GST Registration for Special Category States

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Published Date:  06-12-2023   Author:   deepika-jain
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Center has notified certain states which are facing geographical and socio-economic disadvantages and they need special attention and support from the central government for the purpose of development. Center Government assists in development in Special category states.

Introduction

A state is classified as a special category state on various parameters such as Hilly terrain, Low Population Density, Infrastructure backwardness etc. Assistance is provided to these states in following manners:

  1. 90% of funds required for centrally-sponsored schemes are paid by the central government.
  2. Significant concessions are provided in terms of excise duty, custom duties and Income Tax.
  3. Complete tax exemptions are provided to the industries established in special category states etc.

Similar to the Income tax, Customs etc., differential treatment is also given to special category states under GST such as lower threshold limit for GST registration, lower threshold limit for opting of composition scheme etc. This article makes a detailed discussion of GST Registration for Special category states.

1. What are the special category states ?

As per Explanation (iii) to Section 22 of CGST Act, the expression “special category States” shall mean the States as specified in sub-clause (g) of clause (4) of article 279A of the Constitution. However, it does not include the State of Jammu and Kashmir and includes the States of Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand.

2. Which states are notified as special category states in India?

So far, following twelve States are notified as “Special category states” in India:

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  1. Arunachal pradesh
  2. Assam
  3. Jammu & kashmir
  4. Manipur
  5. Meghalaya
  6. Mizoram
  7. Nagaland
  8. Sikkim
  9. Tripura
  10. Himachal Pradesh
  11. Uttarakhand

Telengana is the most recent state to get the status of special category states as it separated out of Andhra Pradesh.

Also Read: List of Special Category States Under GST

3. What is the Threshold limit for special categories states?

GST law provides a lower threshold limit for obtaining registration in special category states based on whether the dealer is engaged in supply of goods or supply of services. However, every state is given an option to opt for a threshold limit applicable to regular states.

Accordingly, following are the threshold limit for obtaining GST registration:

Category of states State Threshold Limit for supply of goods Threshold limit for supply of services
Special Category states Manipur, Mizoram, Nagaland and Tripura 10 Lacs 10 Lacs
Assam, Himachal Pradesh and Jammu & kashmir 40 Lacs 20 lacs
Other Special Category states 20 lacs 20 Lacs
Regular states Telangana and Punducherry 20 Lacs 20 Lacs
Other regular states 40 Lacs 20 Lacs

4. What are the benefits given to Special States Categories by the central government?

The Central government has given following benefits to special category states for the purpose of development:

  1. The central Government allot 30 % of plan expenditure to these states and the remaining 70% allot to the other states.
  1. The (CSS) Centrally Sponsored Scheme and external aid Special categories States get 90 per cent allot and 10 per cent as loan.
  1. Unspent funds do not lapse and get carried forward in the case of special category states.
  1. The Central Government provides various tax benefits to the newly setup business in special category states.  They include subsidy, Interest subsidy, comprehensive insurance subsidy and transport Subsidy.

Also Read: Top 7 Benefits of GST Registration in Special Category States

5. How to compute the threshold limit for GST registration when a person is operating in both Special Category state and Regular states?

As per GST law, “aggregate turnover” is the aggregate value of following supplies:

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  1. all taxable supplies (excluding the value of inward supplies on which tax is payable on reverse charge basis);
  2. exempt supplies;
  3. Exports;
  4. All inter-state supplies

Aggregate turnover is to be computed on the basis of Permanent Account Number on PAN india basis. While computing aggregate turnover, Central tax, State tax, Union territory tax, Integrated tax and cess shall not be considered.

If a person is dealing in both regular states and Special category states then requirement to obtaining GST registration can be understood with following examples:

Taxable Supplies in Regular state Taxable Supplies in Special Category state

(Uttarakhand)

Aggregate Turnover to determining GST registration requirement GST registration requirement
5 Lacs 5 Lacs 10 Lacs Aggregate turnover is below the threshold limit for both the states. Therefore, No GST registration is required in both the states
20 Lacs 10 Lacs 30 Lacs Punjab: No GST registration is required as aggregate turnover is below the threshold limit

Uttarakhand: GST registration is required

30 Lacs 20 Lacs 50 Lacs GST registration is required in both the states.

6. What is the process of the GST registration for Special Category States?

Following is the GST registration process for special category states which is similar to the regular GST registration. 

  1. For the purpose of registration, the taxable person is required to create a profile on Gst portal https://services.gst.gov.in/services/login by filing Part-A of GST registration Form GST REG-01. 
  2. Following information is required to be furnished in Part-A of GST REG-01:
    • Under the First tab “I am”, the taxpayer has to select the type of GST registration from the dropdown list. In case of regular GST registration, “Taxpayer” has to be selected,
    • State
    • Legal Name (As mentioned in PAN). System will crosscheck the same name available in the PAN database.
    • Permanent Account Number  (PAN)
    • Email Address
    • Mobile Number
  3. After submitting the above mentioned information, the GST portal will display the list of GST registrations already Done, pending for processing or rejected under the same PAN in all states across India.
  4. Upon proceeding, the GST portal will ask to verify mobile number and email id with OTPs.
  5. Taxpayers are suggested to furnish an active and accessible email ID and phone number as OTPs are the essence of the entire GST process. Any action on the GST portal such as return, reply of notices, amendments etc. can be authenticated through OTPs only. Further, all communication from GST authorities are received on phone number and email id registered on GST portal.
  6. Post verification of mobile number and email id, The system will generate a Temporary Reference Number (TRN) which will be used till application for GST registration is filed. TRN will be communicated over e-mail address as well as your mobile number.
  7. Using TRN, dealer is required to fill Part-B of GST REG-01 and required to furnish information under following heads alongwith relevant documents:
    • Business Details
    • Partners or promoters details
    • Authorised Signatory
    • Authorized Representative
    • Principal Place of Business
    • Additional Place of Business
    • Goods and Services
    • State Specific Information
    • Aadhar authentication
    • Verification
  8. Detailed process of GST registration and all documents required to be uploaded to complete the registration process is same as regular GST registration.

Also Read: Special GST Registration Rules For Special Category States

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