In this article we will discuss important points in respect of registration as Regular Dealer either as Obligatory or as Voluntary Registration.
Point 1 : When does the liability to pay GST commenced after registration of GST?
Liability to pay GST will be started from the date as per the following:
In case of Obligatory Registration: Where application for registration under GST filed within 30 days from the date on which the person becomes liable to get registration under GST, liability to pay GST commences from such date on which he becomes liable to get registration under GST.
However, where application for registration under GST filed after expiry of 30 days from the date on which the person becomes liable to get registration under GST, liability to pay GST commences from the same date on which the person becomes liable to get registration under GST. However, he will be liable to pay interest, penalty and other proceedings where he applied for registration post expiry of 30 days.
In case of Voluntary Registration: The date from which such registration is sought.
What are the issues/problems if a person does not apply within 30 days from the date on which the person becomes liable to get registration under GST?
There is a major benefitting provision being provided in GST law for those who apply for registration within 30 days of their commencement of liability. So, if a person applies after 30 days, he will lose those benefits. This benefit is of Input Tax Credits which is allowed on Stock on hand as on the date of commencement of liability.
Following is the replica of Section 18(1)(a) of the CGST Act 2017:
“A person who has applied for registration under this Act within thirty days from the date on which he becomes liable to registration and has been granted such registration shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock on the day immediately preceding the date from which he becomes liable to pay tax under the provisions of this Act”.
In simple words, it is provided that INPUT TAX CREDITS on STOCK-IN-HAND as on the OPENING OF date on which the person becomes liable to get registration under GST shall be allowed to only those persons who has applied for registration under GST within 30 days from the date on which he becomes liable to get registration under GST.
Input tax credits means GST tax paid on inputs (purchases). If a person applies for registration within specified period, he will be allowed to set-off GST liability on sale of goods or services or both from the Input Tax Credits paid on his inputs lying in stock as on the date of commencement of liability. In this way, a person can avoid his costs and get profits from products even having low margins.
On the contrary, if he applies for registration after specified period, he will not be allowed to avail input tax credits on his stock in hand on the date of application.
(To know the procedure to avail these benefits, please refer our another article :
What is the procedure to claim input tax credits on stock at the time of registration under GST)
Other than above benefit, there is a penalty clause is provided in case person fails to obtain registration but liable to be registered under GST law:
Section 122(1) provides for penalty of Rs 10000/- in case failure to obtain registration under GST.
Refer our other articles :-
When do I need to get registration under GST in India
Threshold for Registration under GST enhanced to Rs 40 Lakh w.e.f. 01.04.2019
