All You Need to Know About Mandatory GST Registration – Section 24

Mandatory Registration Under GST Act Section 24

As per Section 24 of the CGST Act 2017, certain categories of individuals and entities must register for GST, even if their aggregate turnover is below the exemption threshold specified in Section 22(1). This mandatory registration applies even when they are otherwise exempt from GST registration under the CGST and SGST Acts.

Here are the categories requiring compulsory GST registration, regardless of turnover:

• Individuals making inter-state taxable supplies.
• Casual taxable persons providing taxable supplies.
• Persons liable to pay tax under the reverse charge mechanism.
• Electronic Commerce Operators.
• Non-resident taxable persons providing taxable supplies.
• Persons required to deduct tax under Section 51.
• Agents or individuals supplying taxable goods or services on behalf of others.
• Input Service Distributors.
• Providers of online information and database access or retrieval services from outside India to unregistered individuals in India.
• Any other persons or classes of persons as notified by the Government based on GST Council recommendations.

These categories must register for GST, irrespective of their aggregate turnover, overriding the provisions of Section 22(1).

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Different types of Compulsory Registration under GST

Threshold Limits for Registration

The standard GST registration threshold is set at Rs. 40 lakhs for goods suppliers and Rs. 20 lakhs for service providers across most states and union territories in India. It's important to note that this threshold exemption does not extend to individuals mandated to register under section 24.

• Exceptional Category States: The threshold limit for GST registration is Rs. 20 lakhs for suppliers of goods and Rs. 10 lakhs for suppliers of services in the special category states, which are Arunachal Pradesh, Jammu and Kashmir, Assam, Manipur, Meghalaya, Mizoram, Sikkim, Nagaland, Tripura, Himachal Pradesh and Uttarakhand. However, this limit also does not apply to the persons who are compulsorily required to register under section 24.
• Input Tax Credit: Businesses registered under GST can take an input tax credit on the purchase made by them. This reduces the overall tax liability of the business.
• Reporting and Compliance: Businesses registered under GST have to maintain proper records, file GST returns on time, and pay GST to the tax authorities.
• Audit and Compliance: After GST registration, tax authorities are required to conduct frequent audits. They audit invoices, transactions, and records to maintain compliance and accuracy.

Compulsory Registration Criteria for Inter-State Supplies Under GST

Persons making an inter-state taxable supply of goods or services are required to take registration under section 24 (i), regardless of the threshold limit. Nevertheless, there are certain exceptions to this rule, including:

• Persons making inter-state supply of services are not required to register if their aggregate turnover is less than Rs. 20 lakhs or Rs. 10 lakhs, as the case may be.
• Persons engaged in inter-state supply of handicraft goods or specified products are not required to register if their aggregate turnover is less than Rs. 20 lakhs or Rs. 10 lakhs, as the case may be.

Compulsory Registration under GST for Casual Taxable Persons

Casual taxable persons making a taxable supply of goods or services in a state or union territory where they do not have a fixed place of business are required to take registration under section 24 (ii), regardless of the threshold limit. However, there are some exceptions to this rule, such as:

• Persons engaged in the supply of handicraft goods or specified products are not required to obtain casual registration if they supply goods outside the state or union territory, and their aggregate turnover is less than Rs. 20 lakhs or Rs. 10 lakhs, as the case may be.
• Casual taxable person registration is not required for the movement of goods on an approval basis, provided that the invoice is issued at the time of delivery of goods.

Compulsory Registration under GST for Non-Resident Taxable Persons

Persons who are not residents but engage in the taxable supply of goods or services in India must register under section 24 (v), irrespective of the threshold limit.

GST Registration for Reverse Charge Mechanism

Persons who are liable to pay tax under the reverse charge mechanism on inward supplies of goods or services are required to take registration under section 24 (iii), regardless of the threshold limit. However, there is an exception to this rule, such as:

• Persons who are making only outward supplies and tax on which is liable to be paid on a reverse charge basis by the recipient under section 9 (3) are exempt from registration.

Mandatory Registration under GST for Service Providers via E-Commerce Operators (ECOs)

If you provide certain services through an E-Commerce Operator (ECO), you must register for tax, and the ECO will pay the tax on your behalf. The services that are covered by this rule are listed in section 9(5) of the Act. They are:

• Passenger transport by radio taxi, motor cab, maxi cab, or motorcycle
• Accommodation in hotels, inns, guest houses, clubs, campsites, or other places for residential or lodging purposes
• Housekeeping services such as plumbing, and carpentering

The ECO has to take mandatory registration and pay tax only if the service providers have a turnover of less than Rs 20 /10 Lakh, and they are not required to take registration under sec 22 of the CGST Act. Those who are liable to pay tax under section 9(5) have to take compulsory registration.

Mandatory Registration under GST for TDS Deductors

If you have to deduct tax under section 51 (TDS), you need a separate registration as a tax deductor, even if you are already registered under the GST Act 2017.

Section 24(vii): Only C&F agents who store and sell goods on behalf of the Principal need to register under GST, even if their turnover is below Rs 20/10 lakhs per annum. Other agents who provide goods or services or both for other taxable persons, whether as an agent or not, do not need to register if their annual turnover is less than Rs 20/10 lakhs. This applies to ordinary commission agents who do not deal in goods or services themselves.

Mandatory GST Registration for Input Service Distributors

Every entity, regardless of its registration status under the CGST Act 2017, is mandatory to register as an Input Tax Distributor.

Section 24(ix): Individuals supplying goods or services, excluding those specified under section 9(5), through e-commerce operators (ECO) must undergo mandatory registration under the CGST Act. This compulsory registration is necessary when E-commerce operators are tasked with collecting tax at source as per section 52 of the Act.

Section 24(x): Electronic Commerce Operator: Any electronic commerce operator mandated to collect tax at source under section 52, introduced through the CGST (Amendment) Act, 2018, effective from February 1, 2019. Therefore, registration for an e-commerce operator is necessary when obligated to collect tax at source under section 52 of the CGST Act.

Section 24(xi) OIDAR (Online Information and Database Access or Retrieval Services): Compulsory registration is necessary for any entity providing OIDAR services from a location outside India to an individual in India, except for a registered taxable person. Therefore, if an individual is already registered under GST, there is no need for a separate registration.

Section 24(xii): Mandatory Registration under GST for Specified Individuals

Compulsory registration is mandatory for any individual or category of individuals as may be specified by the Central Government or a State Government based on the recommendations of the GST Council.

Other applicable Provisions

A person dealing exclusively in exempted products is not obligated to register under GST unless liable under reverse charge. Compulsory GST registration becomes necessary when an individual is liable to pay tax under reverse charge. The requirements for mandatory registration do not apply to individuals who are not obligated to register under section 23 of the CGST and SGST Act. Therefore, the following are exempt from registration, even if falling under any category specified in section 24(1): (a) individuals supplying goods or services not subject to tax, (b) those wholly exempt from tax, (c) agriculturists, or (d) individuals supplying goods or services where the service recipient is liable to pay tax.

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