Different Types of GST Taxpayer and GST Registration Process

A GST Taxpayer means a business or a person who is registered under the GST law in India. This system has gathered several indirect taxes into a single and unified tax. Any business should understand the GST registration process for its purposes. A registration process helps them to register as a new taxpayer in India. The right type and category of GST registration simplifies the taxation process. In this piece of writing, you will learn about the different types of GST taxpayers, the GST registration process, and more.

What is GST?

The GST means a Goods and Services Tax. It refers to a comprehensive, multi-stage, and destination-based indirect tax. This tax is on each value addition to goods and services. This has replaced several cascading indirect taxes. The GST helps to make a single and unified domestic market in India. It includes VAT, excise duty, and service tax.

What is GST Registration?

GST registration is the process of which a business entity or taxpayer gets registered under the Goods and Services Tax in India. The process of registration depends on the specific needs and business requirements. It is suitable for several types of GST taxpayers. The taxpayer gets a GSTIN after completing GST registration. The full form of GSTIN is Goods and Services Tax Identification Number. It is a 15-digit number for identifying businesses. This number helps to track GST-related transactions. It also specifies a liability of the business for GST payments.

What are the key eligibility criteria for GST registration?

Here are the eligibility criteria for GST registration:

a) Businesses Previously Registered

In case of business was registered before GST, you must do the process for GST registration.

b) Non-Resident Businesses

Business operate in India but based outside the country should register for GST.

c) Occasional Sellers

In some cases, when you sell in GST areas without having a permanent business, you must register for it.

d) Users of Reverse Charge Mechanism

You must do GST registration when you are paying GST rather than the supplier.

e) E-commerce Platforms

In case you run an e-commerce platform, then GST registration is compulsory.

f) Businesses with High Turnover

You as a GST taxpayer, need to register for GST when your business turnover is more than Rs. 40 lakh (Rs. 20 lakh for special category states).

g) Input Service Distributors:

When a business distributes input tax credits, then it needs a registration under GST.

h) Agents for Suppliers

The agents that supply goods to others need to do GST registration.

i) E-commerce Sellers

A GST taxpayer who sells goods or services on an e-commerce platform needs to register for GST.

j) Online Service Providers from Abroad

You must register for it when you contribute online services or data from outside India to unregistered users.

Different types of GST Taxpayers in India

Listed below are the following types of GST taxpayers in India:

1. Normal Taxpayers

A Normal taxpayer is also called a Regular taxpayer. As per the GST framework in India, it suits businesses that depend on their annual turnover. Here is a detailed explanation:

• Registration Threshold

Businesses should register for GST. It applies when their annual turnover is more than Rs. 40 lakhs in normal category states and 20 lakhs in special category states.

• Turnover Consideration for Composition Scheme:

A registered person may be eligible for the composition scheme. It will be applicable if their aggregate turnover in the previous financial year is up to 75 lakhs only for special category states & 1.5 crore for most states.

• Applicability to Service Providers:

The category of a normal taxpayer is for taxpayers in the service industry. Restaurants may register either as normal taxpayers or under the composition scheme, subject to eligibility. These GST taxpayers should meet regular compliance requirements.

• GST Return Filing Requirements:

Normal GST Taxpayers must file monthly returns. The filings can include

a) GSTR 3B

b) A summary return of inward and outward supplies

c) GSTR 1 that outlines outward supplies of taxable goods and/or services

• Input Tax Credit Benefits

According to this category, a regular taxpayer can claim input tax credit (ITC). They can deduct the GST paid amount on buying goods or services. They can also deduct this from the GST they must pay on their output.

2. Composition Taxpayer or Composition Scheme in GST

The Composition taxpayers means the registered taxpayers under the composition scheme in GST. This suits to small taxpayers that gives a simplified taxation process. It is applicable for businesses with a turnover of up to Rs. 1.5 crore in the preceding financial year.

Below is the benefits of registering under the composition scheme:

• Simplified Compliance:

GST Taxpayers under this scheme has a reduced or less compliance burdens. They must file few returns. They also meet the simplified record-keeping requirements.

• Reduced Tax Liability

The taxpayers has to pay GST at a fixed turnover rate which is lower compared to regular tax rates.

• Enhanced Liquidity

The businesses can have higher liquidity with taxes levied at a lower rate. This also helps them to utilize funds efficiently for operation and growth.

3. Casual Taxable Person

 A Casual Taxable Person is a person who occasionally supplies goods and/or services in a GST-applicable territory. They don’t have a fixed place of business in that territory. This kind of people makes a business transaction on a temporary basis. Such a person will be considered as a casual taxable person as per GST in India.

4. Input Service Distributor (ISD)

As per the GST law, an Input Service Distributor (ISD) is a specific classification for the tax credits distribution. Here is a detailed explanation:

• Function

An ISD refers to an office of the supplier of goods or services. It focuses on receiving tax invoices upon receipt of input services. Then, it issues tax invoices to distribute the credit of CGST (Central Goods and Services Tax) and SGST (State Goods and Services Tax). They also issues tax to distribute the credit of IGST (Integrated Goods and Services Tax). The credit is distributed to its branches which have the same Permanent Account Number (PAN).

