If Voluntary GST Registration Is Taken in One State, Do You Need GST Registration Again When Starting a Business in Another State? (Turnover Below ₹10 Lakh)

If Voluntary GST Registration Is Taken in One State, Do You Need GST Registration Again When Starting a Business in Another State? (Turnover Below ₹10 Lakh)

Business compliance in India is defined by a number of laws and regulations; the GST registration law is one of the most important laws for any newly formed business. Many first-time entrepreneurs voluntarily obtain their GST registration even though they are below the prescribed turnover limits in order to create an image of credibility and to work with customers who have registered as GST. However, one question frequently asked by small business owners and the owners of Start Ups, Freelancers and by Service Providers (whose businesses often contract across state borders) is this: ‘If I have already registered my GST on a voluntary basis in one state, do I need to register again in the other state where I form another branch of my business or where my other place of business has an annual turnover below INR 10Lacs (the minimum threshold for obtaining a Registered GST)? The purpose of this guide is to examine this question, discuss the rationale for the answer and allow you the opportunity to determine whether you must register again for GST in this state. We will provide you with step-by-step information on the process of obtaining your GST registration, including where you must go, what documentation is required, how a professional service to obtain your GST registration can facilitate the process, and what other benefits you may realize by utilizing a professional GST registration service.

Understanding Voluntary GST Registration

GST registration must generally comply with annual turnover thresholds - currently ₹40 lakh for goods and ₹20 lakh for services. Businesses with annual turnover below these limits also have the option of being voluntarily registered for GST at their discretion.

1. Input Tax Credit (ITC) – Businesses are able to claim an ITC on all goods purchased; this will reduce the total GST due.

2. Legal Recognition – A business that has been registered is viewed as having "legal entity" status; thus, enhancing the credibility and establishing trustworthiness to clients and vendors.

3. Ease of Conducting Business to Business (B2B) – When a business is GST registered, it can easily supply its goods and/ or services to another business that is also GST registered.

4. Flexibility to Expand – Since a voluntary registration can continue to exist until the business has increased its annual turnover to exceed the threshold limits of ₹40 lakh for goods or ₹20 lakh for services, a business owner has many options if he chooses to expand his business after voluntarily registering for GST.

Interstate Operations and GST Compliance

India has a federal taxation structure governed by a Goods and Services Tax which is based on where goods are delivered (GST), not where they were shipped from (Destination) or origin state of the goods. Businesses must comply with GST requirements based on where the business is located.

When a business in a different state begins to make taxable sales in this state(s) ("new") from another state("Principal"), there is confusion on whether the new (state) also requires registration under GST Law.

Key points to understand:

• A business registered under GST in a particular state will have its registered address as their Principal Place of Business, and therefore they will be required to register in each and every new state in which they've made taxable sales, and have established a business.

• If a business registered under GST in State A begins making taxable sales into State B, that business will have a place of business in State B.

• GST Law requires that businesses need to register in every state(s) where they establish a place of business and have made taxable sales.

Threshold Limits and Inter-State Supply

When engaging in interstate commerce and multiple commerce across state lines, understanding the turnover threshold is important:

1) Intra-State–this means supplying (goods or services) entirely within one state, where the turnover is below ₹20 lakhs (₹10 lakhs for special category states). If it does not exceed these amounts GST registration would not be required.

2) Inter-State–this means supplying (goods or services) across multiple states where GST will be required regardless of turnover unless otherwise specified for an eligible composition scheme.
This means that even a business voluntarily registering in State A with only ₹10 lakhs of turnover must register with GST prior to commencing business if taxable supplies are being sourced from within State B.

Does GST Registration Need to Be Taken Again in Another State? (Even If Turnover Is Below ₹10 Lakh?)

Yes, you will need to register for GST if you start your business in another state. Even if your sales are less than ₹10 lakhs, there is a rule in the Goods and Services Tax Act that says you must have a GST registration in every state where you carry out business activities, no matter how small your sales are.

You must register in each state where your business operates, even if:

• You already have a voluntary registration,
• You are making taxable supplies from that state.

