The Goods and Services Tax (GST), launched on 1st July 2017, is one of India’s most significant tax reforms, replacing multiple indirect taxes such as VAT, Excise Duty, and Service Tax with a single, unified structure. It aims to simplify the taxation process, ensure transparency, and reduce the cascading effect of taxes. Under this system, businesses need to obtain a GST Identification Number (GSTIN), which serves as their unique identity in the GST network.

GST registration is mandatory for businesses that cross the specified turnover thresholds or engage in certain activities like inter-state supply, e-commerce operations, and import-export. This article covers the threshold limits, the online registration process, required documents, compliance responsibilities, penalties for default, and the benefits that registered businesses enjoy, such as input tax credit and enhanced credibility.

In this article, CA Manish Mishra talks about GST Registration in India: Threshold, Process, and Compliance.

Threshold for GST Registration

Turnover-Based Thresholds

The Government has set minimum turnover limits that decide when a business must register under GST. These limits are different for suppliers of goods and service providers, and also vary for normal states vs. special category states.

1. For Suppliers of Goods

• If your annual business turnover is more than ₹40 lakhs, GST registration becomes mandatory.

• But if you are in a special category state (like Nagaland, Manipur, Mizoram, Arunachal Pradesh, Sikkim, Meghalaya, Tripura, Assam, Himachal Pradesh, or Uttarakhand), the threshold is ₹20 lakhs only.

2. For Service Providers

• If your turnover crosses ₹20 lakhs, you must register.

• For service providers in special category states, the threshold is lower at ₹10 lakhs.

Example

• A trading business in Delhi earns ₹42 lakhs → it must register under GST since the goods threshold is ₹40 lakhs in normal states.

• The same trading business in Nagaland must register once turnover exceeds ₹20 lakhs, since Nagaland is a special category state with a lower limit.

Mandatory Registration Irrespective of Turnover

Normally, businesses check their turnover limits to see if GST registration is required. But in some cases, the law makes registration compulsory regardless of turnover. This ensures certain categories of businesses are always within the GST system, even if they are very small.

Who Must Register?

• Inter-State Suppliers: Any business supplying goods or services from one state to another must register.
  Example: A Delhi-based photographer doing a shoot in Mumbai must register even if his income is only ₹5 lakhs.

• Casual Taxable Persons: Businesses operating temporarily, such as stalls at fairs or exhibitions.

• Non-Resident Taxable Persons: Foreign entities supplying goods or services in India.

• E-Commerce Operators: Platforms like Amazon, Flipkart, or Myntra must always be registered.

• Suppliers via E-Commerce Operators: Sellers who list and sell products/services through these platforms.

• Input Service Distributors (ISD): Entities that distribute tax credits of input services to other branches under the same PAN.

• Businesses under Reverse Charge Mechanism (RCM): When the buyer, not the seller, pays GST, the business has to register.

Voluntary Registration

Businesses with turnover below the threshold can also apply voluntarily. This helps them claim Input Tax Credit (ITC) and boosts credibility with customers and vendors.

Documents Required for GST Registration

When a business applies for GST registration, the government verifies its identity, ownership, and place of business. The set of documents varies depending on whether the business is a proprietorship, partnership/LLP, or company.

1. Proprietorship

For a sole proprietor, the business and the owner are the same legal entity. Therefore, documents mainly focus on the proprietor’s identity and business address:

• PAN & Aadhaar of proprietor: identity verification.

• Bank details & passport-size photograph: proof of financial and personal identity.

• Proof of business address: utility bill, rent agreement, or NOC if rented premises.

2. Partnership / LLP

In partnerships or LLPs, multiple partners are involved, so documents establish both the legal existence of the entity and the identity of partners:

• Partnership deed/LLP agreement: legal proof of formation.

• PAN & Aadhaar of all partners: identity proof of individuals.

• Photographs & bank details: verification of partners and firm’s account.

• Proof of business address: utility bill, rent agreement, or NOC.

3. Company (Private, Public, or Section 8)

For companies, GST registration requires documents that show incorporation under the Companies Act and authorization of a signatory:

• Certificate of Incorporation + PAN: proof of existence as a registered company.

• Memorandum & Articles of Association (MOA & AOA): define the company’s objectives and internal rules.

• PAN & Aadhaar of directors + their photographs: director identification.

• Board resolution: authorization of a specific person to sign and manage GST filings.

• Bank account details: company’s financial proof.

• Proof of registered office address: electricity bill, rent deed, or NOC from owner.

Step-by-Step Process of GST Registration

GST registration is an online process via the GST portal (www.gst.gov.in).

Step 1: Pre-Application Preparation

Before starting, businesses should gather all required documents, such as PAN, Aadhaar, proof of business address, bank account statement, and passport-size photos of promoters. This ensures the process moves smoothly without delays.

Step 2: Online Application – Part A

• Visit the official GST portal (www.gst.gov.in) → Services → Registration → New Registration.

• Enter PAN, mobile number, email, and state details.

• Verify these through OTP authentication.

