Do You Actually Need GST Registration Yet?

This is the single most common question we get from new business owners, and the honest answer is that turnover is only half of it. Plenty of businesses well under the threshold are still required to register, and plenty above it register in the wrong state.

The turnover test

Broadly, registration becomes compulsory once your aggregate annual turnover crosses the limit that applies to you. The limit is higher for businesses supplying goods than for those supplying services, and lower again for the special category states in the north-east and the hills. Aggregate turnover counts all your supplies on the same PAN across India — taxable, exempt and export — not just the sales from the branch you were thinking of.

These limits have been revised more than once since GST came in, and a few states have opted for different ones. Confirm the figure that applies to your state and your kind of supply before you rely on it.

When turnover doesn't matter

Several situations require registration from the first rupee. The ones that catch small businesses out most often:

• Supplying goods inter-state — selling across a state border
• Selling through an e-commerce operator that collects tax at source
• Being liable to pay tax under reverse charge
• Operating as a casual taxable person, for example at an exhibition in another state
• Acting as an agent supplying on behalf of someone else

The e-commerce one surprises people constantly. A home business listing on a marketplace usually needs a GSTIN before the listing can go live, whatever its turnover.

Voluntary registration: sometimes worth it

Below the threshold you can still register voluntarily. It is worth doing when your customers are businesses that want input credit, when you buy a lot of taxable inputs yourself, or when you are about to bid for work that requires a GSTIN. It is usually not worth it if you sell to consumers, buy little, and would only be adding monthly filings to your workload.

What it costs you after registration

Registration is the easy part. The commitment is the filing calendar that follows — returns are due whether or not you had sales that month, and a nil return still has to be filed. Late fees accrue per day of delay. Decide the filing frequency and the scheme (regular or composition) deliberately, because switching later is not always possible mid-year.

The mistakes we see

• Registering in the state where the owner lives rather than where the place of business is
• Missing that a second branch in another state needs its own registration
• Choosing the composition scheme without checking whether the business is eligible for it
• Registering, then ignoring the returns until a notice arrives

If you are not sure which side of the line you fall on, that is a short conversation rather than a project. Tell us what you sell, to whom, and from which state, and we will tell you whether you need to register yet.