Your current GST registration is not valid in any other state except the one where you received your registration. If you are starting a business in another state, you will need to apply for a new GST registration (also known as an “Additional Place of Business” or “State-wise GST Registration”, depending on how your business is organized).

Why GST Registration Becomes Mandatory in the New State

Here are a few breakdowns:

1)GST Registration Relies on Your Location

When you operate your business out of Delhi but then decide to open up another business in Maharashtra, you cannot use your GST number (GSTIN) for business purposes in Maharashtra.

2) If You Register Voluntarily, You Will Be Responsible

Then Just Filing Your GST (no matter how little your revenue is) Regardless of the amount of your revenue (low revenue), when you register voluntarily under GST, you will also have the following obligations:

• To charge your customers GST

• To submit your returns regularly,

• To comply with all GST regulations,

• To prepare the invoices for your customers in compliance with GST regulations.

The above responsibilities apply to every area in which you conduct business.

3) For Unregistered Persons

Threshold for Turnover is State-specific Only ₹20 lakh or ₹40 lakh revenue threshold is only applicable to businesses that do not have GST registration. Once you voluntarily register under the GST, the revenue threshold is no longer relevant to you.

Documents Required for GST Registration in the New State

Here’s what you generally need:

• PAN Card
• Aadhaar Card
• Passport-size photograph
• Business address proof (electricity bill, rent agreement, NOC, etc.)
• Bank account proof
• Business registration proof (if applicable)

Why State-Wise GST Registration Matters for Multi-State Businesses

Why you Need to Obtain GST registration for each State:

1) Legal Compliance - Failure to obtain GST registration(s) can result in penalties if your business operates in a State without being registered.

2) Invoices - All invoices must be issued from the appropriate GSTIN based on the location of the supply.

3) Input Tax Credit (ITC) - Suppliers operating in a new State may require your GSTIN for claiming Input Tax Credits on goods supplied.

4) Growth of Business - By obtaining GST registration for each State you operate in, you create a clear path for your business to grow.

Implication for Businesses Below ₹10 Lakh Turnover

You should also consider obtaining GST registration in a new State if your turnover will be less than ₹10 lakhs due to any of the following factors:

1) Interstate supply - Supplier will need to obtain a GST registration where the goods or services were supplied.

2) Business Expansion - If any type of warehouse, store, or office is opened up in a new State, GST registration will be necessary regardless of the turnover.

3) Voluntary Registration - A business that obtains voluntary registration in one State cannot rely on that registration to be exempt from the requirement of obtaining registration for another State where operations exist.

How to Obtain GST Registration in Another State

If your business requires GST registration in a new state, here’s the step-by-step process:

1.Prepare Required Documents:

• PAN card of the business entity
• Proof of business address in the new state (rental agreement, electricity bill, etc.)
• Identity and address proof of promoters or directors
• Bank account details
• Photograph of the owner or authorized signatory

2.Visit the GST Portal:

Go to the official GST portal (www.gst.gov.in) and log in with your credentials.

3.Apply for New Registration:

• Fill the application form for new GST registration.
• Specify the new state in which the business is being established.
• Upload the necessary documents and submit the application.

4.Verification by GST Authorities:

The GST authorities will verify the submitted documents and details.

5.Receive GST Registration Certificate:

Once approved, the GST registration certificate will be issued, and your business can legally conduct operations in the new state.

Scenarios Requiring Multiple GST Registrations

The following are just a few examples of when businesses may be required to register for GST in more than one state:

1. E-commerce - an e-commerce seller that sells products online and stores them in more than one state will need a separate GST registration for each state in which a warehouse is located.

2. Franchise Outlets - franchise businesses with outlets located in different states will each need to register for GST separately.

3. Manufacturing Units - if a manufacturer has locations in more than one state, that manufacturer must register for GST in each state where there is a manufacturing or distribution facility.

Most companies under ₹10 lakh in annual turnover will still have to register for GST if there are supplies from one state to another or there is a permanent business address established in the receiving state.

