Over 250,000 new GSTIN numbers registered since Covid pandemic began in Delhi

According to documents seen by HT, Delhi recorded 140,238 new GST registrations in 2020-2021, and 114,726 new registrations in 2021-22 (till January 31, 2022). Delhi had recorded 184,502 new registrations in 2019-20, before the pandemic hit

Over 250,000 people in Delhi registered their new or existing businesses under the ambit of the Goods and Services Tax (GST) from March 2020, when the coronavirus disease (Covid-19) pandemic began, till January 2022, officials said on Sunday.

People can submit applications for GST registration on https://reg.gst.gov.in/registration/. Each eligible trader is given a GSTIN, a 15-digit unique tax registration number, which is based on PAN and state. (REPRESENTATIVE PHOTO)

According to documents seen by HT, Delhi recorded 140,238 new GST registrations in 2020-2021, and 114,726 new registrations in 2021-22 (till January 31, 2022). Delhi had recorded 184,502 new registrations in 2019-20, before the pandemic hit.

GST commissioner Ankur Garg said despite the pandemic and numerous lockdowns, people’s entrepreneurial spirit seemed high, which was facilitated by the ease of applying for GST registration. “The trade and taxes department has made GST registration easy. The applications are cleared within a week of submitting a request. The submitted documents are verified by the ward-level officials concerned and GST registration is approved if all the required documents are properly submitted. The idea is to facilitate a conducive business atmosphere,” said Garg.

People can submit applications for GST registration on https://reg.gst.gov.in/registration/. Each eligible trader is given a GSTIN, a 15-digit unique tax registration number, which is based on PAN and state.

The department, however, does not maintain category-wise data on new GST registrations.

Prateek Chaudhary, a 34-year-old entrepreneur, said he started a salon in East Delhi in October 2020 and currently employs around 18 people. “I already run a dental clinic, but ventured into this sector despite challenges posed by Covid. I got a GST number, because I have to purchase different equipment and necessary items and, with a GST number, I can claim input tax credit,” said Chaudhary.

Input tax credit (ITC) removes cascading taxes (a term meaning taxes on taxes. This occurs when goods are taxed at every stage of production), thereby diminishing the tax burden on traders.

A 24-year-old Kashmiri entrepreneur Aamir Khan, who started a wholesale walnut firm in Delhi in April 2020, said it was challenging to transport the raw material to Delhi without a GST number. “I source the raw material from Uri, and, without a GST number, it was challenging to transport it, because sales tax officials and police would halt our consignment and take time verifying documents. Since we have a GST number, we get show an e-way bill to the authorities whenever our goods are halted in transit for checking making the process smoother. The GST number has also enhanced the goodwill of the business,” said Khan.

Chartered accountant Rakesh Gupta said GST registration is mandatory when a business’s annual turnover exceeds ₹40 lakh (goods dealer), ₹20 lakh (service provider), ₹20 lakh (traders dealing in both goods and services). GST registration is also mandatory for dealers who sell goods interstate.

According to officials, many owners of small and medium size enterprises also prefer to register for GST as that gives them access to business-to-business transactions with large companies and institutions. It is also beneficial for many small and medium scale vendors as they can also avail benefits of ITC.

“Many traders voluntarily register for GST to keep their input tax credit intact, and because business-to-business dealers generally do not buy from unregistered dealers. Since GST registration was brought in years ago, traders who had to mandatorily register have already done so. The new registrations are by people jumping into a new business or those trying to expand their existing businesses,” said Gupta.

A trade and taxes department official, who did not want to be identified, said when non-essential activities were shut due to restrictions during the first wave of the pandemic, the department witnessed a jump in GST registrations. Several people also seemed to have turned entrepreneurs after losing their jobs due to the pandemic. “Many young people started home delivery services for essential items such as groceries, vegetables, and other essential household items, besides starting various online start-up companies. Even though they were not under the GST threshold, they applied for GST registration because many big businesses prefer to purchase from GST-registered manufacturers or suppliers,” said the official.

According to documents, the cancellations of GSTIN number were also slightly higher during the pandemic. During 2019-2020, 46,968 GST registrations were cancelled. The number increased to 150,617 in 2020-21. In 2021-22 a total of 86,453 GST registrations were cancelled.

GST registrations are cancelled two ways– suo motu cancellation and voluntary cancellation. “All GST registered traders are required to file income tax returns every month. If a trader does not do that for three consecutive months, a system-generated notice is sent to them, and, if they fail to reply, their GST registration is cancelled,” said an official.

For those who wish to close their business, or in case a business owner dies, an application to close the GST registration is submitted.

“The number of cancellations is not unusually high during the pandemic. In case of deaths, old registrations are cancelled and traders apply for new registrations. Many of the cancelled registrations belonged to small businesses which sought voluntary registrations, but could not file monthly tax returns,” said the trade and taxes department official quoted above.