Business is where you want to continuously expand your boundaries. The expansion can be in same business vertical or a different one. Expansion of business and taxes comes hand to hand. In these cases, you might have to get GST registration again. Here, we are addressing the frequently asked question “Do I need a separate GST registration for branch?”
Establishment of New Branch:
By using word branch, we consider having a physical business place for same business in India. Do not confuse this with supply in other States. There is no need for registration if you do not have a physical place of business in other State. In said case, the Integrated GST is workable.
The need of registration depends on the State in question. Let’s consider these scenarios for details.
1. GST Registration for Branches in the Same State:
Ideally, there is no need for the separate registration. You do not need to follow the whole process of registration for an individual branch. But, the details of the branch must be added in the registration certificate of the main office.
How to change Registration Certificate?
An application to modify GST registration certificate is made to add branch address. The change will fall under core field amendments, the window for which is open now. The application will be made in form GST REG-14. Know here how to apply for core field amendments.
For the purpose of addition of branch details, there is no addition documentary proof required to be submitted. However, the said modification is subject to verification and approval of the department. Upon approval, the details will be updated in the system accordingly.
2. GST Registration for Branches in Other State(s):
As you see the structure of a GST Number, the first two digits represent the State code, where GST has been obtained. Therefore, as the State changes, a fresh registration is sought.
Here is how you obtain new registration:
Obtaining new registration is as similar to the first registration. The application is made in GST REG-01 on the GSTN portal, acknowledgement of which is generated in Form GST REG-02. Upon verification, the GSTN is allotted to the applicant in Form GST REG-06. Having same PAN in the allotted number, the State code will be changed in the new GSTIN.
New Business Vertical:
Obtaining GST registration for a business vertical is voluntary and upon the discretion of a person. Therefore, it is up to you whether you need the separate registration or not. The business verticals are identified separately primarily because of different level of risks and returns. Therefore, in my opinion, a separate registration should be preferred for the easy administration of business and its financial data.
Subject to having different business vertical as defined below, you can obtain separate registrations in the same State with the following conditions:
(a) If you have obtained the registration as composition dealer under section 9, you may not register as a normal dealer under section 10 of Act;
(b) In case of supplies made by one to another business vertical, said vertical shall pay tax and also issue a tax invoice for such supply.
Let’s understand if your new business field can be termed as business vertical. Business vertical is defined under Section 2(18) of the Central Goods and Services (CGST) Act. It defines business vertical as a distinguishable component of an enterprise that is engaged in the supply of individual goods or services or a group of related goods or services which is subject to risks and returns that are different from those of the other business verticals.
Here, to determine whether goods or services are related, the following factors are considered:
(a) the nature of the goods or services;
(b) the nature of the production processes;
(c) the type or class of customers for the goods or services;
(d) the methods used to distribute the goods or supply of services; and
(e) the nature of the regulatory environment (wherever applicable), including banking, insurance, or public utilities;
If you identify it as business vertical, you may apply for new GST registration as per the conditions. If your business vertical is established in another State where prior registration is obtained, there will be no question to identify it as business vertical. A fresh registration will be compulsory for it being established in another State.
Registration for New Business vertical:
The new registration will again be similar to the first registration. Upon registration of business vertical is the same State, new GST Identification Number (GSTIN) will be allotted with a change in entity code. The 13th digit of GSTIN i.e. the number followed by PAN is the entity code, which represents the number of registration within a State.
PAN-based GST Search:
All the GST registrations obtained under same PAN can be checked on the GST website. You simply need to put your Permanent Account Number in the search field and the list of the registrations will open. Here is the link for PAN-based GST search.
If you are already having unregistered multiple branches or business verticals, within or outside State, the applicability of GST will be decided based on the total turnover of all. As you register the business in the first place and plan for its growth, you need to understand the need of being compliant. Being compliant in GST is not only mandatory but necessary for business growth in long term. This also applies to any other regulation for your business.
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