Daily Dose of GST Update By CA Pradeep Jain

Definition of Business Vertical

Taking further to our discussion, we are continuing our discussion the definitions given under Section 2 of revised GST law and comparing the same with old model GST law to know the changes made in revised law:-

2(18): Business Vertical: The new definition reads as follows:

“business vertical” means a distinguishable component of an enterprise that is engaged in supplying an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business verticals;

Explanation: Factors that should be considered in determining whether products or services are related include:

(a) the nature of the products or services;

(b) the nature of the production processes;

(c) the type or class of customers for the products or services;

(d) the methods used to distribute the products or provide the services; and

(e) if applicable, the nature of the regulatory environment, for example, banking, insurance, or public utilities.

In the old draft, the definition was referred to be as provided in the AS 17 issued by the Institute of Chartered Accountants of India. As this particular AS is proposed to be scrapped, the definition was incorporated in the GST law itself to avoid any complexity in event of scraping of definition. But the definition itself seems to be a complicated definition to understand. A preliminary interpretation led to a belief that as like the current system of registration in excise and service tax where separate registration is taken for separate premise, the new regime will also provide a similar facility. It is expressly stated in the new law that the business verticals situated in the same State will have an option to avail single or separate registration for all such business verticals. A very important thing to note here is that the term used here is business vertical and not business premise. Thus the definition becomes critical altogether when it comes to registration.

A business segment is a part of the company that can be identified by the products it provides or by the services or geographical locations it operates in. In other words, it a single part of a business that can be distinctly separated from the company as a whole based on its customers, products, or market places. Management often divide companies into business segments to help determine which areas of the company are performing well and which areas need improvement.

Now if by the term business vertical, it means a segment of business then it would mean that different registration can be taken for different segments of the company. This interpretation also arises doubt that whether business premises are separate from business verticals and whether separate business premise will enjoy the benefit of separate registration or not. There is no specific provision in this regard and it is not clear that whether all the business verticals located in the same premises can be registered separately or not. However, if one looks into the practical aspect, it is found that for registration, details of constitution, name, bank account etc. is to be given by the assesses. This indicates that different business segments in the same premises may be separately registered only if the bank account is separate and separate accounting is being done for the said business as risks and returns are also required to be different. Moreover, practically assessees would avoid taking separate registration as taking separate registration will increase the administrative costs of the organisation in the form of compliance as there are number of returns to be filed in GST. Accordingly, the option of taking separate registration for business segments within same premises appears to be a costly prospective for assessee.

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19 responses to “Definition of Business Vertical under Revised Model GST Law”

  1. Sunil S Ahuja says:

    Dear Sir,
    A business has 2 Verticals – one taxable and another exempt – I have registered the taxable business vertical (rental of storage tankers) but have not registered the exempt business verticals (rendering services where GST is payable on reverse charge). Am I correct to opt for such a mode? I am given to understand that I am supplying services which are are exempt / do not require registration can be retained without registration even where I am rendering taxable services under a different vertical but both business verticals are under one PAN. I am not eligible for composition scheme because I render a service only. Please clarify

  2. sunil sharma adv says:


  3. Vikasjaiswal says:

    Dear admin 
    We face the problem due to gst according to gst if we have different trade name of business in same city. and with single pan card like that one is VAT registration and 2nd is service tax registration, Trade Name are different and the nature of business are also different  one is service provider for company  and one is VAT (sale &purchase)   then what can I do. The gst no.  is provided by VAT department I have. But the service tax gst no. Not allotted by service tax department  .by the process of migration.

    One thing also that the Pan card are is individual by name.the all firms are registered with same pan card.  

    And also tell,  this is possible with single gst no. Work with all multiple registration.

    Vikas Jaiswal 

  4. sachin mahajan says:

    I am working in Govt company having one PAN. before GST regime company had Drawing and Disbursing wise Service TAX numbers, TAN numbers numbers and we have sub offices through out the state. Can we obtains different GST numbers location wise. please advise as with only one GST number it will become very difficult as purchases are made by different offices sepretatly.

  5. Vinod says:

    If single registration for two vertical business..
    Can one avail input of one business to pay output of another business..

  6. Jenish vira says:

    Separate registration within same premises are mandatory ?

    Also, can we take input of one segment for output of other segment ?

  7. calvin M Raj says:

    i have composition in hollow blocks manufactuerer now continue with hollow blocks manufactuer in gst composition and i have start my engineering profeesion work like plan estatement etc. services.
    should i go for composition under gst law…

  8. Suneet Handa says:

    After the GST registration if we ( in the same premises ) decides to add another item for resale completely different from the one for which we were registered do we have to make an amendment.

  9. Suneet Handa says:

    I deal in resale of insulated wires & cables ( 28% GST).The HSN code of this item was given while registring in GST.Now I want to start an online business of all types of garments(5% GST & 12% GST ) in the same premises.It is clear that I can do it in the same registration but it is not clear whether I have to make an amendment in GST registration or not.If yes then whenever I add another item then I have to make an amendment.

  10. akash says:

    Can a person apply for composition under GST if has follwing incomes for the year–
    1) T/O 25 lakhs from trading of goods.
    2) 3 lakhs rental income from commercial property.

    • suresh says:

      Rental income relates to supply of services so it is not possible to opt composition scheme. Since the supply of service except restaurant service cannot opt composition scheme.

  11. Md Tarique Akhtar says:

    There is no concept of centralised registration in GST unlike services Tax.However in the same state if a person has more than one unit he can take a single registration for all sUchida units under the same PAN.
    However in case multiple units in the same state operating as different business vertical the person the option to take registration different unit wise.

  12. Rishi Sinha says:

    i sale vehicles and also provide maintenance services to our customers whether it is a case of different vertical location.

  13. Mohammed Khwaza Qureshi says:

    I had garments shop which is not registered under any law. Now I am going to start Mobile shop at different location in the same state. Should I take single registration or separate registration?

  14. Jayanta Dutta says:

    I have two business in the same premises in West Bengal,one is for wholesale distribution and another is for retail business of medicine.Both have separate trade licences and profession tax enrolment numbers,though both are under same PAN. Should I take separate GST Number for those two ?

    • Sunil Naskar says:

      I have two business in the West Bengal,one is for fiberglass electrical components and another is for m s enclosure one unit for kolkata 700034 & another is kolkata 700104.Both have separate trade licences and profession tax enrolment numbers,though both are under same PAN. Should I take separate GST Number for those two ?

    • Nishi sinha says:

      I have two cement business and seprate vat tin no and I want to started new cement business in different district can my new business cover under business vertical.

  15. Payal Khandelwal says:

    We have two units, one in sez and one in dta, we need 2 registrations or One? currently there are different tin numbers and ecc but pan and iec are common.

    Section 25(2) says multiple business verticals MAY be granted separate registration, subject to conditions as may be prescribed.

  16. Brij Mohan says:

    how we can apply for vertical registration in GST

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