Transitioning under the GST Regime – From a Regular Dealer to the Composition Scheme

The GST regime calls for registration – that is the first step in transitioning towards a single unified tax system in India. But first we must understand the threshold limits for liability under the GST regime – are you aware that these limits are different for different states? Below is the aggregate turnover explained for the country –

• INR 10 Lakhs (aggregate turnover) – for Special category states such as Arunachal Pradesh, Assam,  Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand
• INR 20 Lakhs – for the rest of the country

Existing dealers in the country may be currently registered under the VAT or CENVAT (Excise or Service Tax) and they need to also register under the GST. Keep in mind that the registration must be done afresh and cannot be carried over from the existing registration. Nonetheless, the registration is done keeping in mind the aggregate turnover of the entire country and not just a particular state, when taking into account a business.

This means that a business F&M Clothing (having a PAN that will applicable to all its units) manufactures and sells clothes in Mumbai, Maharashtra has units located in Karnataka (having an aggregate turnover of INR 20 Lakhs), Delhi (having an aggregate turnover of INR 10 Lakhs)and Tamil Nadu (having an aggregate turnover of INR 15 Lakhs). Therefore, a total aggregate turnover of all three units will be taken into account amounting to INR 45 Lakhs for the purpose of registration under the GST.

Who can Register?

The persons eligible to register under the GST regime are the following, not taking into account what their turnover may be –

• Taxable person carrying on interstate supply
• Casual and non-resident taxable persons
• Businesses liable to pay tax under reverse charge
• Agents supplying on behalf of a taxable person
• Input service distributor
• Any Sellers on e-commerce platforms
• Any and all e-commerce operators
• Personsliving outside India supplying information online and database access or retrieval services to an unregistered person in India
• Aggregator supplying services under their brand names
• TDS deductors

Dealers Registered under the Central or State Tax

Dealers registered under the central or state tax under the existing regime are required to have the following details – PAN verified by the GST portal and a mobile number and email ID verified on the basis of an OTP. Once enrolled and upon the completion of the verification process, these dealers will be given a certificate of registration under Form GST REG-25. Even if a dealer has requested several registrations under a single PAN, he will only be granted a single provisional registration. In case a centralized registration is requested, the dealer will be granted the single provisional registration in the state or union territory where he was previously registered. Form GST REG-24 must be submitted to the GST portal within 3 months by the dealer, along with all requisite documents as necessary. Form GST REG-6 can be used to provide additional information in case the information so furnished is not found satisfactory. Additionally, the dealer will be issued a show cause notice by way of Form GST REG-27 in case of unsatisfactory information and will be given an opportunity to a hearing. In case these options are not successfully executed, then the registration will stand cancelled by issuing an order to the dealer by way of Form GST REG-26.  

It is pertinent to note that a registered dealer may cancel his provisional registration during the transition by way of Form GST REG-28.