Demystifying Registration under the Model GST Law

Registration numbers of the existing taxpayers under Central Excise, Service Tax, Value Added Tax, and Central Sales Tax will be migrated to the new system before the appointed day. All the tax payers will be issued a provisional certificate and once the required information is furnished registration certificate will be issued. This process is covered under the transitional provisions of the Model Act under Section 142 and Chapter VI covers about the registration number registering process, cancellation of registration number, an amendment to registration number and revocation of registration number from section 19 to section 22.

Section 19 lays down the guidelines who should obtain a registration number. Schedule III of the Model Act lists the persons who should obtain the registration number irrespective of the person crossing the threshold limits or not.

The intentions of the government is very clear, it wants to increase the tax base and reduce the tax evasion, in this context only it has

  1. reduced the threshold levels drastically, the threshold limit as per model is Rs 10 Lacs except in Northeast which turns out to be around Rs 2740 per day,  which can be easily achieved
  2. schedule III has ensured that all the persons dealing in supply of services are required to be registered

Similar to the existing provisions, in the Model GST law also there is a provision for registering as a dealer and paying a fixed rate of tax if the turnover is less than Rs 50 lacs. These provisions are given under Section 8 of the model GST law.  The transitional provisions are providing the facility for the taxpayer to either opt for regular registration under GST while he is registered as a composite dealer or vice versa. The details are laid down in the sections 146 & 147 of the Model GST Act. The composite dealer has to file a quarterly return called GSTR -4.

The following persons have to be registered as a taxable person based on the model law

  • Every Supplier who makes a taxable supply of goods or services in a previous financial year exceeds Rs 9.00 Lacs in states other than northeastern
  • Every, Supplier, who makes a taxable supply of goods or services in a previous financial year, exceeds Rs 4.00 Lacs, in northeastern
  • All taxpayers registered under the current tax regimes
  • Any person who is required to pay tax under reverse charge mechanism
  • Any person marking interstate supplies
  • Casual taxable person
  • Non-Residential taxable person
  • Person required to deduct tax under Sec 37
  • A person who supplies goods or services on behalf of a principal has to be obtain irrespective of the threshold
  • Input service distributor
  • Every e-commerce operator irrespective of threshold limit
  • Any aggregator who renders services
  • Any person or class of persons notified by the Central / State Government based on the recommendations of the GST Council

 

Based on the business process document for registration and the Model GST Act, the following are the features of the registration number

  1. Only one registration number is required per state for all the taxes e., CGST / SGST / IGST
  2. If the taxable person has presence is more than one state, has to obtain GST registration numbers in that many states
  3. The registration number under GST is called GSTIN
  4. The registration number is based on PAN number similar to the existing Central Excise’s ECC number
  5. There is also a provision to obtain registration number based on the business verticals in the state based on AS 17 requirements.

Format of the GST Registration Number

As per the business process documents, the GSTIN is a fifteen digit registration number.

GSTIN

The first two digits, determine the state in which the GSTIN in being obtained, the list of the states is based on 2011 Indian Census. Under this, each state will be allocated a two digit number.

Next, 10 digits are PAN number of the entity issued by the Income Tax Department.

The thirteenth digit is alphanumeric, and it is based on the users requirement to get registration based on the business vertical. There can be 35 sequences maximum for this 1-9 numbers and alphabets a – z. If the taxpayer is going for a single registration then it will be 1 in the thirteenth field but if he goes for more than one registration like one two business vertical say for example one for consumer durables and another for automobiles then the second one will be having 2 in the thirteenth number and the third registration number will be having 3 in the thirteenth field.

The 14th digit is a being reserved by the GSTN for the future use, and the 15th digit is the check digit.

Amendment to Registration Number

Section 20 of the Model GST Act, provides provision for amendment of the registration number. Amendment of the registration number is required whenever there is a change in the address of the place of provision of business, or new place of provision of supplies has been added to the existing once.

Cancellation of the Registration Number

Section 21 of the Model GST Act lays down the conditions under which the registration number can be cancelled.

The officer can initiate the cancellation of the registration number on his own or based on the application filed by the taxpayer himself in the following cases

  1. Death of the registered taxpayer in case of individual
  2. Change in the constitution of the registered taxpayers e from partnership firm to a company etc
  3. No longer required to be registered taxpayers based on the provisions of the law
  4. The person has not commenced business within 6 months from the date of registration
  5. The taxable person has not furnished returns for 3 consecutive months
  6. Where registration is obtained under fraud or will full misstatement or suppression of facts
  7. The business has been discounted on account of merger or takeover etc
  8. The person has not followed the provisions of the law

If the tax office is initiating the cancellation of the registration number, the registered person will be given an opportunity to present the case.

Every taxable person who is obtaining cancellation of registration number shall pay the input tax credit on the closing stock of goods as on date of cancellation either by way of electronic fund transfer or online banking.  Same as in the case of capital goods based on the relevant provisions of the law in place for the deferred credit.

Revocation of the Registration Number

A person can apply for revocation of the registration number based on the conditions detailed in Section 22 of the Model GST Act.

Transitional Provisions

Section 142 of the Model GST Act details about the migration of the existing taxpayers under transitional provisions. All the taxpayers as on the appointed date will be issued a provisional registration certificate.

The taxpayer is required to furnish all the required information and obtain the registration certificate within a period of 6 months else provisional certificate of registration stands cancelled.

Any views or opinions represented above are personal and belong solely to the author and do not represent those of people, institutions or organizations that the owner may or may not be associated with in professional or personal capacity, unless explicitly stated. Any views or opinions are not intended to malign any religion, ethnic group, club, organization, company, or individual.

These examples are based on the model law and may change based on the actual law passed.

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