With the release of the proposed rates under the Goods and Services Tax (GST) for most goods and services, the stage seems set for implementation of GST from July 1, 2017.
In fact, the first phase of migration of existing tax payers to GST has already been completed as on April 30, 2017. As per recent news reports, the Finance Ministry has confirmed that as many as 87 percent of central excise assessees and 84 percent of service tax assessees have migrated and registered themselves with the Goods and Services Technology Network (GSTN).
The next phase of migration of existing tax payers is expected to be open between June 1 and June 15, 2017, and existing tax payers who have not yet completed the migration process could use this window to complete the migration process.
For tax payers who have not received a login id and password, registration could also be done as a new registration. As of now, it is not known as to whether new registrations would be enabled prior to the appointed date, or whether such applications would only be possible once GST comes into force.
Who is required to migrate?
All existing central excise law, service tax and state VAT registrants holding a registration under the existing tax regime are required to migrate into GST, unless they are small tax payers who have an all India turnover of less than Rs 20 Lakhs (or Rs 10 Lakh for North East States).
Further, registration would be mandatory notwithstanding the threshold prescribed, in the following cases:
(a) Persons making inter-state supplies ie those persons making supplies to another state / exports;
(b) Persons required to pay tax under reverse charge (whether imports or domestic);
(c) Input service distributor;
(d) Person who are required to deduct TCS (TCS list yet to be notified);
(e) Electronic commerce operators and suppliers who sell through e-commerce operator(s); and
(f) Persons supplying online information and database access or retrieval services from a place outside India to a person in India.
It is important to note that registrations are required for all states from where a tax payer makes a taxable supply of goods or services or both. This is a major departure for service providers in the IT / ITES space, many of whom have a centralized registration under existing service tax law, and are used to filing centralized returns and facing a single audit basis such return.
Why is migration important?
Migration into GST also becomes important where an assessee wishes to carry forward credit of taxes from the current regime.
How would a tax payer be identified under GST?
Every assessee choosing to register in a State under the GST regime would be allotted a unique identification number (the GSTIN number) which is PAN based. The GSTIN number is a vital number for a tax payer. The GSTIN of both the seller is required to be mentioned on the invoices raised by the seller. The GSTIN is one of the key fields that would be matched in the matching process for availment of credit. Also, the GSTIN of a tax payer is required to be displayed mandatorily on the name board at the entry of all his places of business.
Currently, all existing tax payers who have completed the migration process have been allotted a provisional GSTIN at the time of migration. Once the final registration certificate is issued, a final number would be allotted by the tax authorities. While it is possible that the provisional GSTIN would be the final GSTIN that is allotted as it appears to be based on the format that a GSTIN would be issued, based on interactions with the tax authorities, it is understood that is a possibility that there could be a change in the last four digits of the provisional GSTIN that has been issued.
Can a tax payer obtain more than one GSTIN number in a State?
While the GSTIN is PAN based and would typically be issued only once for all operations within a State, the GST law provides for certain exceptions:
Option of tax payer - A separate registration for each business vertical present in a particular State can be taken at the option of the tax payer.
Separate ISD registration - A separate registration is required to be obtained by an Input service distributor (ISD). An ISD is typically the head office of a company which receives bills for common services pertaining to all its branches/ offices. Such common credits would need to be apportioned, given that they pertain to all branches/ offices. The ISD registration is separate from the GSTIN number that the head office receives, and the ISD GSTIN would have to be quoted for all invoices which are required to be distributed.
Tax payer having SEZ operations - All SEZ units in a State are required to have a separate registration based on the draft registration rules.
Before the GST regime comes to fruition, it is important for all suppliers to assess the registration requirements in every State that they operate in and ensure that the enrolment process has been complete in order to ensure business continuity during the transition phase.
Please see the attachments for the detailed process of registration under GST, instructions for GST enrolment and document checklist.
Do watch this space for our next article in the GST series – Supply: Trigger to tax under GST
The above blog is based on inputs from our GST knowledge partner, BMR & Associates. The blog is with the intent to provide general guidance and does not render any definitive opinion. Prior professional advice is recommended before implementation of any aspects covered above.