How to obtain Multiple GST No in a single State or UT?
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How to obtain Multiple GST No in a single State or UT?
In India, any business entity with an annual turnover of more than Rs 20 lakh is required to register under the GST legislation. Registration under GST entails obtaining a 15-digit unique identification number GSTIN, which is encrypted with the applicant’s PAN (Permanent Account Number) and State code.
Because the government has made the allotted PAN mandatory for applying for GST registration, it has also given leading enterprise concepts the option to extend their firm with multiple state divisions, each with its own unique GST number registered with a single PAN.
Two GST registrations in the same state or union territory with a single PAN: GST, or Goods and Services Tax, is one of India’s most revolutionary tax regimes, with the motto “One Nation, One Tax.” GST, which is an indirect tax, is linked to the PAN, which is the base for direct taxes. Let’s start with the fundamentals of GST registration:
PROVISIONS IN THE GST LAW FOR MULTIPLE GST REGISTRATIONS:
Section 25(1) of the CGST Act, 2017 states that every person shall apply for GST registration in each state or union territory where he or she is required to register.
This means that if you run your business from two different locations, you must obtain a separate GST registration for each one.
For example, if a person operates a manufacturing business in Kolkata and has a subsidiary business office in Delhi, he or she must obtain a separate GST registration for each state – one for Delhi and one for Haryana. Furthermore, the same PAN can be used to register in both states.
According to Section -25(1) of the CGST Act, 2017, any person who is required to register for GST under this Act must apply for registration in each state or union territory in which he is required to register.
For instance, if a person conducts a trading business in two different states, say Delhi and Mumbai, and is required to register under this act, the person must apply for registration in each of these states, and GST registration will be granted accordingly. Because GST registration is based on PAN, GST registration will be granted in each of these states under the same PAN number.
Section 25(2) of the CGST Act, 2017 states that a person conducting business in more than one business vertical in a single State or Union territory may be granted a separate GST registration for each separate business vertical, subject to certain conditions and rules.
According to Section 25(2) of the CGST Act 2017, a person seeking registration under this Act will be granted a single registration in a State or Union territory:
However, in a State or Union territory, a person with multiple business verticals may be granted a separate registration for each business vertical, subject to any conditions imposed.
Besides that, pursuant to the CGST Amendment Act 2018, the original proviso to Section 25(2) has been replaced with –
Provided, however, that a person who has multiple places of business in a State or Union territory may be granted a separate registration for each such place of business, subject to any conditions that may be imposed.
Generally, Under this act, a person can only obtain a Single GST Registration in a state or union territory.
Subject to such conditions, a person carrying on multiple business verticals in a state or Union territory may be granted a separate GST registration for each such business vertical – Section 25 (2).
It is clear from the above that a person can register for several GST registrations in a state or union territory using the same PAN.
Definition of Business Vertical:
Business Vertical (Section 2 (18) CGST Act, 2017)) – A distinctive component of an enterprise that is engaged in the supply of individual goods or services, or a group of related goods or services, and is subject to risks and returns that are distinct from those of the other business verticals is referred to as a “business vertical.”
Explanation– Factors to consider in determining whether goods or services are relevant for the purposes of this clause include the following:
(a) the nature of the Goods or Services;
(b) the nature of the production processes;
(c) the customer type or class for the goods or services;
(d) the methods for distributing goods or providing services; and
(e) the nature of the regulatory environment (wherever appropriate), such as banking, insurance, or public utilities
A “business vertical” is a discrete component of an enterprise that is engaged in the supply of specific goods or services, or a group of related goods or services, and is predicated on risks and returns that are separate from those of other business verticals.
This means that two distinct businesses can operate with multiple GST registrations within the same state or Union territory using the same applicant’s PAN. Section 25 requires these verticals to follow certain provisions and rules.
Other than registered verticals, the above section describes the following provisions to consider for new vertical registration under GST:
- The nature of goods and services.
- The nature of production process followed.
- The customers type or class for the goods and services.
- The methods for distributing the goods or providing services.
- The nature of the regulatory environment (wherever appropriate), such as banking, insurance, or public utilities.
CGST Rules, 2017 – Rule 11 –
Within the same State or Union Territory, the law also established the rules for obtaining separate GST registrations for different business verticals. Rule 11 (1) also states that in order to obtain registration for a new vertical:
– Such a person should have more than one business vertical in order to fulfil the definition stated in section 2 (18) of the act.
– A taxable person’s vertical option shall not be granted registration under section 10 (composition levy) if any other business vertical of the same person is already registered under that same section.
Section 9– All separately registered verticals of such person are required to pay tax under the act on supplies of goods or services, or both, made to other registered business verticals of such person and to issue an invoice for the same.
Note: If a person’s business vertical becomes ineligible to pay tax under section 10, the person’s other business verticals will also become ineligible to pay tax under GST.
Rule 8(1), CGST Act 2017 – Persons with registered business units in Special Economic Zones or SEZ developers must submit a separate application as a vertical to be identified outside of Special Economic Zones for separate GST registration.
As a result, w.e.f. February 1st, 2019, taxpayers will be able to obtain registration for each respective place of business within a specific state or union territory, even if the said multiple business locations are not in different business verticals.
Who should use Form ITC-02A and what is it?
