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GST India: When does a service provider need to register across multiple states?

If you are a business owner, having ventures, restricted to just one state, then GST India might prove to be a beneficial upshot for you! This is because, sans much of a compliance burden, you can avail more input-tax credits. However, if you are a service provider, with roots in multiple states, which we believe the majority would be boasting; in that case, GST India might present some hindrances in operations!

Service providers now have to grapple with a completely new set of facts. Many of them are going to be assessed in several states; and will be required to obtain individual registration in states, they aren’t familiar with.

In the past, even if you are operating in 20 states, you could have obtained just one registration, which is for the place where you are headquartered. The theory was that, as long as you are paying the right amount of tax, how does it matter? Now you have to fragment that tax and, pay that to the relevant state.

To clear out some air, if you are a Mumbai-based company and, if you are vending your solutions in Chennai and Delhi, at some stage in your evolutionary process you will set up your offices in these cities. For you, it makes sense to have an office in these cities and, have a person manning it, instead of you going there at periodic intervals!

When you have that kind of setup, with operations in multiple states, you are hampered with a sizeable burden of compliance, as it is mandatory to obtain registrations in every state, you have ventured in! In addition, the invoicing has to be organized according to that state and. Therefore, the input tax credit also becomes state-centric. This is the reason that for multiple state service providers, GST India is a mixed bag of ebbs and flows!

GST India is going to entail significantly high compliances and chances are you will have to deal with problems that you have never dealt with before.

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