The indirect tax system in India has been unified by the Goods and Services Tax (GST), making it easier to conduct business and promoting transparency. Nevertheless, one question many businesses with more than one branch, division, or business vertical in the same state often consider is whether they can have more than one GST registration in the same state.
This blog provides a comprehensive overview of multiple GST registrations within the same state, including the legal basis, eligibility, process, and impact on business.
Concept of GST Registration
GST registration is a distinct identification procedure that allows a business to collect and remit GST on the provision of commodities or services. All businesses whose annual turnover surpasses the set limit on the amount of turnover for which registration is required under GST.
To the majority of Indian states, the threshold limit is Rs. 40 lakh in suppliers of goods and Rs. 20 lakh in suppliers of services. The limit in the case of special category states is Rs. 20 lakh in the case of goods and Rs. 10 lakh in the case of services.
A Business once registered is assigned a GSTIN. As a rule, one GST registration is issued to a business on a state or union territory level. The same entity can, however, request more than one GST registration in the same state under certain circumstances.
Legal Provision under GST Law
Section 25(2) of the Central Goods and Services Tax (CGST) Act, 2017 regulates the idea of multiple GST registrations in the same state. It states:
A person who is in a State or a Union Territory and is in more than one place of business may be issued with a separate registration of the place of business, subject to the conditions that may be prescribed.
It implies that should the business have separate managed units or verticals in a state, it is allowed to receive over one of the GST registrations as long as it satisfies the prescribed requirements under the Act and other related rules.
Meaning of ‘Distinct Persons’
Section 25(4) and (5) of the CGST Act hold that in every registration the same legal entity receives, it is regarded as a separate person. This means that all GST registration in the same state is regarded as distinct taxable entities.
Consequently, this means that supplies or transactions between them, even where the separated units are located in the same state, are considered taxable supplies under the GST and GST should be charged.
Conditions for Multiple GST Registrations
Multiple registrations are not easily obtained by businesses; they must meet the requirements stipulated in Rule 11 of the CGST Rules, 2017.
A company may make several applications at the same state when:
- It has numerous locations of business, that is, physically separate business locations.
- Every location of business has its own books of accounts and records.
- Independent GST filings are issued with separate tax invoices for each registered unit.
- All registrations under the same PAN are expected to pay tax under the same scheme, i.e., the regular scheme or the composition scheme (cannot be mixed).
Procedure for Obtaining Multiple GST Registrations in the Same State
The request to register further GST within the same state is done online by the GST portal. The steps include:
- Enter the GST portal with the existing credentials.
- Choosing an alternative Application for New Registration under the same PAN.
- Offering information about the new location of the business, business division, and type of operations.
- Posting relevant documents like evidence of address, authorization form and photographs.
- Making the application and waiting to be verified by the jurisdictional officer.
Upon this approval, an additional business location with a new GSTIN is issued, although the PAN is the same.
Advantages of Multiple GST Registrations within the Same State
There are various benefits to obtaining individual GST registrations in a similar state for different business verticals or branches.
- First, it provides superior administrative control and ease of compliance in case of large organizations operating in numerous lines of business. Individual divisions are allowed to maintain their own books and file their returns separately.
- Secondly, it assists in clearly segregating input tax credit (ITC) from tax liability. This segregation eliminates confusion and complications with accounting.
- Thirdly, it promotes operational efficiency, as firms can operate each department independently without being interdependent with other sections on GST compliance.
- Finally, it allows businesses to avoid the time and mistakes that could have occurred if all operations were conducted under a single GSTIN, particularly when the operation is large.
Consequences of Multiple Registrations
As flexible as several registrations are, they are also subject to compliance obligations. After separate registrations are made, the individual units are considered individual taxable persons under the GST law.
Thus, a supply of goods or services between registered units within the same state is considered a taxable supply, despite the fact that it is in the same legal entity. The supplying unit should collect the GST and issue a tax invoice and the receiving unit is entitled to input tax credit upon qualifying.
This form of treatment guarantees transparency; however, the amount of compliance and documentation also grows. Before considering multiple registrations, businesses should do well to review the business benefits of conducting operations against the consequent increased compliance burden.
Conclusion
Multiple GST registrations in the same state are available for companies with several separate units, branches, or divisions that operate under a single company. It is more convenient and transparent to the administration, but it also adds extra burdens of compliance and record-keeping.
The businesses need to scrutinise the structure, the number of transactions, and the possibility of keeping separate books of account before they apply for further registrations.
Following the requirements of Section 25(2) of the CGST Act, 2017, and Rule 11 of the CGST Rules, 2017, any business is able to manage its operations efficiently and at the same time be in full compliance with the GST law.