• Once verified, the system generates a Temporary Reference Number (TRN), which allows the applicant to proceed further.

Step 3: Online Application – Part B

• Log in using the TRN to access Part B.

• Provide detailed business information including:

  • Business name, constitution, PAN.

  • Principal and additional business locations.

  • Promoters/partners/directors’ details.

  • Nature of goods and services (HSN/SAC codes).

  • Bank details.

• Upload scanned copies of required documents for verification.

Step 4: Authentication

The completed application must be authenticated before submission. This can be done via:

• DSC (Digital Signature Certificate) for companies/LLPs.

• E-sign using Aadhaar OTP.

• EVC (Electronic Verification Code) through a registered mobile/email.

Step 5: Processing by Tax Officer

• A GST officer reviews the application.

• If additional information or documents are needed, a notice (Form GST REG-03) is issued.

• The applicant must respond within 7 working days.

Step 6: GSTIN and Certificate Issuance

• Once the application is approved, a unique 15-digit GSTIN (Goods and Services Tax Identification Number) is generated.

• The GST Registration Certificate (Form GST REG-06) becomes available for download from the portal.

Compliance After GST Registration

After obtaining registration, businesses must adhere to ongoing GST compliance requirements.

1. Issuing Tax Invoices

Once a business is registered under GST, it must issue a tax invoice for every supply of goods or services. This is not just a bill but a legal document that allows the buyer to claim Input Tax Credit (ITC) and proves that the seller has charged GST correctly.

A valid GST invoice must contain certain key details: a unique invoice number and date, the GSTIN of the seller and (if applicable) the buyer, a clear description of goods or services, the quantity, value, and applicable GST rate, and the place of supply when the transaction is between two states.

2. Filing GST Returns

After GST registration, every business has to file regular returns to report its sales, purchases, and taxes. These returns keep the tax system transparent and allow the proper flow of Input Tax Credit (ITC).

• GSTR-1 → Shows all outward supplies (sales). It can be filed monthly or quarterly, depending on the turnover.

• GSTR-3B → A monthly summary return where businesses declare sales, purchases, ITC, and pay their final tax liability.

• GSTR-9 → An annual return that combines all the data filed throughout the year.

• GSTR-9C → A reconciliation statement required for businesses with turnover above ₹5 crores, matching GST data with audited accounts.

Note: If returns are not filed, businesses face late fees, interest, and even risk cancellation of GST registration.

3. Input Tax Credit (ITC) Management

Input Tax Credit (ITC) allows businesses to reduce GST liability by adjusting tax paid on purchases against tax collected on sales. It can be claimed only if suppliers upload invoices and pay tax. However, ITC is restricted on personal expenses, motor vehicles for personal use, and blocked credits under Section 17(5), ensuring compliance with GST rules.

4. Payment of GST

After registration, every GST-registered business must pay its tax dues regularly. The payment is made online using a challan in Form GST PMT-06, available on the GST portal. For monthly filers, the tax must be deposited by the 20th of the following month. Timely payment is essential to avoid interest and penalties.

5. Record-Keeping

Every GST-registered business is required to maintain accurate and up-to-date records of its financial activities. This includes keeping copies of all invoices issued and received, details of stock held, and complete records of input tax (GST paid on purchases) and output tax (GST collected on sales). Additionally, if goods are moved from one place to another, the business must maintain E-way bills as proof of lawful transport. These records ensure transparency, help in audits, and support Input Tax Credit (ITC) claims.

As per law, all such records must be preserved for at least 72 months (6 years) from the due date of filing the annual return for that financial year. For example, if the annual return for FY 2023–24 is filed in December 2024, records must be maintained until December 2030.

6. Other Key Compliances

1. Display GSTIN at Business Premises

Every registered business under GST must prominently display its GSTIN (Goods and Services Tax Identification Number) at its principal place of business and at all additional branches. This is a legal requirement that helps customers, vendors, and tax officers quickly verify that the business is GST-compliant. Failure to display the GSTIN can attract penalties during inspections.

2. File Amendment Forms for Changes

If there are any changes in business details after GST registration, the business must update its records by filing an amendment application online through the GST portal. This may include:

• Change in business or trade name.

• Shifting of business premises.

• Addition or removal of partners, directors, or authorized signatories.

• Change in contact details like email ID or mobile number.

Such amendments ensure the GST records remain up to date and avoid notices or mismatches during compliance checks.

3. Comply with E-Invoicing Requirements

E-invoicing under GST requires businesses above a certain turnover (currently ₹5 crores) to generate invoices through the Invoice Registration Portal (IRP). Each invoice gets authenticated with a unique Invoice Reference Number (IRN) and a QR code. This ensures standardization, reduces fake billing, and enables real-time reporting of sales to the GST system. Businesses falling under this category must comply to avoid penalties.

4. Comply with E-Way Bill Requirements

An E-Way Bill is compulsory for transporting goods valued at more than ₹50,000. It contains details of the goods, the supplier, the recipient, and the mode of transport. The bill must be generated online before the movement of goods and carried during transit. It applies to both inter-state supplies and many intra-state movements. Without a valid e-way bill, goods may be detained, and penalties imposed.

