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Major takeaways as per the Report of the Joint Committee on Business Processes for GST on Registration Processes in GST Regime :-
The committee have assumed :-
Ø There will be threshold of Gross Annual Turnover including exports and exempted supplies (to be calculated on all-India basis) below which any person engaged in supply of Goods or Services or both will not be required to take registration.
Ø The taxpayer would be eligible for ITC in respect of all his purchases from the date of application in case application for registration has been filed within 30 days. The taxpayer would, however, not be eligible for ITC in respect of his purchases prior to the date of registration in case the registration application is not filed within the prescribed time limit of 30 days.
Ø The Persons with all-India gross annual turnover below the threshold turnover would be allowed to take voluntary registration,
Ø There will be another relatively higher threshold of Gross Annual Turnover (to be calculated on all-India basis) to be called Compounding turnover up to which the registered person can opt to pay tax at a specified percentage of the turnover, without entering the credit chain. Such registered person will neither be allowed to collect tax from his customers nor claim any input tax credit.
Ø Irrespective of turnover, if a taxable person carries out any inter-state supply and / or is liable to pay GST under reverse charge, he will be compulsorily required to take registration. Such person shall neither be eligible for exemption threshold nor for Compounding scheme. However, an individual importing services for personal consumption will not be liable to pay GST under reverse charge or register under GST if the GST law so provides.
Ø The concept of Input Service Distributor (ISD) presently being followed in Centre's Law may continue if the GST Law so provides. They would be required to obtain GSTIN for distributing the credit of GST paid on services proposed to be used at multiple locations which are separately registered.
Ø All existing registered persons, whether with the Centre or State under any of the tax statues being subsumed in GST, would be allotted a GST registration number called Goods and Services Tax Identification Number (GSTIN) on voluntary basis. Dealers who are below the GST threshold will have option to remain in GST chain.
Ø For each State the taxable person will have to take a separate registration, even though the taxable person may be supplying goods or services or both from more than one State as a single legal entity.
Ø Multiple registrations within one State to business verticals [as defined in Accounting Standard (AS) 17 issued by ICAI] of a taxable person may also be permitted, subject to all the verticals being on the same scheme of tax treatment if the GST Law so provides.
Ø A supplier who is not registered on regular basis, whether on mandatory or voluntary basis, in other State (s) and desires to conduct business in a particular State for a limited period, will have to obtain registration in that State for that limited period. Such suppliers are known as casual dealers and shall not be allowed to opt for composition scheme. However, the supplier would be eligible to claim ITC on purchases / inward supplies.
Ø A Non-resident Supplier is a person who, in the course of business, makes an intra-state supply of goods or services or both, but is not a resident in the state in which he has applied for registration, but is already registered in any other state. Since the Non-Resident Supplier is already registered in another State, there would be an easy way of registering such entities in the State in which registration is applied as Non-Resident Supplier.
Structure of registration number :-
Ø Each taxpayer will be allotted a State wise PAN-based 15-digit Goods and Services Taxpayer Identification Number (GSTIN).
Ø In GST regime, multiple registrations within a State for business verticals of a taxable person would be allowed.
Procedure for obtaining Registration :-
Ø For obtaining registration, all the taxable persons shall interact with tax authorities through a common portal called GST Common Portal2 that would be set up by Goods and Services Tax Network (GSTN).
Ø Once a complete application is submitted online, a message asking for confirmation will be sent through e-mail and SMS to the authorized signatory of the applicant. On receipt of such confirmation from the authorized signatory, Acknowledgement Number would be generated and intimated to the applicant. Once the application is approved and GSTIN is generated, the same along with Log-in ID and temporary Password will be sent to the authorized signatory. This credential will be permanently used to access the GST Common Portal subsequently.
Ø Online verification of PAN of the Business / Sole Proprietor/ Partner/Karta/Managing Director and whole time directors/Member of Managing Committee of Association, Managing trustee/authorized signatory etc. of the business would be mandatory and without such verification, registration application will not be allowed to be submitted.
Ø New applicant can apply for registration:
(1) at the GST Common Portal directly3; or
(2) at the GST Common Portal through the Facilitation Center (FC)
Ø Multiple applications can be filed at one go where a taxable person seeks registration in more than one State or for more than one business vertical located in a single / multiple State(s).
Ø Separate application forms are to be designed for:
(1) Multiple registration for business verticals of same legal entity (it must be registered already) within a State;
(2) Application for registration in more than one State (that can be filed at one go);
(3) Amendments to existing Registration(s);
(4) Cancellation of Registration(s);
(5) Option to avail / withdraw from the Compounding scheme;
(6) Enrolment of Tax Practitioner or Facilitation Centre if provided for in the GST Law;
(7) Assignment of Role (by a dealer) to TP/FC, as agent of the dealer if so provided for in the GST Law;
(8) Application for new registration on account of Succession / Amalgamation / De-merger etc. of existing GST registrants;
(9) Application by UN bodies for getting a Unique Identification Number (ID).
