FAQs on Goods & Services Tax (GST)
Frequently asked questions on GST Registration, ITC, Composition Scheme, and Compliance
Basics of GST & GST Registration
Goods and Services Tax (GST) is an indirect tax levied on the supply of goods and services in India. It replaced multiple indirect taxes such as VAT, Service Tax, Excise Duty, and others, creating a unified tax system.
There are four types of GST:
- CGST (Central GST): Collected by the Central Government.
- SGST (State GST): Collected by the State Government.
- IGST (Integrated GST): Levied on interstate transactions and imports.
- UTGST (Union Territory GST): Applicable in Union Territories without a legislature.
GST registration is mandatory for:
- Businesses whose turnover exceeds the prescribed threshold limit.
- Interstate suppliers of goods (subject to applicable rules).
- E-commerce operators and certain sellers through e-commerce platforms.
- Casual taxable persons and non-resident taxable persons.
- Persons liable to pay tax under the reverse charge mechanism.
- Other persons as specified under the GST law.
Generally:
- Goods: Aggregate turnover exceeding ₹40 lakh (₹20 lakh in certain special category states).
- Services: Aggregate turnover exceeding ₹20 lakh (₹10 lakh in certain special category states).
Yes. Businesses below the prescribed turnover limit can opt for voluntary GST registration if they wish to avail themselves of input tax credit and expand their business operations.
Some key benefits include:
- Legal recognition as a registered supplier.
- Ability to collect GST from customers.
- Eligibility to claim Input Tax Credit (ITC).
- Easier interstate business operations where applicable.
- Enhanced business credibility.
Commonly required documents include:
- PAN of the applicant/business.
- Aadhaar card.
- Proof of business registration/incorporation.
- Identity and address proof of promoters/partners/directors.
- Business address proof.
- Bank account details.
- Passport-size photograph(s).
- Digital Signature Certificate (DSC), where applicable.
GST registration can be completed online by:
- Visiting the GST portal.
- Filling out the GST registration application.
- Uploading the required documents.
- Completing Aadhaar authentication or verification, where applicable.
- Receiving the GST Identification Number (GSTIN) upon approval.
A GST Identification Number (GSTIN) is a unique 15-digit registration number assigned to every registered taxpayer under GST.
If the application and documents are complete and no additional clarification is required, registration is generally processed within 7–15 working days, although timelines may vary.
Yes. A business may obtain separate GST registrations for different states or union territories where it operates. Separate registrations may also be available for multiple places of business within a state, subject to GST rules.
Many sellers supplying goods or services through e-commerce platforms are required to obtain GST registration, though eligibility depends on the applicable legal provisions and exemptions.
Yes. GST registration may be cancelled:
- At the request of the taxpayer (subject to eligibility).
- By the tax authorities for specified reasons, such as non-compliance with GST provisions.
A registered taxpayer is generally required to:
- Issue GST-compliant tax invoices.
- File GST returns within the prescribed due dates.
- Maintain proper books of accounts and records.
- Pay GST on time.
- Comply with all applicable GST provisions.
Failure to obtain mandatory GST registration may result in penalties, interest, and other actions under the GST law.
Yes. Changes such as business address, bank account details, or authorized signatory can generally be updated through the GST portal, subject to applicable procedures.
FAQs on Input Tax Credit (ITC) under GST
Input Tax Credit (ITC) means the credit of GST paid on purchases of goods or services used for business purposes. This credit can be used to reduce the GST liability on outward supplies.
Only a registered person under GST can claim Input Tax Credit, provided all conditions prescribed under the GST law are fulfilled.
The main conditions for claiming ITC are:
- The taxpayer must have a valid tax invoice or debit note.
- Goods or services must have been received.
- The supplier must have furnished the invoice details.
- The recipient must file the required GST returns.
- Other conditions under GST law must be satisfied.
No. ITC cannot be claimed on goods or services used for personal consumption.
Yes. ITC can be claimed on capital goods such as machinery, equipment, and other assets used for business purposes, subject to GST rules.
Blocked Credit refers to Input Tax Credit that is not allowed under GST law, even if the expenses are related to business.
Examples include:
- Personal consumption expenses.
- Certain motor vehicles.
- Club membership fees.
- Certain food and beverage expenses.
Generally, ITC on motor vehicles is restricted. However, it is allowed in certain cases such as transportation of goods, passenger transport services, and other specified purposes.
Yes. Exporters can claim ITC on eligible inputs and input services used for exports, subject to GST provisions.
The following documents are generally required:
- Tax Invoice
- Debit Note
- Bill of Entry (for imports)
- Other prescribed documents under GST law
If ITC is wrongly claimed, the taxpayer may have to reverse the credit along with applicable interest and may also face penalties as per GST provisions.
FAQs on Composition Dealer under GST
A Composition Dealer is a taxpayer who opts for the Composition Scheme under GST and pays tax at a fixed lower rate on turnover.
Threshold Limit:
- Manufacturers & Traders of Goods: Turnover up to ₹1.5 crore in a financial year.
- Service Providers: Turnover up to ₹50 lakh in a financial year.
