SGST with State Government.

Ex: A furniture dealer in Hyderabad supplies furniture worth Rs 100,000 to a customer in

Warangal. GST rate applicable on furniture is 12%. Since the supply is intra-state within
Telangana, GST in the invoice is shown as follows:

Taxable value of supply Rs 1,00,000

Add: CGST @ 6% Rs 6,000
SGST @ 6% Rs 6,000
Total amount Rs 1,12,000
If the furniture dealer does not have input tax credit, he will deposit Rs 6,000 with the Central
Government and Rs 6,000 with the Telangana Government through internet banking using
the same challan.

If a furniture dealer in Chandigarh supplies furniture to a customer in Chandigarh, GST is

shown in invoice as follows:

Taxable value of supply Rs 1,00,000

Add: CGST @ 6% Rs 6,000
UTGST @ 6% Rs 6,000
Total amount Rs 1,12,000

In this case, furniture dealer will deposit Rs 6,000 with the Centre and Rs 6,000 with
Chandigarh Government.

Inter-State Supply of Goods or Services: When the location of the supplier and the place of
supply are in different states, it is inter-state supply. Inter-state supplies attract Integrated
GST (IGST) and the supplier collects the same from the receiver and deposits with Central
Government. Subsequently, revenue from IGST will be distributed among Union and States
by Parliament on the basis of recommendation of GST council.

Ex: A furniture seller in Hyderabad supplies furniture worth Rs 1,00,000 to a customer in

Bangalore. Since it is an inter-state supply between Telangana and Karnataka, it attracts
IGST at 12%. Invoice in this transaction reflects GST as follows:

Taxable value of supply Rs 1,00,000

Add: IGST @ 12% Rs 12,000
Total amount Rs 1,12,000
In this case, assuming that furniture seller does not have any input tax credit, he deposits the
entire tax amount of Rs 12,000 with the Centre.

If a furniture dealer in Chandigarh supplies furniture to a customer in Lakshadweep, invoice

reflects GST as follows:

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 Taxable value of supply Rs 1,00,000
Add: IGST @ 12% Rs 12,000
Total amount Rs 1,12,000
In this case, furniture dealer will deposit Rs 12,000 with the Centre. This is because, supply
between two Union Territories is considered as inter-state supplies. Similarly, supply
between a state and a UT is also an inter-state supply.

SGST Act: To levy SGST on the supply of goods and services within a state, each state has
passed its own State GST Act, which is primarily copy of CGST Act.

UTGST Act: The act has been passed for Union Territories (UTs) which do not have
legislature. These UTs are Andaman and Nicobar Islands, Lakshadweep, Dadra and Nagar
Haveli, Daman and Diu and Chandigarh. As Delhi and Puducherry have their own
legislatures, they have passed SGST Acts.

GST Compensation Cess:

In addition to CGST, SGST, UTGST and IGST, GST compensation cess is levied on
specified products i.e tobacco products, pan masala, coal, motor cars, aerated waters etc. to
compensate the revenue loss for the states for the next 5 years, due to the abolition of Central
Sales Tax (CST).

Destination Based Consumption Tax (DBCT): If the goods manufactured in Ahmadabad

are sold to a customer in Bhopal, the tax revenue goes to Madhya Pradesh Government not to
Gurarat Government. Since GST is imposed at the point of consumption, it is destination
based consumption tax.

GST Council: GST council consists of representatives from the Centre and the States as
follows:

Chairperson: The Union Finance Minister, currently (Arun Jaitley)

Member: The Union Minister of State in charge of Revenue or Finance

Members: The Minister in charge of Finance or Taxation or any other Minister nominated by
each State Government

GST Council will make recommendations on various important issues in relation to GST like
goods and services that may be subject to or exempted from GST, principles of place of
supply, GST rates etc.

Tax slabs under GST:

GST rates applicable to the supply of goods: GST rates on the supply of goods are primarily
0%, 5%, 12%, 18% and 28%. However, there are two more rates of 0.25% and 3% applicable
on specified goods.

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GST rates applicable to the supply of services: GST rates on the supply of services are 5%,
12%, 18% and 28%.