Within 30 days of obtaining the new registration, the principal place of business (transferor) can transfer any unutilized balance of input tax credit to a new branch (transferee) in the ratio of the value of assets. The value of assets must be considered irrespective of whether or not ITC has been utilised for. The transfer of ITC is accomplished through the submission of Form GST ITC-02A by the transferor.
Purpose of using Form GST ITC-02A:
The method of ITC transfer is similar to that of ISD distribution, but within the same state/Union Territory and based on asset distribution.
It is possible that the head office purchases capital goods, inputs, or input services for a new branch before it is established inside the same state (principal place of business). In such a case, the primary place of business would already have claimed ITC on such capital goods, inputs, or input services.
Such ITC claims ideally belong to the branch because it consumes or uses the capital goods, input services, or inputs in the end. As a result, the GST ITC-02A is utilised to transfer any unclaimed ITC to the newly constituted branch.
However, under Rule 11 of the CGST Rules 2017, some conditions for obtaining registration for multiple places of business in a state or union territory have been prescribed:
- There should be uniformity in determining whether to use a composition scheme at all places of business or none at all. It has also been clarified that if any registered person’s place of business that has been given a separate registration becomes ineligible to pay tax under section 10, all of the said person’s other registered places of business will also become ineligible to pay tax under that section.
- GST must be charged on supplies made between multiple places of business with distinct GSTINs, and a tax invoice or bill of supply must be supplied.
Credit is transferred on obtaining separate registration for multiple locations within a State or Union territory.
The procedure for transferring input tax credit where a taxpayer has obtained separate registration for multiple places of business within a state or union territory is specified in Rule 41A of the CGST Rules 2017. The steps to be taken are as follows-
- This rule applies to a registered person who has obtained separate registration for multiple locations within a state or union territory and intends to transfer, in whole or in part, the unutilized input tax credit in his electronic credit ledger to any or all of the newly registered locations.
- Form ITC-02A must be submitted by the registered person within 30 days of obtaining separate registrations. Previously, the Form ITC-02A was not available on the portal; however, it is now functional, and taxpayers can easily transfer their unutilized input tax credit from electronic credit ledgers to the newly registered place of business. Previously, because the form was inoperative, taxpayers transferred stock by issuing tax invoices to newly registered individuals, causing unnecessary complications.
- Newly registered entities will receive input tax credits proportional to the value of their assets at the time of registration.
Note that the term “value of assets” refers to the total value of the business’s assets, whether or not input tax credit has been claimed.
- The newly registered person (transferee) must accept the details provided by the registered person (transferor) on the common portal, and the unutilized input tax credit specified in FORM GST ITC-02A must be credited to his electronic credit ledger.
Procedure for GST Registration:
The Multiple Registration under GST procedure is conducted online via a portal. The Central Government of India maintains and operates this portal. GST Suvidha Providers, also known as GSPs, must be appointed by the government. This person is assigned to assist with the registration process. The registration procedure is as follows, based on the information provided by the GST portal:
- The applicant must complete Part A of Form GST REG – 01 on the GSTN portal or at a Facilitation Center. The applicant must enter his or her PAN, mobile phone number, and email address here.
- The PAN, mobile number, and email address are then validated via the GST portal and the OTP. Following this verification, the applicant is given a reference number and an acknowledgement in FORM GST REG-02.
- In Part B of FORM GST REG-01, the application reference number must be specified. This form must be submitted after filling out all of the required information and attaching the required documents.
- If more information is needed, FORM GST REG-03 is given.
- The applicant must file FORM GST REG-04 in response to the information requested within 7 working days of receiving the above-mentioned form.
- If you have provided all required information in Form GST REG-01 or Form GST REG-04, the certificate of registration in Form GST REG –06 for the place of business and each additional place of business can be issued to the applicant by filing the previously mentioned forms. A person with multiple businesses within a state could file a separate application for GST registration in Form GST REG-01 for each business type.
- If the details submitted are incorrect, the registration application may be rejected using Form GST REG-05. The candidate who is required to deduct TDS or collect TCS must submit an application in Form GST REG – 07 for GST registration. If he is no longer required to deduct or collect tax at source, the officer may cancel and notify the registrant of the cancellation.
Conclusion:
GST Registration is PAN-based and state-specific; however, multiple GSTINs can be obtained in a single state or union territory if a person conducts multiple business verticals or has multiple branches within the state or union territory. More than one GSTIN can be obtained only if a person conducts business in two or more States or Union Territories, or if the registration process is carried out as a multiple business verticals in a State or Union Territory.
Important aspects while obtaining more than one GST registration
- Various provisions for Multiple Registration under GST were made. Businesses with an aggregated turnover of more than INR 40 or 20 lakhs in the case of commodities and INR 20 or 10 lakhs in the case of services must register as a typical taxable person under GST, according to the act.
- The company must fulfil the requirements of the Business Vertical as laid out in Section 2(18) of the Act.
- A business vertical cannot receive a composition scheme if any of its other business verticals has become ineligible to pay tax under the composition scheme.
- On supply of goods or services, or both, by a registered business vertical to another registered business vertical of such person, a tax invoice must be issued and tax must be paid under this act.
- If a taxpayer has multiple locations within a state or union territory, separate GST registration can be obtained for each location. In addition, the unutilized input tax credit can be transferred to new registered persons using ITC-02A.
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