CA Vinod Kaushik
Hope you are ready for the most awaited indirect tax reform called GST in the country since independence. The union Govt. headed by Hon’ble finance minister and Empowered group of State finance minister is working very hard to implement this reform from 01-04-2016 if the constitutional amendment bill is passed by Rajya Sabha and also ratified by more than half of the State Assemblies. Various committees has been constituted to prepare the draft of proposed process of GST, GST bills ( CGST, SGST and IGST bills) and the GST rules to make its introduction from 01-04-2016 if the constitutional bill is passed in winter session of parliament. In this article we will discuss the draft process released by ministry of finance on GST registration process to make it understandable to all of its stakeholders.
Threshold under proposed GST regime:
There will be a 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. Once a dealer crosses the required threshold or he starts a new business, registration application must be filed within 30 days from the date of the dealer’s liability for obtaining such registration. Earlier the States were demanding separate threshold for individual State but it was opposed by the representatives of Union Government. The voluntary registration and composition scheme shall also be incorporated under GST with almost same principals prevailing under various State laws. 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. The amount of threshold is not yet final and same will be worked out by the GST law drafting committee on recommendation of GST council.
Concept of Input Service Distributor (ISD):
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. This would be an exception/ deviation in case of services only. Such mechanism is necessary for service provider as the location of payment of GST may be distinct from the location where goods are received. Therefore, drafting Committee may look into this issue.
Registration scenario under GST:
Each of the business entity either providing pure services or trading in goods will be required to obtain GSTIN from both Centre and State Government. The business entity has to file 2 applications with each of the Govt. for registration and allotment of GSTIN. The registration no. under GST regime will be of 15 digits containing first 2 digits as state code and next 10 digits as PAN, 13th digits will be the entity code i.e. depending upon the registration no. obtained by an entity in a particular state. The 14th digits will be optional and will be used in future and 15th digit will be check sum digit.
Quick look on the registration process under GST:
For obtaining registration, all the taxable persons shall interact with tax authorities through a common portal called GST Common Portal that would be set up by Goods and Services Tax Network (GSTN). The portal will have backend integration with the respective IT systems of the Centre and States. The applicant must have PAN to apply for registration under GST and the PAN will be verified online with NSDL for further processing in the case. 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.
Verification of documents under GST laws:
The GST common portal shall carry out preliminary verification / validation, including real-time PAN validation with CBDT portal, Aadhar No validation with UIDAI, CIN (Company Identification) with MCA and other numbers issued by other Departments through inter-portal connectivity before submission of the application form. The hard copy of the documents will not required to be sent to authorities if the same is digitally signed. In the absence of digital signature, taxpayers would have to send a signed copy of the summary extract of the submitted application form printed from the portal to a central processing center to be operated by GSTN. After verification if the uploaded documents and information are in order same will be approved by both the Centre and State authorities and registration certificate shall be generated automatically. If during the process of verification, one of the authorities raises some query or notices some error, the same shall be communicated to the applicant either by the Tax Authority directly or through the GST Common Portal and also simultaneously to the other authority and to the GST Common Portal within 3 common working days. A deeming provision to the effect that rejection of the registration application by one authority amounts to rejection by both Centre and State will need to be incorporated in the GST law.
Migration of existing registrants:
The Dealers registered under VAT laws of various States and registered under Service Tax or Central Excise will be granted GSTIN based on their validated PAN. On the basis of validated PAN GSTIN shall be generated and intimated to taxpayer through State and Central authorities. The remaining data shall also be collected by authorities and verification exercise shall be conducted without affecting the routine working of concerned departments.
The process discussed in the above article is draft and open for comments by all the stakeholders till 31st October 2015 on website of department of revenue. In my personal opinion the tax base of Union and State will increase manifold and a better and simple registration process is one of the important factor in this stage. With certain improvements in the above process it can be implemented for better tax compliance among trade and industry. Hope is still lying on the winter session of Parliament and decision of Bihar assembly’s election which will decide the fate of GST by 01-4-2016.
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Disclaimer: Views expressed are strictly personal. The content of this document are solely for informational purpose. It doesn’t constitute professional advice or recommendation. The Author does not accept any liabilities for any loss or damage of any kind arising out of information in this article and for any actions taken in reliance thereon.