Under Inter-state supplies, the entire tax rate is considered under IGST, whereas in case of
intra-state supplies, the tax rate is divided into CGST and SGST (UTGST) equally.

The rates would be notified from time to time on the recommendations of the GST council.

Registration
Since GST on the supply of goods/services, as per section 22 of the Act, supplier shall get
registered under GST law. Registration of a business under GST law provides a unique
identification number called Goods and Services Tax Identification Number (GSTIN) from
the GST authorities. It indicates that the person is legally recognized as a supplier of goods or
services. The purpose of the registration is to facilitate the registered business to collect tax
from the recipient of goods/services on behalf of government and to avail input tax credit
paid by him on his inward supplies.

Threshold exemption for registration under GST:

All businesses whose aggregate turnover in a financial year on an all India basis exceeds
Rs 20 lakh shall get registered under GST. However, threshold limit is Rs 10 lakh for North
Eastern States (Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland,
Sikkim and Tripura), Himachal Pradesh and Uttarakhand. As the total revenue of these states
is low, if threshold limit is kept at higher level, majority of the businesses fall below the limit
and thereby reducing the tax collections of the states and effecting their fiscal position.
Hence, lower threshold limit of Rs 10 lakh is prescribed for these states.

Aggregate Turnover: For the purpose of registration, as per section 2(6) of the Law,
“Aggregate Turnover” means the aggregate value of

• All taxable supplies

• Exempt supplies
• Exports of goods/services
• Inter-State supplies
• All supplies made by the taxable person, whether on his own account or made on
behalf of all his principles
Note:

1. All the above supplies

• To be made by a person having the same PAN

• To be computed on all India basis in a financial year

2. Aggregate turnover does not include

• Value of supplies on which tax is levied on reverse charge basis

• Value of inward supplies

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 • Central Tax, State Tax, Union Territory Tax and Cess

Example 1: Mr Agarwal has his business operations in 4 different states and his aggregate
turnover in those states is as follows

Delhi Karnatakar Madhya Pradesh Telangana

Taxable Supply 8,00,000 5,00,000
Exempted Supply 4,00,000
Supply on behalf of his principal 6,00,000

What is his aggregate turnover? Is he liable to register under GST?

Example 2: In a financial year, Mr. Sailesh, a resident of Tiruvantapuram has generated a

turnover of Rs 50,00,000 through the sale of land and Rs 30,00,000 through exports. Apart
from this, his other supplies include Rs 30,00,000 of exempted supplies and Rs 10,00,000 of
taxable supplies. What is his aggregate turnover? Is he liable to register?

Example 3: Taxable supplies of Mr Joseph in Mumbai and Itanagar amount to Rs 4,00,000

and Rs 11,00,000 respectively. Is he liable to register under GST?

When is Registration not required even if aggregate turnover is more than

threshold exemption?:

• When a business is exclusively engaged in making exempted supply

• When a business is exclusively engaged in making taxable supply on which tax is
payable under reverse charge mechanism
• Agriculturist: An agriculturist is not liable for registration to the extent of supply of
produce out of cultivation of land. For this purpose, agriculturist means an individual
or Hindu Undivided Family (HUF) who is involved in the cultivation of land by own
labour or by the labour of family or by servants on wages payable in cash or kind or
by hired labour under personal supervision of his own or any member of his family.

Example 4: Mr Punia supplies Rs 50,00,000 worth of goods which are fully exempted under
GST. Is he liable to register under GST?

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Example 5: Mr Kulkarni makes exempted supplies of Rs 22,00,000 and taxable supplies of
Rs 2,00,000. What is his aggregate turnover? Is he liable to register under GST?

Example 6: Mr Surender, an advocate provides legal services to Infosys for which he

receives Rs 30,00,000 per annum. Is he required to register under GST?

When is Registration required despite aggregate turnover is less than threshold

exemption?:

The following persons/entities are compulsorily liable to get registered under GST, despite
their aggregate turnover does not exceed threshold limit.

Persons who were registered under earlier laws: All the persons who were registered
under tax laws prior to GST like Excise, VAT, Service Tax etc. are liable to get registered
under GST Act.

