Simplification of GST registration (Optional)
A Simplified GST Registration Scheme (Optional) has been introduced to reduce the compliance burden and enhance the ease of doing business for small taxpayers.
The reform is aimed at:
- Streamlining the GST registration process,
- Expanding the taxpayer base, and
- Promoting voluntary compliance among small businesses and service providers.
This optional registration particularly benefits small-scale suppliers who primarily engage in B2B transactions, enabling them to register under GST even if their aggregate turnover is below the limits prescribed under Section 22 of the CGST Act
Application & Withdrawal of Scheme
| Application under Scheme | Withdrawal under Scheme |
| Eligibility | Eligibility |
| · Small taxpayer having only B2B supplies
· Monthly output tax liability should not exceed Rs. 2.5 lacs ( inclusive of all CGST, SGST, IGST, UTGST and compensation cess) |
· Monthly output tax liability exceed Rs. 2.5 lacs
· No cancellation should be initiated under Sec 29 · All pending returns from the date of registration till withdrawal must be filed. · Return should be filed for at least 3 months if withdrawal occurs before 1st April, 2026 · Return of One tax period should be filed if withdrawal occurs on or after 1st April, 2026 · No amendment in registration particulars should be pending at the time of filing application for Withdrawal. |
| Procedure
· Application should be made online in Form Reg- 01 Updated to include a new field for declaring monthly output tax liability and Enables applicants to opt for registration under Rule 14A directly. · Aadhar Authentication must be done · Registration granted using data analytics and risk parameters. · Applies to application made under Rule 8 (Normal) Rule 12 (Tax Deductor/ Collector)& Rule 17 (Non-resident taxpayer) · Not covered under Sec 25(6D) persons notified for enhance verification · Multiple registration under same state for the same PAN not allowed for distinct business verticals. |
Procedure
· Same procedure would follow for withdrawal of application also by filing application in Form GST Reg- 32. · Aadhar authentication and Digital verification will follow · Risk based scrutiny for withdrawal applications. |
| Time period for approval.
· Rule 9A has been inserted to grant registration within 3 working days. |
Time period for disposal
· No time limit has been specified for disposal of withdrawal application. Its upon the discretion of the officer. |
Benefits of the Scheme
- This ensures low-risk taxpayers get instant registration, while high-risk profiles face additional scrutiny or physical verification.
- Ease for startups and MSMEs reducing procedural burden and improve turnaround time.
- Withdrawal option is available instead of cancellation and surrender which allows seamless transition without losing previous filing records and also a flexible exit option
Demerits of the Scheme
- 5 lakhs ceiling limit is fixed for monthly output tax liability instead of Turnover which make a tedious task for small taxpayer to calculate liability in advance and must self monitor and file withdrawal application upon exceeding the threshold.
- It covers only B2B supplies , a trader with low B2B and high B2C can still qualify creating asymmetric eligibility and confusion for mixed supply businesses.
- Multiple registration in same state for same PAN not allowed for different business verticals which is again burden for small taxpayer.
- Delay of one return tax period constitute contravention u/s 29 enabling direct cancellation.
- In addition to, if we look into the withdrawal application under this scheme filed, there is no time limit specified for disposal of the case which make it complex for small business and it’s the discretion of the proper officer to dispose the application at his will.
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