Compulsory registration under GST – all you need to know

Provisions related to Compulsory registration are covered under section 24 of CGST act.

Section 24:

Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act.

Generally, the liability to register under GST arises when you are a supplier within the meaning of the term, and also if your aggregate turnover in the financial year exceeds as per the limits specified in section 22(1) of CGST act. However, the GST law prescribed certain categories of suppliers who are required to get compulsory registration irrespective of their turnover (as per sec 22).

  1. Persons making any inter-State taxable supply: –

A person making any inter-State taxable supply of is required to be registered under GST irrespective of turnover limit.

Interstate supply is when the location of supplier in one state and place of supply is in another state.

Exemption from compulsory GST registration even after making interstate supply (i.e., exemption for above rule): –

  1. a) A person making inter-state supply of servicesis not required to register under GST if his aggregate turnover is less than Rs 20/10 lakhs. Notification No. 10/2017-IT dated 13-10-17)

(b) Persons engaged in supply of handicraft goods making inter-state supply are exempt from GST registration, if the aggregate value of all their supplies on all India bases is less than Rs 20 lakhs/10 lakhs per annum.

(c) A job worker with turnover less than 20/10 lakhs is exempt from registration, even if he makes inter-State supplies to registered person. This exemption is not available to Jewellery, goldsmiths’ and silversmiths’ wares and other articles manufactured on job work basis – (Notification No. 7/2017-IT dated 14-9-2017 as amended on 29-1-2019) .

Meaning of Job worker: Section 2(68) of the CGST Act, 2017 defines job work as ‘any treatment or process undertaken by a person on goods belonging to another registered person’. The one who does the said job would be termed as ‘job worker’. The ownership of the goods does not transfer to the job worker, but it rests with the principal. The job worker is required to carry out the process specified by the principal, on the goods.

  1. Casual taxable person making taxable supply.

As per section 24 of CGST Act 2017, a casual taxable person is required to obtain compulsory registration irrespective of the aggregate turnover in the previous year. However, exemption has been given to person engaged in the supply of “Handicraft goods”. A casual taxable person making taxable supplies of handicraft goods is exempted from obtaining registration if aggregate turnover to be computed on all India basis not exceeding an amount of 20 Lakhs.

 As per sec 2(20) of CGST Act 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.

  1. Persons who are required to pay tax under reverse charge

A person who is required to pay tax under reverse charge has to take compulsory registration as he has to take registration to submit tax under reverse charge.

The important point which merits is consideration Section 24 overrides sec 22(1) but not Section 23

  1. Electronic Commerce Operator

Electronic Commerce Operator who is required to collect tax at source under section 52;] [The words ‘required to collect ‘ inserted vide CGST (Amendment) Act, 2018 w.e.f. 1-2-2019]. Thus, an e commerce operator would require registration only when he is required to collect tax at source under section 52 of CGST Act.

Persons who supply goods or services or both, other than supplies specified under sub-section (5) of section 9, are required to collect tax under at source under section 52

  1. Non-resident taxable persons making taxable supply

A non-resident person who is making any kind of taxable supply in the taxable territory then he has to take compulsory registration.

As per section 2(77) of 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.

  1. Persons who are required to deduct tax under section 51, whether or not separately registered under this Act

Section 51 of the CGST Act provides for deduction of tax at source under certain circumstances. This section also lists out the diductor’s who are mandated by the central Govt to deduct tax at source. Such persons are required to take mandatory registration.

  1. Persons who make taxable supply of goods or services or both on behalf of other taxable persons whether as an agent or otherwise

A person who is working as an agent or otherwise and also making taxable supply then as per section 24 of CGST Act 2017 he has to compulsorily get registered so any kind of agent who is making taxable supply needs to get registered under GST immediately.

Agent: As per section 2(5) of CGST Act 2017 “agent” means a person, including a factor, broker, commission agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the business of supply or receipt of goods or services or both on behalf of another.

  1. Input Service Distributor, whether or not separately registered under this Act:

input service distributor has to get compulsory registration under GST.

  1. Those supplying online information and data base access or retrieval services from outside India to a non-registered person in India.

Ex: Netflix services.

  1. Such other person or class of persons as may be notified by the Government on the recommendations of the Council.