No. A Composition Dealer cannot collect GST separately from customers.
No. Composition Dealers are not eligible to claim ITC.
No. Buyers cannot claim ITC because the Composition Dealer issues a Bill of Supply instead of a tax invoice.
A Composition Dealer issues a Bill of Supply, not a Tax Invoice.
Generally, no. Interstate outward supplies are not permitted under the Composition Scheme.
Yes. A taxpayer may voluntarily opt out or become ineligible and shift to the regular scheme.
Composition taxpayers are required to file CMP-08 quarterly and GSTR-4 annually, as applicable.
Lower tax rates, simplified compliance, fewer returns, and reduced record-keeping requirements.
FAQs on Casual Taxable Person (CTP) under GST
A Casual Taxable Person is someone who occasionally supplies goods or services in a state or union territory where they do not have a fixed place of business.
Yes. A Casual Taxable Person must obtain GST registration before commencing business.
No. Registration is temporary and is generally granted for the period of business activity.
Yes. A Casual Taxable Person is generally required to deposit estimated GST liability in advance.
Yes, subject to the provisions and conditions of the GST Act.
No. Casual Taxable Persons are not eligible for the Composition Scheme.
Yes. The validity may be extended by applying before expiry and paying additional advance tax, if required.
Yes, except in certain notified cases where specific provisions apply.
A Casual Taxable Person (CTP) files the regular GST returns applicable to taxpayers, such as GSTR-1 and GSTR-3B.
A business from Delhi participating in a trade exhibition in Mumbai for a few days without having a permanent office there.
FAQs on Input Service Distributor (ISD) under GST
An ISD is an office that receives invoices for input services and distributes the eligible ITC to its branches having the same PAN.
Businesses with multiple GST registrations that receive common input service invoices at one office.
No. ISD can distribute credit only of input services.
Yes, as per the distribution rules prescribed under GST.
Yes. ISD registration is separate from normal GST registration.
No. An ISD is only meant for distribution of ITC and not for supplying goods or services.
ISD files GSTR-6 every month.
No. A Composition Dealer cannot be registered as an ISD.
To distribute common input service credits accurately among branches.
A company's head office receives an audit fee invoice and distributes the ITC to its branches across different states.
FAQs on Non-Resident Taxable Person (NRTP/NRI) under GST
A person residing outside India who occasionally supplies goods or services in India without a fixed place of business.
Yes. Registration must be obtained before making taxable supplies in India.
No. NRTPs may register using other prescribed documents such as their tax identification number or passport, as applicable.
Yes. An NRTP is generally required to pay estimated tax liability in advance.
No. Registration is temporary and valid for the approved period, with extension available if eligible.
Yes, subject to the provisions and conditions applicable under the GST law.
No. Non-Resident Taxable Persons are not eligible for the Composition Scheme.
NRTPs file the GST returns prescribed for non-resident taxable persons.
No. GST registration is compulsory before commencing taxable supplies in India.
A foreign company participating in a trade fair in India and selling products for a limited period without having a permanent establishment in India.
FAQs on Reverse Charge Mechanism (RCM) under GST
RCM is a system under GST where the recipient of goods or services is liable to pay GST instead of the supplier.
RCM applies when:
- Goods or services are covered under the notified categories by the Government.
- Supplies are received from an unregistered supplier in specified cases.
Under RCM, the recipient of goods or services pays the GST directly to the Government.
Yes. A person required to pay GST under RCM must obtain GST registration, irrespective of turnover limit.
Yes, Input Tax Credit (ITC) can be claimed on GST paid under RCM if the goods or services are used for business purposes and other conditions are fulfilled.
No. RCM on purchases from unregistered suppliers applies only in specific cases notified under GST law.
The time of supply under RCM is determined according to the provisions of GST law for goods and services separately.
No. GST liability under RCM must be paid through the Electronic Cash Ledger. ITC cannot be used for payment of RCM tax.
Taxpayers should maintain proper invoices, payment records, and details of RCM transactions in their books of accounts.
Failure to pay GST under RCM may result in interest, penalties, and other actions as per GST provisions.
FAQs on QRMP under GST
QRMP stands for Quarterly Return Filing and Monthly Payment of Taxes. It allows small taxpayers to file GST returns quarterly and pay taxes monthly.
Taxpayers with annual aggregate turnover up to ₹5 crore are eligible, subject to GST conditions.
Yes, taxpayers must pay GST liability for the first two months of every quarter.
No, IFF is optional and can be used by taxpayers who want to upload B2B invoices monthly.
Yes, eligible taxpayers can opt out of the scheme and switch to monthly return filing.
Disclaimer
The blogs, articles, FAQs, and other content published on this website are provided solely for general informational and educational purposes and do not constitute professional advice. While reasonable efforts are made to ensure the accuracy and timeliness of the information, Dhalkari & Bhawalkar Chartered Accountants makes no representations or warranties regarding its completeness, accuracy, or applicability. Readers should independently verify the information and seek professional advice before acting on it. The Firm shall not be liable for any loss or damage arising from the use of or reliance on the content published on this website.
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