In India, the Goods and Services Tax (GST) is an extensive indirect tax structure that has substituted various state and central taxes. GST aims to simplify the taxation process and bring uniformity across the country. However, when it comes to interstate supply of goods or services — that is, when a business sells products or provides services from one state to another — the rules are a bit different.
One of the most important rules under the GST law is mandatory registration for businesses involved in interstate supply. In this article, we’ll explain what interstate supply means, when GST registration becomes compulsory, the registration process, the documents required, and the benefits of timely registration.
What is Interstate Supply under GST?
Interstate supply means supplying goods or services from one state or union territory to another. For example, if you have a business in Delhi and sell products to a customer in Mumbai, it is an interstate supply.
Under GST, interstate transactions attract Integrated GST (IGST), which is different from intrastate transactions (sales within the same state), which involve Central GST (CGST) and State GST (SGST).
Who Must Register for GST in Interstate Supply?
According to Section 24 of the CGST Act, any person making an interstate taxable supply of goods or services must register under GST, regardless of their turnover.
This means:
- Even if your turnover is below the threshold limit of ₹40 lakhs (or ₹20 lakhs/₹10 lakhs for special category states), if you supply goods or services outside your state, you must take GST registration.
- This rule is applicable to all types of businesses, such as manufacturers, traders, service providers, e-commerce sellers, or freelancers, involved in interstate supply.
Exceptions to Mandatory Registration
There are a few exceptions where GST registration is not mandatory for interstate supply:
- Service providers with turnover below threshold: After amendments in 2019, if you only provide services (not goods) and your turnover is below the threshold limit (₹20 lakhs/₹10 lakhs), you are not required to register, even for interstate services.
- Job workers: If you are a job worker providing interstate services to a registered principal, you may not require registration.
However, these exceptions can be complex, so it’s always best to consult a GST expert if you are unsure.
Why is GST Registration for Interstate Supply Important?
Registering for GST if you supply interstate has many benefits and is necessary to:
- Avoid penalties: Non-registration can attract heavy fines, starting at ₹10,000 or 10% of the tax due (whichever is higher).
- Collect IGST legally: Only registered businesses can collect IGST on interstate sales.
- Avail input tax credit: Registered businesses can claim credit on GST paid on purchases, reducing overall tax liability.
- Expand market reach: With GST registration, you can sell products or services nationwide without worrying about state tax complications…!
Documents Required for GST Registration
To register for GST for interstate supply, you need to submit these documents:
- PAN card of business owner/firm
- Aadhaar card of the applicant
- Proof of business address (rent agreement, electricity bill, etc.)
- Passport-size photograph
- Bank account details. (canceled cheque or bank statement)
- Business incorporation certificate or partnership deed. (for companies/LLPs/partnerships)
- Digital signature (for companies/LLPs)
How to Register for GST for Interstate Supply?
Follow these steps to register:
- Visit the GST portal at gst.gov.in.
- Click on “Register Now” under the “Taxpayers (Normal/TDS/TCS)” section.
- Fill in Part A of the form with basic details like name, PAN, mobile number, and email ID!
- Once you receive the OTP verification, proceed to Part B, where you upload documents and provide detailed business information.
- After successfully submission of registration, you will receive an Application Reference Number (ARN) for tracking.
- The GST officer will examine the application and may ask for additional documents if required.
- Upon successful verification, you will receive your GSTIN (GST Identification Number) and certificate within 7–10 working days…!
Penalty for Not Registering
If you make interstate supplies without GST registration, you may face:
- A penalty of 10% of the tax amount due or ₹10,000, whichever is higher.
- In case of intentional tax evasion, the penalty can be 100% of the tax due.
Conclusion
GST registration for interstate supply is mandatory for businesses supplying goods across state borders, regardless of turnover. Proper registration helps you comply with the law, expand your business legally across India, and benefit from input tax credits. If you are planning to sell your products or services outside your state, make sure you register under GST at the earliest to run your business smoothly and avoid penalties.