Inter-state taxable supply of goods: For all those doing inter-state supply of goods, it is
compulsory to get registered under GST. However, this clause is not applicable to

• Those who makes inter-state supply of handicrafts goods

• Those who make inter-state supply of services
• Job worker (except jewellery, goldsmiths and silversmiths)

Transfer of Business: When a business carried on by a registered taxable person is

transferred, the transferee is liable to get registered, if such business is transferred as a going
concern on account of succession to another person. This is applicable even if the transfer of
the business takes place on account of merger or amalgamation.

E-commerce operators: Operators (Flipkart, Amazon, Paytmmall, Snapdeal etc.) supplying

goods on ecommerce platform are required to get registered under GST irrespective of
threshold limit. Note that as per 22nd GST meeting held on 6th October, 2017, a person
supplying services, other than supplier of services under section 9(5) of the CGST Act, 2017,

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through an e-commerce platform are exempt from registration, if their aggregate turnover
does not exceed threshold limit in a financial year.

Persons required to deduct Tax at Source: As per Government order, the following entities
may need to deduct tax at source (TDS) at rate of 1% on the payments to the suppliers of
taxable goods/services, where the total value of such supply, under an individual contract
exceeds Rs 2,50,000.
i. A department or establish of the Central or State Government
ii. Local authorities
iii. Government agencies
iv. a) An authority or board or any other body set up by an Act of Parliament or a state
legislature or established by any government with 50% or more equity or control b)
the society established by the central government or state government or any local
authority c) Public Sector Undertakings (PSUs) as notified in the latest notification
dated 13th September 2018.
A TDS deductor should compulsorily register under GST without any threshold limit. The
deductor can obtain registration without PAN.

Casual taxable persons making taxable supplies: Casual taxable person is the one who
supplies taxable goods or services occasionally in a state/UT where he does not have a fixed
place of business. The person can act as a principal or agent or in any other capacity to supply
goods or services for the furtherance of business. Casual taxable person cannot opt for
composition scheme and he must apply for registration at least 5 days prior to commencing
his business.

Example: Mr. Agarwal of Rajastan participates in an exhibition held in Hyderabad in

February of every year where he has no fixed place of business and sells the taxable products
in exhibition. He shall get registered as a casual taxable person in the state of Telangana,
despite his aggregate turnover does not exceed threshold limit.

Non-resident taxable person making taxable supplies: Non-resident taxable person is the
one who occasionally supplies taxable goods or services in a state/UT where GST applies but
does not have any fixed place of business in India.

Example: Mr. Gurung of Nepal participates in an exhibition held every year in Bhopal where
he has no fixed place of business and sells the taxable products in the exhibition. He is
required to be registered as a casual taxable person in the state of Madhya Pradesh as non-
resident taxable person, despite his aggregate turnover does not exceed threshold limit.

Persons supplying online information from outside India: Persons supplying online
information and database access or retrieval services (OIDAR) from a place outside India to a
person in India is required to get registered under GST irrespective of threshold limit. In this
context, OIDAR services are the services which are delivered through the internet.

Example: Google Drive providing cloud services, Steam providing digital distribution
platform for video games, Amazon Prime Video providing e-books, movie via internet, web
services providing trade statistics, legal and financial data etc. However, lawyer and financial
consultant services through email, ticket booking for entertainment events, Professional

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courses like education delivering the content by a teacher over the internet etc. do not come
under OIDAR services.

Reverse charge mechanism: Under normal circumstances, the supplier of goods or services
collects tax along with the price of goods/services from the receiver and in turn pays the tax
to the government. Under reverse charge, the receiver pays to the supplier only price of the
goods/services and pays the tax directly to the government. Thus, the liability of tax payment
directly to the government lies with the receiver rather than supplier under reverse charge
mechanism.

GST PAYMENT PROCESS UNDER NORMAL CASE

Goods/Services
Supplier of Receiver of
Goods/Services Goods/Services
Prices of Goods/Services
and GST

GST

Government

GST PAYMENT PROCESS UNDER REVERSE CHARGE

Goods/Services
Supplier of Receiver of
Goods/Services Goods/Services
Prices of Goods/Services

GST

Government

When does the liability under Reverse Charge arise?

