one person company guide
Javed

GST Registration Procedure for One Person Company in India

This short article discusses the GST Registration Procedure for One Person Company in India. This blog aims to demystify the process of GST registration for One-Person Companies in India, providing a step-by-step guide to ensure compliance with the law and to help OPCs avail the benefits of the GST system. Whether you’re a small or medium business owner in India or an aspiring entrepreneur, this blog will serve as your comprehensive guide to navigating the GST registration process for your One-Person Company.

We will also discuss the GST returns that are to be filled by an OPC in India. Stay tuned to the last section of the blog.

What is one-person company?

One-person company in India finds its origin in the Companies Act of 2013. An OPC is a unique business structure that allows a single individual to start and run a company. This is a significant departure from traditional company structures, which typically require at least two members.

The definition of a One-Person Company, as per Section 2 (62) of the Companies Act, is a company that has only one person as its member. In other words, an OPC is a company that has only one shareholder

This type of company structure is generally chosen when there is only one founder or promoter for the business. Entrepreneurs whose businesses are in the early stages often prefer to create OPCs instead of sole proprietorship businesses because of the several advantages that OPCs offer.

A major difference between a sole proprietorship and a one-person company is the nature of the liabilities they carry. An OPC, being a separate legal entity distinct from its promoter, has its own assets and liabilities. The promoter is not personally liable to repay the debts of the company. On the other hand, in a sole proprietorship, the law allows the attachment and sale of the promoter's own assets in case of non-fulfillment of the business's liabilities.

Benefits of One-Person Company

Establishing a One-Person Company (OPC) in India offers numerous advantages. One of the major advantages of this format is that the OPC provides limited liability, safeguarding the personal assets of the sole owner from the company’s debts. This structure allows a single individual to initiate and manage a business without needing partners. The ease of formation of the One Person Company is notable and also the registration process for the same reduces complexities. GST Registration Applicability for One-Person Company in India For an OPC, GST registration becomes mandatory if the aggregate turnover is more than Rs. 20 Lakh in the case of services and Rs. 40 Lakh in the case of goods. In special category states, the threshold limit for GST Registration is set at Rs. 10 lakhs.

Also, GST registration is mandatory for the OPC companies that supply goods or services outside the state, regardless of annual turnover. For example, GST registration is necessary if an OPC company registered in Assam supplies goods to Maharashtra. Existing OPCs with service tax, VAT, or Excise registration must enroll for GST Registration. 

GST Registration Procedure for One-Person Company

GST registration procedure is a hassle-free process and is completely online. Following are the steps listed to complete the GST Registration procedure for a One-person company in India :

  1. Visit the official GST portal.
  2. Fill out the Part-A submission form (Email address, mobile no, PAN, legal name of the business, etc.).
  3. The GST portal will verify your details through Email/OTP.
  4. Upload all the necessary documents.
  5. Access and fill the Part-B form carefully using the Temporary reference number (TRN).
  6. Then, you will get the Application Reference Number (ARN).

GST Returns for One Person Company

Under the GST regime, regular businesses having more than Rs.5 crore as annual aggregate turnover have to file two monthly GST returns and one annual GST return. This amounts to 25 returns each year. Taxpayers with a turnover of up to Rs.5 crore have the option to file returns under the QRMP scheme. The number of GSTR filings for QRMP filers is nine each year, which includes four GSTR-1 and GSTR-3B filings each and an annual return.

Handling GST Returns, the easy way!

GSTR 3B and GSTR 1 reconciliation is essential because the GSTR-1 return CAN NOT be filed if your previous tax period’s GSTR-3B is NOT filed

Hence, taxpayers who are registered as a One-Person Company must understand that the GSTR-3B vs GSTR-1 reconciliation is essential.

Reconciliation between GSTR-3B and GSTR-1 is required because :

  • To avoid late fees and interests for short payment or non-payment of Tax.
  • This reconciliation ensures that there is no duplication of any invoices. It also provides that no invoice mentioned in your GSTR-1 is missing in the GSTR-3B summary.
  • Calculation of Tax payable on outward sales becomes easy for a particular tax period (monthly or quarterly).
  • An automated reconciliation on a platform like GSTHero ensures no mismatches between the two returns.
  • Errors in the integrated taxes are identified while your GSTR 3B is filled.
  • Allows your recipient to claim 100% Input Tax Credit under GST based on his GSTR-2B

To learn more on ‘Issues of mismatches in GST returns', check out our detailed blog in the link provided.

Relevant Sections from the CGST Act, 2017 for One Person Company

The CGST Act, 2017, does not specifically mention One-Person Companies. However, it does define a “person” to include a company. Therefore, an OPC would fall under the definition of a “person” for the purposes of the CGST Act, 2017.

Section 22 (1) of the CGST Act, 2017, provides that every supplier shall be liable to be registered under this Act in the State or Union territory from where he makes a taxable supply of goods or services or both if his aggregate turnover in a financial year exceeds Rs. 20 lakhs (10 lakhs for specified states).

Section 17 (5) of the CGST Act, 2017, has prescribed the nature of input services which are restricted to avail unless it is used for the same nature of services or in the nature of composite supply or mixed supply.

Conclusion

Understanding the GST registration procedure is crucial for any One Person Company (OPC) in India. It ensures compliance with the law and allows the company to avail the benefits of the GST system. If you’re a small or medium business owner in India, it’s time to get your OPC registered under GST!

Stay tuned with GSTHero for more GST-related updates.


Javed

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