Declaration, Applicability, and Format of GST Non-Enrollment

The process by which a taxpayer indicates their choice not to sign up for the Goods and Services Tax (GST) system is known as GST Non-Enrollment. Businesses that don't meet the required turnover criteria set by the tax authorities are subject to this disclosure. Name, address, GSTIN (if applicable), and a declaration stating the taxpayer's intention not to enrol under the GST regime are commonly included in the format for a GST Non-Enrollment declaration.

The GST is a tax on goods and services bought and used domestically. For the purpose of tax collection, products and services are split into five distinct tax slabs with respective tax rates of 0%, 5%, 12%, 18%, and 28%. The GST does not apply to commodities containing petroleum, alcoholic drinks, or electricity, unlike earlier tax systems like the VAT—instead, the state governments of the various states where these commodities are provided charge separately. Every supplier must register under the GST Act once the combined turnover of goods, services, or both in a financial year surpasses ₹20 Lakh. The introduction of GST has dramatically altered how commerce is conducted. Businesses have to get the GSTIN of their suppliers to ensure a seamless flow of tax benefits. Suppliers had to accurately document business-to-business transactions for receivers to ensure they received the proper input tax credit.

Did You Know? You can submit a declaration of GST non-enrollment in case you are making supplies that are not liable to tax under the Goods and Services Act, 2017!

What Does a GST Non-Enrollment Declaration Mean?

A GST Non-declaration form is a form that is required to be submitted by an entity wherein the entity submits a declaration that it is not required to get itself registered under the Goods and Service Tax Act, 2017. It is customary for a supplier whose supplies are not subject to GST under the GST tax law for any reason to file a statement of GST non-enrollment. It is typically present in situations involving independent contractors, small service providers, employment agreements, contracts with small businesses, freelancing businesses, etc., when their yearly or annual aggregate turnover does not surpass the required registration threshold level.

Applicability of the Declaration of GST Non-enrollment

For various reasons, the declaration of GST non-enrollment is often required from suppliers who are not taxable individuals.

The entity has not reached the required threshold level of aggregate turnover as specified in the Goods and Services Act.
The entity is engaged in the supply of goods or services completely subject to the reverse charge mechanism as specified in the GST Act.
The entity solely makes supplies exempt from GST under the GST Act.

Reasons Why the Recipient Obtains a Declaration of GST Non-enrollment

Here are a few explanations as to why a receiver could need a statement of GST

Non-enrollment:-

Determine whether or not to claim an input tax credit.
To ascertain if the GST TDS/TCS requirements are relevant. For instance, certain online retailers must first withhold tax at the source before transmitting the money owed to the merchants. However, the e-commerce operator won't be required to deduct any tax if the online suppliers are registered under the GST Act.
To protect oneself from any penalties or losses that could be incurred as a result of the supplier's tardy GST payments.

Format for a GST Declaration Non-enrollment

Although the GST law does not provide a standard format for this disclosure, the format below is an example for your reference. It should be noted that this format could change depending on the government or private sector. If a business entity becomes registered later on, they must notify the receiver and get the recipient's GSTIN so they may include it in their invoices and GST filings. The agreement between the supplier and the recipient should also include an indemnity clause to prevent the receiver from suffering a loss due to the supplier's noncompliance, failure, or oversight. On the company entity's letterhead, the following declaration must be printed-

Entity's business letterhead

GST DECLARATION NON-ENROLMENT

Greetings, Sir/Madam

Sub - Declaration of exemption from the Central/State/UT/Integrated Goods and Services Tax Act, 2017's registration requirements

I/We Name of the service provider/business entity hereby declare that I/we are/are not registered under the Goods and Services Tax Act, 2017, for the reason(s) that choose and fill in the appropriate field below.

I/We supply/deal in the following class of products or services. The Goods and Service Tax Act of 2017 exempts some goods and services -describe them.

-I/We fall beneath the Goods and Services Tax Act of 2017's defined taxable threshold for yearly aggregate revenue.

-I/We have not yet completed the Goods and Services Tax Act, 2017 registration process.

By signing this document, I/We also reaffirm that we agree to supply the necessary paperwork and information to register for the GST at any point in the financial year.

We ask that you use this message to declare that we are exempt from the 2017 Goods and Service Tax Act's registration requirement.

I/We thus further affirm that __________ Name of service receiver shall not be responsible for any damage incurred by me/us as a result of any GST registration failure.

Authorised signatory's signature

The authorised signer's name is

Name of Company -

Date -

Stamp or seal of the company -

Penalty for Late Registration Under GST

Although there is no specific provision for a penalty for late registration under the GST Act by a taxable person or supplier, the penalty will be assessed against that person or supplier if the GST authorities discover that person or supplier is applying for GST registration after the deadline- 10,000 or the whole amount of tax the taxable person or supplier avoided, whichever is higher. Under the GST Act, there is a fine for failing to register, or if registration is required, a fine may be imposed for failing to apply. According to the CGST Act, if a person or supplier exceeds the threshold limit for registration under GST and becomes taxable or is required by law to register, the penalty is equal to the penalty for non-registration under GST shall not exceed ten thousand rupees or 10% of the tax due from such person or supplier, whichever is higher.

Why Should You Register for GST in a Timely Manner?

The following are the consequences if the entity does not register the GST promptly -

Retention of goods and vehicles
Confiscation of goods and automobiles
The individual or supplier is ineligible to receive the input tax credit
The input tax credit cannot be transferred by the person or provider
The higher the fine of ten thousand or the whole tax imposed.

Conclusion

An entity must submit a GST Non-declaration form that declares it doesn’t need to register under the Goods and Service Tax Act of 2017. In the context of registration, the GST declaration form is only a letter of declaration granting authority to act in tax-related matters to the signatory. The GST law does not specify a letter of authorisation format, although one may get one from several websites. It is necessary to upload the declaration for the appointment of the authorised signatory in PDF or JPG format. The GSTIN will only accept files up to 1MB in size. A firm registered for the GST system will get a GST Certificate from the authorities. firms with an annual income of at least ₹20 lacks, and a few unique firms must register under this scheme. The GST registration certificate is issued. You may get the GST Certificate from the official GST Portal if you are a registered taxpayer under this system.

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GST Non-Enrollment: Declaration, Applicability, and Format