Supply from an unregistered dealer to a registered dealer: When a person not registered
under GST supplies taxable goods/services to a registered dealer, the receiver will have to
directly pay GST to the government. In this case, the registered receiver has to do self-
invoicing for the inward supplies, as the supplier, being an unregistered dealer cannot issue
GST compliant invoice.

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Services through an E-commerce operator: When an e-commerce operator supplies
services, he is liable to pay tax under reverse charge, irrespective of the fact that the original
service provider is registered or not under GST.

For Example: Hometraingle providing house cleaning services, repairs & installations, pest
control, home improvements, commercial services etc., is liable to collect tax from customers
rather than service providers and pay the same to the government.

Supply of goods and services as specified by CBIC: Any person supplying goods/services
specified by Central Board of Indirect Taxes and Customs (CBIC) under section 9(3) and
9(4) of CGST Act is liable to pay tax under reverse charge.

Agents of a supplier: A person who makes taxable supply of goods/services on behalf of

other taxable persons as an agent or otherwise, is compulsory get registered under GST
irrespective of threshold limit.

Input Service Distributor:

When a business with multiple branches incurs common expenses towards the services used
by all its branches and receives tax invoices from the service provider, the head office of the
business issues a document called ISD invoice to its branches in proportion to the use of
services for the purpose of distributing the credit of CGST and SGST/UTGST or IGST paid
on the services received. Hence, head office is an input service distributor (ISD). Thus, ISD is
a facility provided to business with a large common expenses where bill payment is on
centralised basis from head office. This is to simplify the process of availing input tax credit
and to strengthen the seamless flow of credit under GST. The branches can have different
GSTINs but must have the same PAN as that of ISD. ISDs are required to compulsorily
register under GST Act irrespective of threshold limit. Further, registration as ISD is to be
done separately from its registration as a normal tax payer under the Act.

Example: A business with head office located in Hyderabad has branch offices in Chennai,
Ahmadabad, Kolkata and Delhi. The business incurs software maintenance expenses on
behalf of all its branches and receives invoice for the same. Head office issues ISD invoice to
its branch offices so as to distribute input tax credit to its branches proportionately.
Accordingly, head office in Hyderabad has to compulsorily register under GST as an Input
Service Distributor irrespective of its aggregate turnover.

However, ISD cannot distribute ITC paid a) inputs like raw materials and capital goods like
Machinary b) To outsourced manufacturers or service providers

Procedure for Registration:

The registration under GST is PAN based. Supplier is required to register in each of the
states/UTs from where he effects supplies.

The step-wise procedure for registration is as follows:

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Registration under GST can be done on the GST portal (i.e. www.gst.gov.in) or through a
facilitation centre.

Verification of Details: A person who wants to register under GST needs to fill in GST
REG-01 which is available on GST portal or any facilitation centre. The person has to declare
his PAN, mobile number, e-mail address, State/UT in Part of the form. After the successful
verification of PAN, mobile number and email-id, a temporary reference number (TN) will
be generated and sent to the mobile number and e-mail address of the applicant.

Application for Registration: Using the TRN received above, the applicant shall submit
application in Part B of Form GST REG-01 along with the required documents (permanent
account number (PAN) of the applicant, aadhaar card, proof of registration of business
or incorporation certificate, address proof of the place of business, identity and address
proof of promoters/directors with photographs, bank account statement/cancelled
cheque, digital signature, letter of authorisation/board resolution for authorized
signatory) on GST Portal. Part B of the form has ten sections namely business details,
promoter/partners, authorised signatory, authorised representative, principal place of
business, additional place of business, goods or services, bank accounts, state specific
information and verification.

Once the application is received, an acknowledgement which contains application reference

number (ARN) is issued to the applicant in Form GST REG-02 through registered e-mail
address and mobile phone number.

Every person liable to register under GST shall apply for registration within 30 days from the
date on which he becomes liable to registration. A casual person or a non-resident taxable
person shall apply for registration at least 5 days prior to the commencement of the business
by depositing an advance tax amount equivalent to the estimated tax liability of such person
for the period for which registration is sought.

