GST Registration - What is GST and its types?

Introduction

July 1, 2017, marked a watershed moment in India's economic history. With the stroke of a midnight gong, the complex web of Excise Duty, VAT, Service Tax, and Octroi was swept away, replaced by a single, unified tax structure: the Goods and Services Tax (GST).

For a business owner, obtaining a GST registration is akin to getting a passport for your business. It gives you a legal identity, allows you to collect tax from customers, and most importantly, lets you claim credit for the taxes you pay on purchases. Without this 15-digit GSTIN, you are essentially invisible in the formal economy.

However, nearly eight years later, confusion persists. Should a freelancer register? What is the difference between IGST and SGST? Is the limit ₹20 Lakhs or ₹40 Lakhs? In this guide, we will strip down the jargon and explain the fundamental types of GST, the latest registration thresholds for 2025, and the step-by-step process to get your business compliant.

Table of Contents

1. What is GST?
2. The 4 Types of GST (CGST, SGST, IGST, UTGST)
3. Who Needs to Register? (Threshold Limits 2025)
4. Mandatory Registration (No Threshold Rule)
5. Documents Required for Registration
6. Regular Scheme vs. Composition Scheme
7. Step-by-Step Online Registration Process
8. Biometric Authentication: The New 2025 Norm
9. Penalty for Non-Registration
10. FAQs

What is GST?

GST is a destination-based tax on the consumption of goods and services.

Unlike the old system, where tax was levied at the point of manufacture (Excise) or sale (VAT), GST is levied at every stage of the supply chain, but only on the value added.

The ultimate burden falls on the final consumer. The business owner acts merely as a pass-through entity, collecting tax from the buyer and depositing it with the government after deducting the tax paid on their own purchases (Input Tax Credit).

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The 4 Types of GST (CGST, SGST, IGST, UTGST)

Since India is a federal country, both the Centre and the States have the power to tax. To ensure both get their share, GST is split into components.

1. CGST (Central GST) + SGST (State GST)

• Applicability: Intra-State Supply (Selling within the same state).

• Mechanism: If a dealer in Mumbai sells to a buyer in Pune (both Maharashtra), a tax of 18% is split equally:

  1. 9% goes to the Centre (CGST).
  2. 9% goes to Maharashtra Govt (SGST).

2. IGST (Integrated GST)

• Applicability: Inter-State Supply (Selling to a different state).
• Mechanism: If a dealer in Mumbai sells to a buyer in Bangalore, a single tax of 18% (IGST) is collected by the Centre. The Centre then transfers the state's share to the destination state (Karnataka).

3. UTGST (Union Territory GST)

• Applicability: Replaces SGST in Union Territories without a legislature (like Chandigarh, Ladakh, Lakshadweep).

Also read: GST simplified: Breakdown of CGST, SGST, IGST, & UGST

Who Needs to Register? (Threshold Limits 2025)

The government exempts small businesses from the hassle of registration. You are liable to register only if your "Aggregate Turnover" exceeds a specific limit.

For Goods Suppliers:

• Normal Limit: ₹40 Lakhs.
• Special Category States: ₹20 Lakhs (e.g., Arunachal, Manipur, Meghalaya, Sikkim, Uttarakhand).

For Service Providers:

• Normal Limit: ₹20 Lakhs.
• Special Category States: ₹10 Lakhs (e.g., Manipur, Mizoram, Nagaland, Tripura).

Note: If you deal in both goods and services, the lower limit of ₹20 Lakhs applies.

Mandatory Registration (No Threshold Rule)

Section 24 of the CGST Act lists specific cases where you must register immediately, even if your turnover is just ₹1.

1. Inter-State Supply of Goods: If you sell goods from one state to another (e.g., sending a parcel from Delhi to Haryana), registration is mandatory. (Service providers get an exemption up to ₹20L here).
2. Casual Taxable Persons: If you set up a temporary stall in an exhibition in another state.
3. Reverse Charge Mechanism (RCM): If you are liable to pay tax under RCM.
4. E-Commerce Sellers: If you sell goods through Amazon, Flipkart, or Meesho, you must register (unless you are a pure service provider below ₹20L).
5. TDS Deductors & TCS Collectors.

Documents Required for Registration

The process is paperless. You need soft copies of:

1. PAN Card of the Business/Proprietor.

2. Aadhaar Card of the Proprietor/Partners/Directors.

3. Proof of Business Address:

   1. Owned: Property Tax Receipt or Electricity Bill.
   2. Rented: Rent Agreement + Electricity Bill + NOC from Owner.

4. Bank Proof: Cancelled Cheque or Bank Statement showing the name of the entity.

5. Authorization Letter: For Partners or Authorized Signatories.

Regular Scheme vs. Composition Scheme

When registering, you have a choice.

Feature

Regular Scheme

Composition Scheme

Eligibility

All businesses

Turnover up to ₹1.5 Cr (Goods)

Tax Rate

Standard Rates (5%, 12%, 18%)

Flat Rate (1% Traders, 5% Restaurants)

Input Tax Credit

Available

Not Available

Inter-State Sale

Allowed

Prohibited

Collection

Can collect tax from customers

Cannot collect tax

Verdict: Choose Composition only if you sell directly to consumers (B2C) and have very few purchases. If you are B2B, Regular is mandatory for your buyers to get credit.

Step-by-Step Online Registration Process

1. Generate TRN: Go to gst.gov.in > Services > Registration > New Registration. Enter PAN and Mobile/Email. Verify OTP. You get a Temporary Reference Number (TRN).
2. Fill Part B: Log in using TRN. Fill the application form (10 tabs) with business details, promoter details, and upload documents.
3. Aadhaar Authentication: A link is sent to the Aadhaar-linked mobile/email of the promoter. Click and verify. This is critical for fast approval.
4. ARN Generation: Once submitted, you get an Application Reference Number (ARN).
5. Approval: The officer verifies the application. If clean, the Registration Certificate (RC) in Form GST REG-06 is issued within 7 working days.

Biometric Authentication: The New 2025 Norm

To curb fake registrations, the GST Council has rolled out Biometric-Based Aadhaar Authentication in high-risk cases.

• If your profile is flagged as "Risky" by the system, you may be asked to visit a GST Suvidha Kendra physically for biometric verification before your registration is approved.

Penalty for Non-Registration

If you are liable to register but fail to do so:

• Penalty: 100% of the tax due or ₹10,000, whichever is higher.
• Confiscation: Your goods can be detained or confiscated if caught in transit without a GST bill.
• No ITC: You lose the right to claim credit on all your purchases during the unregistered period.