Wednesday, May 16, 2018

GST registration in multiple states of India

If you are a service provider providing services in more than one state, GST might bring along some problems for you. The new set of rules under GST makes it troublesome for providers that have operations in more than 1 state.

If you are a service provider in more than one state, and I believe, the majority would have operations in multiple states; it would be hugely different under GST.

Why?

Because
  • Service providers now have to grapple with a completely new set of rules.
  • Many of them are going to be assessed in several states, 
  • Several of them would have to obtain registration in new states.


When does a service provider need to look at a multi-state registration?

It is only when you have operations in a particular state, which is a place of business or office that you have to register in that state.

For example, you are a Ghaziabad based service provider who seldom provides services in Delhi. Then you don’t need to obtain registration in Delhi.

However, if you have an office in Delhi apart from Ghaziabad, then it becomes mandatory for you to obtain registration in Delhi as well as Ghaziabad.

When you have this kind of setup with more than one state of operation

·       you are required to obtain multiple registrations,

·       you have to do the compliance of each of those registrations,

·       the invoicing has to be organized according to that state and

·        the input tax credit also becomes state-centric


Continuing with the above example, in case of multiple state operations, the person would be required to obtain registration in every state where he has an office, GST compliances for every state would have to be complied with individually, invoices raised from every office would have to be organized according to the respective state. And most importantly, input tax credit on input services would accrue the state where such services are received.

In the past, even if you are operating in 20 states, you could have obtained just one registration, which is for the place where you are headquartered. Now you have to break down that tax into relevant states and pay that to the relevant state.

This is the reason that for multiple state service providers, it is a mixed bag at least for the initial one-two years. It is also going to entail significantly high compliances and chances are you will have to deal with problems that you have never dealt with before.

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