Even if a person registers as a normal tax payer, a separate registration is required in each of
the following cases:

• A person who owns a SEZ unit or who is SEZ developer

• Input Service Distributor
• A person required to collect TDS or TCS
• A person supplying online information and database access or retrieval services

Scrutiny of application: The application will be forwarded to the proper officer for
verification who examines the application with the accompanying documents. If the same is
found to be in order, he approves the grant of registration within 3 working days from the
date of submission of application.

In case of any deficiency in the application, the proper officer may send a notice to the
applicant electronically in Form GST REG-03 within 3 working days from the date of
submission of application. The applicant shall furnish clarification and any other information
as required electronically in Form GST REG-04, within a period of 7 working days from the

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date of receipt of such notice. If the proper office is satisfied with the clarification provided,
he may approve the grant of registration to the application within a period of 7 working days
from the date of the receipt of such clarification. If the applicant fails to provide clarification
or the proper officer is not satisfied with the clarification provided, the proper officer may
reject such application and inform the applicant in Form GST REG-05.

If the proper office fails to take any action within 3 days from the date of application or
within 7 days from the date of furnishing clarification in case of deficiency, application for
grant of registration is deemed to have been approved.

Issue of Registration Certificate: Once application for grant of registration has been
approved, a certification of registration in Form GST REG-06 is issued and the same is made
available on the common portal. The certificate contains a unique identification number
assigned to the applicant called Goods and Services Tax Identification Number (GSTIN).

GSTIN contains 10 characters: Prior to GST, all the registered dealers under VAT were
allotted a unique Tax Identification Number (TIN). Under GST regime, state wise 15 digit
unique Goods and Services Tax Identification Number (GSTIN) will be assigned to each
registered dealer.

The first two digits represent state code as per Indian Census 2011
The next 10 codes represent PAN of the tax payer
The thirteenth digit represents entity number of the same PAN holder within a state
The fourteenth digit is ‘Z’ by default
The last digit is for check code to verify whether the information on the barcode is correctly
entered or not.

36 ABPKV2748R 1Z X
State Code PAN Entity Check Sum
Code

Unique Identity Number in lieu of GSTIN: A special category agency of the UNO or any
Multilateral Financial Institution and Organisation notified under the United Nations
(Privileges and Immunities) Act, Consulate or Embassy of foreign countries, shall be granted
a unique identification number instead of GSTIN.

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Effective date of Registration and Validity Period:

Registration is effective from the date on which the person becomes liable to register if the
application for registration has been submitted within 30 days from the date he becomes
liable to register. In case, the application is submitted after 30 days, registration is effective
from the date of grant of registration. Registration is valid forever unless it is cancelled.
However, in case of casual taxable person and non-resident taxable person, registration is
valid for the period specified in the application for registration or 90 days from the effective
date of registration whichever is earlier. Such a person shall make taxable supplies only after
the issuance of certificate of registration. The period of 90 days may be extended by a further
period of 90 days by the proper officer.

Example: Mr. Bahadur from Rajashtan, who registered as a casual taxable person to supply
his products in Nampally exhibition of Hyderabad held during January 1- February 15 of
every year. In the application for registration, validity period of the registration is specified as
46 days. Hence, registration is valid till February 15, as it is earlier.

State-wise Registration: Note that aggregate turnover for the purpose of determining
threshold exemption is computed on all India basis with the same PAN, registration should be
done state-wise.

Example: Mr. Gupta has operations of Rs 5,00,000 in Hyderabad, Rs 10,00,000 in Mumbai,

Rs 5,00,000 in Vizag and Rs 5,00,000 in Bangalore. His aggregate turnover on all India basis
is Rs 25,00,000. Hence, he shall get registered separately in Telangana, Maharashtra, Andhra
Pradesh and Karnataka. Thus, he has totally four registrations with four GSTINs.

Multiple-Registration within a State: A person with multiple business verticals within a

state/ UT, can have separate registration for each business vertical at his own description,
subject to the following conditions,

• Business vertical of a taxable person shall not be granted registration under composite
scheme, if any of other business verticals of such a person are registered under normal
provisions.
• Supplies between business verticals of such a taxable person in a state/UT are subject
to GST and a tax invoice shall be issued on such supply

Voluntary Registration: A person who is not liable to register otherwise can also option
registration. Under such a case, all provisions applicable to a registered person, shall also
apply to such person.