Penalties for Non-Compliance

1. Failure to Register

If a business crosses the prescribed GST threshold but does not apply for registration, it attracts a penalty of 10% of the tax due or ₹10,000, whichever is higher. This ensures that all eligible businesses enter the GST system.

2. Fraudulent Evasion

If a taxpayer deliberately evades GST or commits fraud, the penalty is much harsher—100% of the tax due. This means the entire amount of tax evaded has to be paid as penalty in addition to the actual tax liability.

3. Late Filing of Returns

When GST returns are not filed on time, a late fee applies:

• ₹50 per day of delay (₹25 CGST + ₹25 SGST).

• ₹20 per day for NIL returns (₹10 CGST + ₹10 SGST).
  In addition, interest at 18% per annum is charged on the outstanding tax until payment is made.

4. Wrong ITC Claim

If a business wrongly claims Input Tax Credit (ITC), it must reverse the credit and also pay a penalty along with interest. This prevents misuse of ITC provisions and ensures that only eligible credits are claimed.

Benefits of GST Registration

1. Legal Recognition

GST registration gives a business official recognition under the tax system. A registered dealer can legally collect GST from customers and remit it to the government. It also allows passing on Input Tax Credit (ITC) to buyers, making the business more compliant and trustworthy.

2. Market Expansion

Without GST registration, businesses are restricted in interstate operations. Registration removes these barriers and enables seamless inter-state trade, helping companies expand beyond local markets and reach a wider customer base.

3. Input Tax Credit (ITC)

Registered businesses can claim ITC on the GST paid on purchases, which reduces their overall tax liability. This ensures that tax is only paid on the value addition, not on the total transaction amount, lowering costs and improving profitability.

4. Credibility

Having a GSTIN (Goods and Services Tax Identification Number) enhances the business’s credibility. Customers, vendors, and investors often prefer dealing with GST-registered firms because it signals compliance, professionalism, and transparency.

5. Government Tenders

Many government departments and large organizations make GST registration a mandatory condition for participating in tenders and contracts. Without GSTIN, businesses may lose opportunities to bid for lucrative projects.

Conclusion

GST registration is a key requirement for businesses in India, especially for those crossing the turnover threshold or engaged in activities like inter-state supply, e-commerce, or imports and exports. It gives businesses legal recognition, allows them to collect GST, and provides the benefit of claiming Input Tax Credit (ITC), which reduces overall tax liability and enhances efficiency.

For startups and SMEs, timely GST registration is more than compliance it is a growth enabler. It helps build credibility with customers, suppliers, and investors while opening access to wider markets and government tenders. By filing returns on time, maintaining proper records, and following GST rules, businesses can avoid penalties and strengthen their long-term prospects in a unified, transparent tax system.

Frequently Asked Questions (FAQs)

Q1. What is GST registration and why is it important?

Ans. GST registration is the process by which a business gets a unique GSTIN (Goods and Services Tax Identification Number). It is mandatory for businesses crossing turnover limits or engaged in specific activities, and it allows them to collect GST legally and claim Input Tax Credit (ITC).

Q2. What is the turnover threshold for GST registration?

Ans. For goods, the threshold is ₹40 lakhs (₹20 lakhs for special category states). For services, it is ₹20 lakhs (₹10 lakhs in special states). Some businesses, like inter-state suppliers and e-commerce operators, must register regardless of turnover.

Q3. Can a business register for GST voluntarily?

Ans. Yes, businesses below the threshold can opt for voluntary registration. This enables them to claim ITC, expand into inter-state trade, and build credibility with customers and vendors.

Q4. What documents are required for GST registration?

Ans. Documents depend on the business type: PAN, Aadhaar, bank details, photos, and address proof for proprietorship; partnership deed/LLP agreement for firms; and incorporation certificate, MOA/AOA, board resolution, and director details for companies.

Q5. How can I apply for GST registration online?

Ans. GST registration is done on the official GST portal (www.gst.gov.in). The process involves filling Part A (basic details) and Part B (business details, documents), authentication through DSC/EVC/Aadhaar OTP, and verification by a GST officer before GSTIN is issued.

Q6. What compliances must businesses follow after GST registration?

Ans. They must issue GST invoices, file returns (GSTR-1, GSTR-3B, GSTR-9, etc.), maintain records, pay GST dues on time, manage ITC correctly, display GSTIN at premises, and follow e-invoicing and e-way bill rules.

Q7. What are the penalties for not registering under GST?

Ans. Failure to register attracts a penalty of 10% of the tax due or ₹10,000 (whichever is higher). Fraudulent evasion leads to 100% penalty, while late filing attracts daily late fees and 18% interest on unpaid tax.

Q8. What are the benefits of GST registration for small businesses?

Ans. It gives legal recognition, allows ITC claims, enables inter-state trade, boosts credibility with stakeholders, and makes businesses eligible for government tenders and larger contracts.