• Restriction on Credit Distribution:

An ISD is only liable to distribute the credit received on “input services". It does not include credit distribution for input goods or capital goods.

• Eligibility:

The entity should be a supplier of taxable goods and services. They also need the PAN as the office performing the role of the ISD. These are the eligibilities to qualify as an ISD (Input Service Distributor).

• Mandatory Basis

It is important to become an Input Service Distributor but not it is optional. It applies to businesses with multiple GST registrations under the same PAN. These businesses get common input services at a central office.

5. Non-Resident Taxable Person

As per GST, an individual or business entity occasionally supplies goods and/or services in a territory where GST is applicable. They does not have a fixed place of business in India. Such persons are the non-resident taxable persons. According to the GST law, they must follow all the GST rules.

6. Non-Resident Online Service Distributor

A Non-Resident Online Service Distributor means a provider of OIDAR. The full form of OIDAR is Online Information and Database Access or Retrieval Services. The OIDAR is a specific category which identifies the taxation of digital services. It includes foreign entities that give several online services from outside India to individual. This also includes entities. It does not include registered GST individuals.

Here are the various key aspects:

• Scope of Services:

OIDAR services provides a broad range of digital offerings. It contains online advertising, e-books, software, and cloud services. The services also cover online digital content such as movies, TV shows, music), data storage, online gaming, etc.

• Mandatory GST Registration

Any foreign provider that gives OIDAR services to unregistered persons should register under GST in India.

• Single PAN-India Registration

A single registration applies to Non-Resident Online Service Providers across India.

• Centralized Processing:

The Office of the Principal Commissioner of Central Tax in Bengaluru West centrally maintains such service providers' registration and consequent process.

Appointment of an Authorized Signatory in India:

These service providers should appoint an authorized signatory with a valid PAN in India. This Authorized signatory maintains the GST registration process on the GST portal. It is on behalf of the Non-Resident Online Service Provider.

7. Embassy, UN Bodies, and Other Notified Persons

As per the GST regime, Embassies, UN Bodies, and Other Notified Persons can apply for a Unique Identity Number (UIN).

Key Points of UIN

Here are the key points of UIN (Unique Identity Number):

• Issuance and Purpose:

It is issued to UN Bodies and Embassies depends on letters from the Ministry of External Affairs. This number will be grant to other entities as stated the Commissioner. These bodies can get taxable goods or services from registered persons in India.

• Invoice and Refund Process:

The UIN should be mentioned on purchase invoices. The UIN holders can claim refunds of the GST paid on transactions. Refunds are processed on the basis of Form RFD-10. This form is generated after filing the statement of inward supplies in Form GSTR-11.

Registration Process on GST Portal:

Listed below are the steps to apply for UIN as a UN Body, Embassy, or Other Notified Person:

Step 1:

You must visit the GST portal. Then, navigate to the "Services" option and then "Registration" Option. Next, you need to click on the "New Registration" option.

Step 2:

As a user, you need to select the "New Registration" option. Then, choose the "United Nation Body/Consulate or Embassy of Foreign Country/Other Notified Person" from the "I am a" drop-down list.

Step 3:

In this step, you will find-

Conditions for UIN Application- The conditions can include:

a) Unique Registration:

The applicant must not already have a UIN in that State. UN Bodies and Embassies needs only one registration for all of India. In contrast, Other Notified Persons must get state-wise registration.

b) Valid Contact Details:

Applicants should have an Indian mobile number and email address.

c) Mandatory Documents and Information:

You must provide all necessary documents and required information for registration.

d) Authorized Signatory:

As an applicant, you must designate an authorized signatory with valid details.

8. Special Economic Zone (SEZ) Developer and Units

As per the GST regime, Special Economic Zone (SEZ) developers and SEZ units need to register a new GST. Listed below are the specific guidelines:

• Fresh Registration Requirement:

SEZ developers and units need to apply for new registration under GST. It will be treated as separate business verticals.

Registration Process:

In the application of GST registration, you as a GST taxpayer, must select "SEZ Unit" or "SEZ Developer" under the "Business Details" as the reason to get registration. You need to upload necessary certificates or documents. These are issued by the Government of India in the “principal place of business" tab. The documents confirms your status as an SEZ unit or developer. Email Confirmation for Existing Enrolments can include:

• In case the "SEZ" was chosen as a business activity while enrolling the initial GST, the primary authorized signatory needs to get an email. They should take further action based on this email. It helps to identify the GSTIN as an SEZ Unit or Developer.

• In the absence of such an email or if "SEZ" was not selected, they must approach the Jurisdictional Tax Authority. They can seek a request with the GST system to simplify the process.

9. Tax Deductor at Source (TDS) /Tax Collector at Source (TCS)

As per the GST regime, businesses or individuals for Tax Deduction at Source (TDS) and Tax Collection at Source (TCS) must register for GST. This means the GST taxpayer need to deduct or collect tax must register it. This registration is for the specific purpose of handling these transactions.