Exceptions to PAN based registration: In general, GST registration is PAN based.

However, there are exceptions to this rule under h following cases.

• A person who is required to deduct tax at source (TDS) under section 51 can register
using Tax Deduction and Collection Account Number (TAN). Such a person shall
submit application for registration electronically in Form GST REG-07.

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 • A non resident taxable person can apply for registration by using a valid passport.
Such a person shall submit application for registration electronically in Form GST
REG-09.

Suo motu Registration: Suo motu means on its own motion. It means pursuant to any
survey, enquiry, inspection, search or any other proceedings, the proper office finds that a
person liable to registration, failed to apply for registration, such a officer may register the
said person on temporary basis by issuing a temporary reference number and an order in
Form GST REG-12. In such a case, the person with temporary registration shall submit an
application within 90 days from the date of grant of such a temporary registration.

Amendment to Registration: In case of any change in the particulars provided at the time of
registration, the registered person shall submit application for amendment in Form GST
REG-14 electronically, within 15 days of such change. Within 15 days, the proper officer
can electronically issue amendment order in Form GST REG-15. In case, the proper officer
finds that the amendment sought is not warranted, he may serve notice within 15 days in
Form GST REG-03, which shall be replied within 7 working days in Form GST REG-04. He
may reject the application, if the clarification submitted is not satisfactory. In case, there is no
communication from the proper officer within the time limits mentioned above, application
for amendment is deemed to have been approved and amended certificate is made available
to the registered person on portal.

Amendment is possible under the following cases:

• Change in legal name of business

• Change in address of principal place of business or any additional place(s) of business
• Addition, deletion or retirement of partners or directors, Karta, Managing Committee,
Board of Trustees, Chief Executive Officer or equivalent, responsible for the day to
day affairs of the business

In case of change PAN of a registered person due to a change in the constitution of business,
a fresh registration shall be sought in Form GST REG-01.

Cancellation of Registration: Cancellation of registration may be done in two situations.

Proper officer on his own motion: The proper officer may cancel the registration when he
deems it is necessary after giving the person an opportunity of being heard. Such cancellation
generally happens under the following cases.

• When registered person has contravened the provisions of the act

• When composite payer has not furnished returns for 3 consecutive tax periods
• When a registered person (other than composite payer) has not furnished returns for
continuous period of 6 months.
• When registration has been obtained by means of fraud, wilful misrepresentation or
suppression of facts

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On the receipt of application from the registered person: When application for
cancellation has been submitted by a registered in Form GST REG-16 electronically, the
proper officer, once satisfied with such an application, may cancel the registration. Such
cancellation generally happens under the following cases.

• Discontinuance or transfer of business due to death of the proprietor, amalgamation

with other legal entity, or demerger or disposal
• Change in the constitution of the business
• Taxable person (other than a person with voluntary registration), no longer liable to
registered under section 22 or section 24

When the proper officer has reasons to believe that the registration of a person is liable to
cancelled, he shall issue a notice to such person in Form GST REG-17, asking him to show
cause, within a period of 7 workings, why registration shall not be cancelled. If the reply to
the show cause given in GST REG-18 is satisfactory, proper office shall drop the proceedings
and pass a cancellation order in Form GST REG-20. In case the reply is not satisfactory, the
proper officer shall issue a cancellation order in Form GST REG-19, within a period of 30
days from the date of application for cancellation or reply to the show cause notice.

Revocation of cancellation of registration: In case cancellation order issued by the proper

office on his own motion, any registered person whose registration is cancelled can apply to
such officer for revocation of cancellation of the registration in Form GST REG-21 within a
period of 30 days from the date of order of cancellation of registration. However, application
for revocation cannot be filed if cancellation is due to failure to furnish returns, until such
returns are furnished and tax due is paid with interest, penalty and late fee with respect to
such returns.