Voluntary GST Registration vs. Mandatory GST Registration

It is important to distinguish between voluntary and mandatory GST registration:

Feature	Voluntary GST Registration	Mandatory GST Registration
Threshold	Below Rs. 20-40 lakh	Above Rs. 20-40 lakh
Benefits	Access to ITC, credibility	Legal compliance, ITC, avoid penalties
Requirement in other states	Separate registration may be required	Mandatory registration required if business operates there

Common Misconceptions About GST Registration Across States

1.GST registration is voluntary and applies nationwide.

Incorrect because GST registration is only valid for a specific state. A separate GST registration must be obtained when operating in a different state.

2. Turnovers below ₹10 lakh are exempt from needing to register in another state.

While turnover thresholds determine whether or not businesses are required to register, establishing a place of business in another state or providing services across state lines could create a need for such registration.

3. Only large businesses need to register.

Small businesses choosing to register voluntarily may have to continue to register in all states where they have operations if their operation expands.

Maintaining Compliance After GST Registration in Multiple States

When a business registers for GST in another State/Create state GST registration, it must:

• Maintain separate accounting books for each State GST registration

• File returns for each State GST account on a monthly basis

• Update its GST account anytime a business activity or business location changes

• Ensure that each invoice has the proper State GSTIN number on it for the State to which it is billing

If a business does not comply with these requirements, it could face fines, penalties, or loss of its GST registration.

Importance of GST Registration Across States

GST registration across multiple states is crucial for several reasons:

• Legal Compliance: Ensures that your business operates within the GST framework, avoiding legal complications.

• Input Tax Credit Benefits: Enables claiming of ITC for purchases made in the respective state.

• Business Credibility: Enhances trust among suppliers and customers, especially for interstate transactions.

• Avoidance of Penalties: Non-registration can attract heavy fines and interest on unpaid taxes.

Impact of Not Registering in Another State

Ignoring GST registration for a new state can have serious repercussions:

• Legal notices and penalties under GST law.

• Disallowance of input tax credit, affecting cash flow.

• Difficulty in conducting B2B transactions as GST-compliant invoices are mandatory.

• Negative impact on business reputation and potential loss of clients.

Consequences of Non-Compliance

Businesses that fail to obtain GST registration in a new state may face:

• Penalties: Up to 10% of tax due or ₹10,000, whichever is higher.

• Interest on Tax Dues: Interest accrues from the date the tax was payable.

• Seizure of Goods: In case of interstate supply without registration.

• Legal Action: Persistent non-compliance can lead to prosecution under GST law.

Understanding these consequences highlights why even small businesses should consider registration seriously, regardless of turnover.

Conclusion

A registered business at one specific state in India does not allow that business to conduct business in another state, where the business is located, without being registered in that state, even if the business turnover is below ₹10 lakh. Each Indian state requires its businesses to register with GST in the state where they conduct business, in order to be legally compliant and to operate smoothly. To get a GST registration certificate in India, businesses can either apply directly on the GST portal or work with a professional GST registration company in India to obtain their GST registration certificate as quickly as possible so that they can operate smoothly and legally in different Indian states. In addition to providing businesses with legal compliance, proper registration increases business credibility and provides an opportunity for growth.

FAQs

Q1. If my turnover is below ₹10 lakh, do I still need GST registration in another state?
Yes. Even if your turnover is below ₹10 lakh, GST registration in a new state is mandatory if you set up a business location there or conduct interstate supply of goods/services.

Q2. Can voluntary GST registration in one state save me from registering in other states?
No. Voluntary GST registration is state-specific. Expansion to a new state requires a separate GST registration.

Q3. Where can I obtain GST registration for a new state?
You can apply through the official GST portal (www.gst.gov.in) or through professional GST registration services in India for faster and error-free processing.

Q4. What documents are required for GST registration in another state?
Key documents include PAN card, proof of business address, identity and address proof of promoters, bank account details, and photographs of authorized signatories.

Q5. How long does GST registration in a new state take?
Typically, registration is processed within 7–10 working days if all documents are accurate and complete. Using professional services can expedite this process.