Here is a detailed overview of their roles and registration process:

TDS under GST:

Entities Required to Register:

The Central/State Governments have been notified the Departments, Centre/State Government establishments, local authorities, government agencies, and certain persons or categories. These entities need to register as TDS deductors when their contractual payments to suppliers is more than Rs. 2.5 lakhs.

Deduction Rates:

• 1% under CGST (Central Goods and Services Tax). There is also 1% under SGST (State Goods and Services Tax) for intra-state transactions.

• 2% under IGST (State Goods and Services Tax) for inter-state transactions.

The deducted GST amount need to remit to the appropriate GST account. The suppliers need to get credit for these payments.

TCS under GST:

It is similar to TDS, the government has specific these entities as tax collectors. They should register under GST for TCS purposes.

Registration Process:

Online Application: You can register for GST online through the official GST portal.

Form and Preconditions:

Here are the form and preconditions:

• Entities should apply for it using the prescribed form.

• Registration conditions can contain a valid PAN or TAN, a valid mobile number, and an email ID. It can also include necessary documents, a place of business, and authorized signatory with valid details.

• Self-Registration:

Entities are eligible to file the Registration Application for Tax Deductor or Tax Collector themselves through the GST system.

Steps for different types of GST Registration

Here are the step-by-step process of GST registration:

Step 1: Visit GST Portal

You must go to the official GST portal to begin the registration process.

Step 2: Register Now

You as a GST Taxpayer must click on the "Register Now" under the "Taxpayers" menu.

Step 3: New Registration

You need to choose "New Registration".

Step 4: Fill in Details

You need to fill out the required details. It includes:

a) You must select "Taxpayer" under "'I am a".

b) Then, you need to choose your state and district.

c) Next, enter your business name and PAN.

d) You must give an active email ID and mobile number for OTP verification.

e) Then, Complete the CAPTCHA challenge and click on the "Proceed"

Step 5: OTP Verification:

Once you have receive the OTP on your mobile and email, you need to enter it.

Step 6: TRN Generation

You will find the Temporary Reference Number (TRN) on the screen. So, you must note this number.

Step 7: Revisit the GST Portal

In this step, you need to revisit the GST portal. Then, select on the "Register" option under "Taxpayers".

Step 8: Enter TRN

You must choose "Temporary Reference Number (TRN)'" and input your TRN. Then, complete the CAPTCHA.

Step 9: OTP Verification Again

You will again get the OTP on your email and mobile. Then you need to enter it.

Step 10: Application Status

As an applicant, you can view your application status. You can make changes by clicking on the Edit icon.

Step 11: Fill Application Form

You need to complete all 10 sections and upload required documents. The documents can include-

a) Photographs,

b) Business address proof,

c) Bank details,

d) Authorization form,

e) Constitution of the taxpayer.

Step 12: Verification

You must go to the "Verification" page. In this page, you need to agree to the declaration, and submit your application through EVC, e-sign, or DSC for companies.

Step 13: ARN Generation:

Once submitted, you will get a success message. You will also receive an Application Reference Number (ARN) on your registered mobile and email.

Step 14: Track ARN Status

You can use the ARN to track your status of application on the GST portal.

Step 15: GST Registration Number

Once all documents are verified successfully, you will get your GST registration number generally within 7–10 working days, subject to verification.

Conclusion

Every GST taxpayer should understand their rights and obligations for their business purpose. You must understand the types of taxpayers under GST for a valid GST registration. A proper GST registration and timely filings avoid penalties. It also gives benefits to Input tax credits. This proves that the business follows all the GST rules. It also helps to maintain tax deductions and collections. If you have any queries about it, get in touch with Online Legal India.

FAQ

Q1. Who is a GST Taxpayer?

A GST taxpayer means an individual or business entity who is registered under the GST system in India. It contains several types of entities engaged in economic activity, trade, and commerce.

Q2. What are the different types of GST taxpayer?

There are various types of GST taxpayer in India:

• Normal Taxpayer

• Composition Taxpayer

• Casual Taxable Person

• Input Service Distributor (ISD)

• Non-Resident Taxable Person

• Non-Resident Online Service Distributor

• Embassy/UN Body/ Other Notified Persons

• Special Economic Zone (SEZ) Developer/ Unit

• Tax Deductor at Source (TDS) /Tax Collector at Source (TCS)

Q3. Who must register for GST?

In India, business and individuals must register for GST on the basis of their annual aggregate turnover. This also applies if they fall into specific categories for registration, regardless of turnover.

Q4. What are the Key benefits of being a registered GST taxpayer?

Here are some key benefits of being a registered taxpayer:

• Legal Recognition

• Claim Input Tax Credit (ITC)

• Business Expansion

• Enhanced Credibility

• Simplified Compliance

Disclaimer

This article is for informational purposes only and does not constitute legal advice. Online Legal India is a digital platform. If you require legal assistance, we strongly recommend consulting a qualified lawyer or law firm.