Ø In some North-eastern States, individuals (Proprietorship firms) are exempt from Income Tax. However, to obtain GSTIN they will have to obtain a PAN before they can apply for registration under GST. Further Government departments will also be required to obtain PAN if they are required to obtain registration under GST. Under GST regime, registration will not be allowed without a valid PAN.
Migration of existing registrants :-
Ø Existing registrants are those who are either registered with States or with the Centre or with both.
Ø In case of such registrants, the system shall be designed to migrate cleaned and verified data from the existing database to the GST Common Portal and a GSTIN shall be generated. With regard to the migration of data of the existing registrants, following steps are necessary:
(1) The process of migration of data must be started sufficiently in advance so that the business of existing registrants does not suffer and transition from the present system to GST is smooth.
(2) At present, tax payers are separately registered with State and/ or with Central tax administrations or with both based on their business activity. In the GST regime, a taxpayer will have to obtain State wise registration. Even within a State, the taxpayer may either opt for a single registration or multiple registrations for different business verticals.
(3) Analysis of registration data available with States and Centre conducted by NSDL and GSTN reveals the following:
The number of fields in the registration database of various State VAT and CBEC system are different than that finalized for GST. The number of fields varies from 50 to 107 in case of States/Centre whereas GST Registration Form has 120 fields. Thus there is a gap of 13 to 70 fields, meaning that data will have to be collected from the taxpayers.
b) As per report of NSDL, which conducted as is study of State Systems as well as that of CBEC, in majority of cases, the available data does not comply with Metadata and Data Standards (MDDS) of Government of India. This is also confirmed by the feedback received from States in May 2015. Importing such data, which is not MDDS compliant, will lead to wrong or incomplete results on query.
c) The data from States also shows that they do not have scanned copies of supporting documents for mandatory fields like principle place of business, photos of MD or Karta etc. in their database. This again will have to be collected from them.
Since, lots of reports will be using registration database, purity of registration data will be of paramount importance. Migrating half-complete and incorrect data from existing registration databases to GST database will adversely impact the reports and intelligence derived out of it. Thus data will have to be collected afresh from the existing taxpayers. GSTIN can be issued based on State and validated PAN. In case of taxpayers under Excise and VAT, source of data for issuing GSTIN should be VAT data as in most cases Excise assesse will also be registered under VAT. For taxpayers under Service Tax the source of data for issuing GSTIN should be Service Tax.
Out of six mandatory data fields in the GST Registration field, three can be filled up from validated PAN data, namely PAN, name of business, constitution of business. The name of State is known in case of VAT data. The remaining two mandatory data fields namely „Principal Place of Business? and „details of promoters? will have to be collected from taxpayers along with non-mandatory items. In case of Service Tax, State will have to be collected before generating GSTIN. With this the following process has been suggested:
(4) For Taxpayers Registered under State VAT/Excise
i. GSTIN will be generated by NSDL in case of all VAT TINs where PAN has been validated. Along with a password the GSTIN will be sent to respective State Tax Authorities.
ii. State tax authorities will communicate the GSTIN/password to taxpayers, with instruction to log on the GST portal and fill up the remaining data. State specific data over and above what is contained in the GST Registration Form can be collected after GST registration becomes operational.
The data so collected by GSTN/NSDL will be provided to States so that they can undertake the verification exercise as per their convenience after 1/4/2016 in a staggered manner spread over a period of one to two quarters so that it does affect the working of the tax authorities. This is being suggested as the dealer is already registered with VAT department.
iv. In case, PAN has been validated but the email or mobile numbers of dealers are not available, such dealers may be advised through newspaper advertisement to visit the GST portal and use the following data for user authentication:
3. Date of Birth/Date of Incorporation in DDMMYYYY format. (This data is available with PAN Database)
i. Date of birth of proprietor in case of Proprietorship firm.
ii. Date of incorporation in case of all other types of dealers.
v. In those cases where PAN has not been validated, State VAT department will have to collect the taxpayers.
(5) In case of Service Tax, the taxpayers are not registered under a State, a different approach will have to be adopted.
I. Since all Service Taxpayers have user ID and password and Service Tax has their email IDs, they may advice the taxpayers to intimate State(s) where they would like to get themselves registered in.
II. Service Tax portal will check from GST portal whether GSTIN has been generated for combination of State and PAN of the taxpayer. If not generated, request GST portal to generate the same.
III. GST portal will generate the GSTIN and communicate to Service Tax, which will be communicated to the taxpayer asking him/her to provide remaining data at GST Portal.
(6) Any verification / updation of the information as outlined above would have to be done by the taxable person within a specified period.
(7) If the verification/updation is not done within the stipulated period, the GSTIN will be suspended till the taxable person does the needful.
(8) Any verification by State / Central authorities can be done after GSTIN is issued.