The GST registration Rules for UTGST

by Thea Lewis Blogger

India is a diverse nation, which comprises 29 states and 7 union territories. The newly implemented Goods and Services Tax, ultimately hitting the nation with a storm, was implemented all over the Indian states with some minor changes to some selected states. But the concept of taxation in the union territories is less-known and talked about. In India, the major business hubs come under the category of states and only and most of the businesses registered under the GST regime are able to do business in their state boundaries only. That’s the prime reason the exposure on the UTGST is not much.

What is UTGST?

UTGST simply stands for Union Territory Goods and Services Tax. With the inclusion of UTGST in the new tax regime, the constitutional obligation was completed as the government added Clause 26B in the article 366. This clause was included to ensure the separate mentioning of the union territory in the legislation. The prime reason behind introducing UTGST was to levy taxes on the supply of goods and services union territories and from them to other states of India. And the fact that introduction of UTGST, with similar features as SGST, ensures the legislation, which is primarily absent in the union territories as they are rules by the central government.

The agenda

As it is clear that UTGST fulfills the provisions of the SGST, the GST Council, for the ease of the taxation, set up the apex body that could take control of the flow of the taxation in the union territories. Besides, the provision of the apex body, New Delhi and Puducherry having their own legislatures, operate freely under the GST regime while properly complying with the rules and regulations of SGST and are also considered as ‘states’ only by the council.

As per the Article 246(4) of the constitution of India which states that the Parliament holds the power to formulate laws, if in case required, for any part of the territory of India, in any matter or concern. As per this rule, the supply of goods and services within the union territory would consist of CGST and UTGST. And as far as the input tax credit is concerned, the calculation of utilization would also be equivalent to the State Goods and Services Tax.

The process

The process of registration is same as the India GST registration rules that rest of the other states comply with. The person having an income more than 20 lakh is supposed to get registered under the Goods and Services Act and also get the unique identification number, GSTIN. So, almost every rule is same as the normal GST. The government, with the idea of simplicity and reduced hassle, has made the process similar which wasn’t expected earlier during the time of the GST implementation. And if it wasn’t for the legislative purpose, the government wouldn’t even have interfered with the union territories at first. But good that the government did, now every supply of the goods and services is under the proper scrutiny of the GST Tax Act.

How is the tax levied?

If the supply of the goods and services is made within the union territory then, as per GST rules, CGST and UTGST will be levied.

For example- A furniture shop in Chandigarh supplies 100 chairs worth INR 10,000 to another furniture shop in Chandigarh only. If the GST rate applicable on that particular supply is to be assumed 12% then both CGST and UTGST will attract 6% of the tax each.

Cost of the supply- INR 10,000

CGST 6%- INR 600

UTGST 6%- INR 600

Total cost- INR 11,200

Similarly, if the supply of the goods and services is made from a union territory to another union territory or state, then IGST will be levied.

For example- A furniture shop in Chandigarh supplies 100 chairs worth INR 10,000 to a furniture store in Delhi, then, assuming the GST rate applicable of 12%, IGST alone will attract the complete tax amount.

Cost of the supply- INR 10,000

IGST 12%- 1200

Total cost- INR 11,200

Summary

The addition of the UTGST in the Goods and Services taxation regime has simplified the processing of the taxation in the union territories of India and also it keeps the constitutional decision making powers and authorities in the correct position.