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Scenarios where a service provider needs to register for GST across multiple states

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There are different scenarios as to how GST behaves. If you are a service provider who has operations in only one state, then GST is going to be very easy for you because there would not be much compliance burden and one gets more input tax credit numbers. But in case you are a service provider in more than one state, then, in that case, it would be a huge difference as to how the GST behaves. Service providers have to absorb some new facts, many of them are going to be assessed in several states as the registration would be required in many new states.

However, there has been a lot of confusion since the implementation of GST from 1st July 2017. Confusions related to various compliance activities such as registration in different states and when does a service provider need to look into the multi-state registrations.

To let everyone know very clearly, one is not required to register for a new state only because you provide your services in that particular state. No, that is not required. It is only if you have operations in that particular, i.e., that particular state is your place of business or you have an office there is when you would be required to register in that particular state.

Service provision or one set up an office in a state only for business expansion in that particular state. So for example, if you are a Mumbai based company and you plan to expand to Bangalore and Hyderabad for that matter, then you might plan to set up an office to make you make services and operations smooth. In such scenarios, you would require multiple registrations as you are setting up an office in a new state. Also, in this case, the invoicing would have to be organized according to each state, and the input tax credit (ITC) would also become state-centric.

In the past, i.e., the pre-GST era if a business was operating in 25 other states, then only one registration was required. That registration was only for a particular state, i.e., where your business was headquartered. The earlier rationale was that if you are paying your taxes correctly, it does not matter at all. Now in the post-GST era, you have to break down that tax and pay state wise accordingly.

Imagine how much difficult it would be for the technology sector and the banking sector which has their branches across each state. It is learned that for a long time the experts tried to persuade the government to let these sectors continue with the centralized registrations but to no success.

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Ashutosh Aggarwal
Ashutosh Aggarwal is a Founder and Editor-In-Chief at The GST Blog. He holds Bachelor Degree in commerce. He is pursuing company secretary course and chartered accountancy course. Before started this blog, He worked as an accounts manager in a reputed MNC. Also, having an experience of teaching for all subjects of commerce for five years in his study point.

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