If proper officer is satisfied, he shall revoke the cancellation by an order in Form GST REG-
22 within a period of 30 days from the date of the receipt of the application. If the proper
office is not satisfied, proper officer shall issue a show cause notice in Form GST REG-23.
Show cause notice can be replied within 7 working days in Form GST REG-24. If reply to
the show cause notice is satisfactory, he may revoke the cancellation within 30 days of reply
to the show cause notice. Otherwise, he shall reject revocation.

Harmonized System of Nomenclature (HSN Code): It is a multipurpose international

product nomenclature developed by the World Customs Organization (WCO) and it first
came into effect in 1988.

Under GST regime, taxpayers whose turnover is below Rs 1.5 cr are not required to use any
HSN code for the goods they supply. Tax payers with the turnover above Rs 1.5 cr and below
Rs 5 cr, shall use 2 digit code and with above Rs 5 cr to use 4-digit code. Turnover for the
previous financial year will be considered as a basis to find out number of HSN digits to be
used. 8 digit HSN code is mandatory in case of exports and imports under the GST.

HSN codes must be declared in every tax invoice

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Composite Scheme: In case aggregate turnover of a person during the preceding financial
year does not exceed Rs 1 cr (Rs 75 lakh in case of special category states), he can register
under composite scheme. It is optional.

Applicable up to Applicable with effect from

October 12, 2017 October 13, 2017
Eligible registered person from the Rs 75 lakh Rs 1 cr
States other than special category
States
Eligible registered person from Rs 50 lakh Rs 75 lakh
special category States

Tax rates applicable to the composite payer are as follows:

Type of Business Tax Rate

Manufacturers/Traders 1%
Restaurants not serving 5%
alcohol

However, the scheme is not available to

• The manufacturer of certain goods (ice cream, pan masala, tobacco products)
• Person dealing with inter-state supply
• Person supplying goods through an e-commerce portal
• Service providers (except restaurants for human food consumption not serving
alcohol)

Points to remember:

• No input tax credit is available

• Cannot charge GST in his invoice i.e. tax to be paid out of his own pocket
• No input tax credit to the person who gets supply of goods/services from a dealer
under composition scheme

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Form Purpose Form Purpose
GST REG-01 Application for Registration GST REG-16 Application for Cancellation of Registration
Show Cause Notice for Cancellation of
GST REG-02 Acknowledgement GST REG-17
Registration
Notice for Seeking Additional Information /
Clarification / Documents relating to Reply to the Show Cause Notice issued for
GST REG-03 GST REG-18
Application for Cancellation
registration/amendments/cancellation
Clarification/additional information/document
GST REG-04 GST REG-19 Order for Cancellation of Registration
for Registration/Amendment / Cancellation
Order of Rejection of Application for Order for dropping the proceedings for
GST REG-05 GST REG-20
Registration / Amendment /Cancellation cancellation of registration
Application for Revocation of Cancellation of
GST REG-06 Registration Certificate GST REG-21
Registration
Application for Registration as Tax Deductor at
Order for revocation of cancellation of
GST REG-07 source (u/s 51) or Tax Collector at source (u/s GST REG-22
registration
52)
Order of Cancellation of Registration as Tax Show Cause Notice for rejection of application for
GST REG-08 GST REG-23
Deductor at source or Tax revocation of cancellation of registration

Reply to the Show Cause Notice for rejection of

Application for Registration of Non Resident
GST REG-09 GST REG-24 application for revocation of cancellation of
Taxable Person
registration

Application for registration of person supplying

online information and data base access or
GST REG-10 GST REG-25 Certificate of Provisional Registration
retrieval services from a place outside India to a
person in India, other than a registered person

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 Application for extension of registration period
GST REG-11 GST REG-26 Application for Enrolment of Existing Taxpayer
by casual / non-resident taxable person
Order of Grant of Temporary Registration/ Suo Show Cause Notice for cancellation of provisional
GST REG-12 GST REG-27
Moto Registration registration

GST REG-13 Application/Form for grant of Unique Identity GST REG-28 Order of cancellation of provisional registration
Number (UIN) to UN Bodies/Embassies /others
Application for Amendment in Registration Application for cancellation of provisional
GST REG-14 GST REG-29
Particulars (For all types of registered persons) registration
GST REG-15 Order of Amendment GST REG-30 Form for Field Visit Report

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