Updated : July 12, 2024Types of GST Registration: Regular, Composition, and QRMP Schemes
Overview : The types of GST Registration in India are categorised on the basis of annual business turnover and the nature of business activity. According to these parameters, taxpayers can register their businesses under the Regular GST registration, Composition GST registration, and QRMP GST registration schemes. Read more about each of these in the blog further.
GST Regular scheme is applicable to regular sized businesses having turnover exceeding Rs.40 lakhs for suppliers of goods and Rs.20 lakhs for service providers. In contrast, the GST composition scheme is applicable to smaller businesses with turnover up to Rs.1.5 crore for goods and Rs.50 lakh for services. GST QRMP scheme is applicable to businesses with turnover less than 5 crores, providing the flexibility of quarterly return filing with monthly payment of taxes.
What is GST Registration?
GST registration is the legal process by which eligible businesses enroll under the GST regime. It allows businesses to pay GST, file GST returns and meet other GST compliances. The registration is granted by the GST Department, under the Ministry of Finance. For this purpose, the applicant business is required to file an online application in GST REG-01 form.
The form seeks details of the concerned entity, its place of business, and the type of business structure. Besides, the applicant also needs to specify the business activity, promoter’s, and authorized signatory details. Once the form is complete, the authorized signatory authenticates its origin using OTP, EVC, or digital signature, and finally submits it on the GST website. It takes around 7 to 14 working days for the grant of GST registration. At the end of the process, the Department allots a GSTIN or GST Identification Number as a confirmation to such registration.
Who Requires GST Registration?
GST Registration is required by businesses supplying goods and services in India. This includes both resident and non-resident businesses. However, the requirement for registration is not universal. It depends on three basic factors, namely:
- Aggregate Annual Turnover
- Type of GST Registration
- Business Activity
Not all businesses are required to obtain GST registration. Each type of GST registration draws a different eligibility criteria for the same. While some may define the eligibility based on turnover threshold, others may make it mandatory for certain categories of businesses. Even these turnover thresholds are not uniform, and change for different types of GST registrations. We’ll discuss the specific GST registration eligibility criteria for different types further in the blog.
What are the Different Types of GST Registration in India?
GST Registration is a process mandated by the GST Act of 2016. However, the Indian Government has amended the Act multiple times to introduce several schemes under it. Each scheme is now classified as a different type of GST registration, with their own specific eligibility criteria and process of enrollment. All the types of GST Registration have been launched with the same objective, that is to bring more and more business under the ambit of the GST regime, without increasing the tax payment or compliance burden and on taxpayers. The different types of GST registration have been explained below.
Regular GST Registration: Eligibility and Compliances
The regular GST registration is the initial type of GST registration introduced by the GST Act. However, many changes have been made in its regulations over time. Let’s discuss the eligibility first. For Regular GST registration, we can categorise businesses into two types – firstly, the businesses for which eligibility is determined through aggregate annual turnover, and secondly, the businesses for which GST registration is mandatory unconditionally. Before elaborating further, let’s understand what is the meaning of aggregate annual turnover, the basis of eligibility for Regular GST Registration.
Aggregate Annual Turnover: Aggregate Annual Turnover is the total value of outward and inward supplies made by a business in a financial year. This includes taxable, tax-exempt, inter-state, and export supplies. However, supplies taxed under the reverse charge mechanism, and non-taxable supplies are exempt from its scope.
Now that the meaning of Aggregate Annual Turnover is clear, let’s determine the eligibility of Regular GST registration. Businesses can opt for regular GST registration if their aggregate annual turnover exceeds Rs.40 lakhs for goods-based business and Rs.20 lakhs for service-based businesses.
These limits have been lowered up to Rs.20 lakhs for goods and Rs.10 lakhs for service-based businesses belonging to hilly and north-eastern states, keeping in mind their limited revenue generating potential and need for formalization under the GST regime. However, these states still have the option to opt for higher limits, if favourable.
Further, certain categories of businesses are exempt from the requirement of exceeding threshold limits for GST registration, indicating the same is mandatory for them under all circumstances. They include:
- E-commerce operators/ aggregators
- Businesses selling on e-commerce platforms
- Casual Taxpayers
- Business non-resident in India
- Importers & Exporters
- Taxpayers under GST Reverse Charge Mechanism
- Taxpayers registered under the older tax regime
- Businesses engaged in Inter-state supplies of goods & services
- Service Providers providing information & online databases services (OIDAR)
Once registered, regular taxpayers can pay their taxes and file their GST returns on a monthly basis. Both processes can be completed online. The taxpayer can select the applicable GSTR form as per their category or resident status. Besides, eligible businesses must also conduct a GST audit of their supplies, if applicable.
Composition GST Registration: Eligibility and Compliances
GST Composition Registration is obtained by taxpayers enrolled under the GST composition scheme. The applicant can opt for it during the GST registration process. Once opted, the taxpayer will be registered as a Composition dealer and will have to comply with the Composition Scheme rules instead of the regular CGST Act. Let’s understand the eligibility criteria for the same.
The eligibility for Composition GST registration is determined on the basis of aggregate annual turnover, calculated by adding the values of all supplies made under the same PAN. Goods-based businesses recording a turnover up to Rs.1.5 crore and service providers recording a turnover up to Rs.50 lakhs are eligible. However, these limits have been lowered up to Rs.75 lakhs for businesses belonging to special category states.
Composition taxpayers receive the flexibility of quarterly tax payments and return filings. Their tax rates are as low as 1% to 6%. However, a few limitations they face include the lack of ITC benefits, prohibition from inter-state sales, and raising tax invoices. The GST Composition registration was introduced with the objective of bringing extremely small businesses under the ambit of the GST regime without increasing the burden on GST compliance on them.
QRMP GST Scheme: Eligibility and Compliancess
Another variation to the GST registration process is the QRMP Scheme. QRMP stands for Quarterly Return Monthly Payment. The objective behind introducing the scheme is to reduce the compliance expenses for low income businesses, without compromising on the Government’s tax earnings. GST QRMP registration is applicable to businesses recording an annual aggregate turnover up to Rs.5 crores in the previous year. Further, it is only meant for taxpayers liable to file GSTR-3B and GSTR-1 returns. These include taxpayers registered under the regular GST scheme, those opted out of Composition GST scheme, and taxpayers seeking new GST registration.
GST QRMP registration can be opted only if the GSTR-3B return in the last tax period has been filed timely, and no returns are further due in the taxpayer’s name. Moreover, while opting for quarterly GSTR-3B/ GSTR-1 filing, the timeline of intimation on the GST portal must be kept in mind. The intimation must be given anytime between the beginning of the preceding quarter’s second month and the end of the current quarter’s first month. Additionally, if the business’s turnover exceeds Rs.5 crores in a particular quarter, it shall not be eligible for filing quarterly returns from the next quarter onwards.
Conclusion
The government has introduced several types of GST registrations with different turnover limits and eligibility criteria to make them as inclusive as possible.The objective is to bring businesses of all sizes and scales under the Indian tax structure to ensure their formalisation and legal existence. Knowing these types and their respective criteria is essential to comply with applicable GST regulations and avoid legal consequences arising due to non-compliance.
