Registering for GST
Let’s start with the basics. The GST Act prescribes turnover thresholds for mandatory registration. For goods, registration is required once annual turnover exceeds ₹40 lakh, and for services the threshold is ₹20 lakh (though lower thresholds may apply to special category states).
However, even if your turnover is below these thresholds, registration is mandatory in specific situations. Under Section 24 of the CGST Act, GST registration is mandatory for specific categories of businesses and individuals, regardless of turnover.
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These include those involved in the inter-state taxable supply of goods, the reverse charge mechanism (RCM), and casual taxable persons.
Gautam Khattar, principal at Price Waterhouse & Co LLP, said, “For inter-state supplies, there is no turnover exemption for goods. You must register from day one.”
Under RCM, the tax liability shifts from the supplier to the recipient. In such cases, the recipient must register for and pay GST on the services received, regardless of turnover.
A casual taxable person is someone who occasionally undertakes taxable transactions in a state or union territory where they do not have a fixed place of business. Imagine a designer from Gujarat sets up a stall at a trade fair in Karnataka for a few days. This makes them a casual taxable person, necessitating GST registration.
Selling online? You must register
One of the most misunderstood areas is GST for e-commerce sellers. Mahesh Jaising, indirect tax leader at Deloitte India, said any business selling on e-commerce platforms such as Amazon or Flipkart must register for GST, regardless of turnover.
Importantly, individual service providers such as tutors or beauticians who offer their services online may qualify for an exemption if their turnover is below ₹20 lakh and they are not involved in inter-state supplies. But chartered accountant Deepak Rao said, “Once you sell outside your state or opt into an e-commerce aggregator, the exemption may no longer apply.”
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In the case of dropshipping, the seller accepts customer orders but does not stock the products. Instead, when a customer places an order, the seller buys the goods from a third party, typically a manufacturer or wholesaler, who then ships the product directly to the customer. While the seller never handles the product physically, he is still deemed to be supplying the goods and earning a margin on the transaction.
According to Mahesh Jaising, partner and leader, indirect tax, Deloitte India, dropshippers effectively provide taxable supplies by buying and selling goods. As such, GST registration is required. However, if a dropshipper only supplies goods within his state and does not fall under any other category that triggers mandatory registration (such as e-commerce), the ₹40 lakh registration threshold for goods will apply.
How to register for GST
Owing to inconsistencies in verification procedures, the Central Board of Indirect Taxes and Customs (CBIC) issued new instructions in April 2025 to eliminate unnecessary documentation and reduce delays caused by subjective practices adopted by some GST officers. “The recent CBIC instructions are a welcome move to reduce red tape and ensure timely registration for genuine businesses,” Agarwal said.
GST registration is entirely digital and can be done through Form GST REG-01 on the GST portal. Agarwal said the application has two parts. In Part A, the applicant must submit their PAN, mobile number, and email for verification. Once validated, an Application Reference Number (ARN) is generated. Part B involves submitting business details and uploading the necessary documents.
For sole proprietors, a PAN card, Aadhaar, and address proof of the place of business (such as an electricity bill or rent agreement) suffice. Limited liability partnerships (LLPs) and companies need more documents such as a certificate of incorporation, a board resolution authorising the signatory, and details of all partners or directors.
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According to Jaising, a digital signature certificate (DSC) from certifying authorities is mandatory for companies and LLPs. This is an electronic signature used to verify the identity of the person signing an electronic document and to ensure the authenticity of digital documents.
After submitting documents, the registration process may include Aadhaar-based authentication, biometric authentication in some cases, or physical site verification, depending on the risk assessment. “Ideally, registration should be granted within seven working days. However, where physical or biometric checks are triggered, the timeline can extend up to 30 days,” Jaising said.
When to file returns & pay GST
Once registered, the obligation to file GST returns and pay tax starts from the effective date of registration. “The first return must cover the period from when the business became liable to register to the date the registration was granted,” Agarwal said.
Subsequent filings depend on the type of business and its turnover. Small businesses (turnover up to ₹5 crore) can opt for quarterly returns under the quarterly returns with monthly payments (QRMP) scheme. This is an optional compliance scheme under GST, introduced by the government to ease the filing burden on taxpayers.
Standard monthly returns include GSTR-1, which captures outward supplies and is due by the 11th of the following month, and GSTR-3B, a summary return that includes tax payments and is due by the 20th of the following month.
An easier alternative for small businesses
For small businesses, there’s an alternative scheme under GST that eases compliance and lowers tax, known as the composition scheme. Under this scheme, businesses pay tax at flat rates of 1-6%, but cannot claim input tax credit (ITC) – the GST paid on expenses related to one’s own business that can be offset against the GST liability.
Goods manufacturers with a turnover up to ₹1.5 crore and service providers with a turnover up to ₹50 lakh can choose the composition scheme. The flat tax under the composition scheme is 6% for services businesses, 1% for goods vendors and 5% for restaurants.
Vijaykumar Puri, partner at VPRP & Co LLP, chartered accountants, said businesses that provide inter-state supplies and supply e-commerce operators are ineligible for this scheme.
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Even without ITC, the lower rates under the composition scheme reduce the net GST liability of small businesses with few business expenses, especially service providers. The composition scheme also makes compliance easier as the business can pay GST and file returns quarterly.
You can choose the composition scheme when registering for GST by filing form GST-CMP-02. If you are a regular GST taxpayer and wish to switch, you should fill the form on the GST portal in March, before the next financial year starts.
Penalties are significant
Failing to file GST returns on time can result in significant financial penalties. The interest on delayed tax is 18% a year.
According to Jaising, businesses that delay filing their GST returns are also liable to pay a late fee of ₹200 a day. However, this fee is capped at ₹10,000 per return.
The final word
GST registration is not just a statutory formality, it’s a foundational step that allows businesses to operate legally, claim input tax credit, and expand operations across states or digital platforms.
Whether you’re a startup, an established company, or a solo entrepreneur testing the waters online, knowing when and how to register can save you from regulatory hassles and unlock new business opportunities.
