The Goods and Services Tax (GST) Act, 2017, mandates that certain categories of taxpayers must obtain GST registration irrespective of their turnover or threshold limit of 40 lac or 20 lac for goods and services respectively. This requirement ensures that all taxpayers involved in specific transactions are registered under GST and fulfill their tax obligations. Section 24 of the CGST Act outlines the conditions under which compulsory registration is necessary.
Categories of Taxpayers Required for Compulsory Registration
Interstate taxable supply of goods
Any person who makes an interstate supply of goods, regardless of their turnover, must obtain GST registration. This includes both taxable and non-taxable goods. However, an exception exists for handicraft goods suppliers. As per Notification no. 07/2017-IGST dated 01-10-2023, suppliers of handicraft goods are not required to register for GST if their aggregate turnover from interstate taxable supplies does not exceed Rs. 20 lakhs in a financial year.
Supply by casual taxable person
A casual taxable person is an individual or entity who makes occasional or irregular taxable supplies of goods or services. If the aggregate turnover from such casual supplies exceeds Rs. 20 lakhs in a financial year, the casual taxable person must obtain GST registration.
Person required to pay tax under Reverse Charge Mechanism (RCM)
Under the RCM, the recipient of certain taxable supplies is responsible for paying GST instead of the supplier. If a person is liable to pay tax under RCM, they must obtain GST registration regardless of their turnover.
E-commerce operator specified under section 9(5)
Any e-commerce operator who facilitates the supply of goods or services through their electronic platform is required to obtain GST registration, irrespective of their turnover.
Non-resident taxable persons making taxable supply
A non-resident taxable person is an individual or entity who is not ordinarily resident in India but makes taxable supplies in India. Non-resident taxable persons must obtain GST registration regardless of their turnover.
Person who is required to deduct tax at source (TDS)
Any person who is liable to deduct TDS from payments made to suppliers for taxable services must obtain GST registration. This requirement applies regardless of their turnover.
Person who makes taxable supply on behalf of another taxable person
If a person makes taxable supplies on behalf of another taxable person, they must obtain GST registration regardless of their turnover.
Input service distributor (ISD): An ISD is a person who receives taxable services from multiple suppliers and supplies them to their clients as a single invoice. Any person acting as an ISD must obtain GST registration regardless of their turnover.
Person who supplies goods and/or services (other than supplies specified under section 9(5)) through such e-commerce operator who is required to collect tax at source under Section 52
Any person who supplies goods or services through an e-commerce operator who is required to collect TCS under section 52 must obtain GST registration regardless of their turnover.
Every e-commerce operator (who is required to collect TCS under section 52
Any e-commerce operator who is responsible for collecting TCS from buyers for taxable supplies made through their platform must obtain GST registration regardless of their turnover.
Person supplying OIDAR services from a place outside India to unregistered person in India
OIDAR stands for Online Information and Database Access and Retrieval services. Any person who supplies OIDAR services from a place outside India to an unregistered person in India must obtain GST registration regardless of their turnover.
Every person supplying online money gaming from a place outside India to a person in India
Any person who supplies online money gaming services from a place outside India to a person in India must obtain GST registration regardless of their turnover.
Such other person or class of persons as may be notified by Central Government or a State Government
The Central Government or the State Governments may issue notifications specifying additional categories of taxpayers who are required to obtain compulsory GST registration.
Consequences of Non-compliance
Failure to obtain compulsory GST registration can result in severe penalties and legal consequences. These include:
- Imposition of late fees and interest on unpaid GST
- Liability for penalties for non-compliance with GST provisions
- Seizure of goods or assets
- Criminal prosecution in severe cases
Conclusion
Compulsory GST registration plays a crucial role in ensuring compliance with the GST regime and safeguarding tax revenues. By mandating registration for specific categories of taxpayers, the GST authorities ensure that all parties involved in taxable transactions are duly registered and fulfill their GST obligations. Taxpayers should carefully assess their circumstances and determine whether they fall under the compulsory registration requirement.
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