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Is GST mandatory for OPC: Navigating the Tax Landscape

One-Person Registration: GST (Goods and Services Tax) is mandatory for OPC (One-Person Company) in India, regardless of turnover, fostering tax compliance.

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Is GST mandatory for OPC: Navigating the Tax Landscape

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  1. Is GST Mandatory for OPC: Navigating theTaxLandscape First andforemostonemustbe wellclearwith what isOnePersonCompany (OPC),sowhat isOPC? Thecompanywhichisformed byone personand carries out theentirebusiness byhimselfis calledOPC.As,GSTMandatoryforOPC,the registration ofOPCislegalandprovidedunderSEC2(62)inCompanies Act2013. Many OPC companies have enrolled toregisterGST.Now aftergreatdevelopment in technology,GSTregistrationcanbedone entirelyonline.Noneedtosubmitthe physical documents for registration. The OPC has to submit certain documents for theregistration ofGST.Herearethelisteddocumentswhich arerequiredforGST registration. TableofContents • Documents Required forGSTRegistration forOPC: • Whois required and notrequired toregisterforGST? • Restrictionsof OnePerson Company • FAQ DocumentsRequiredforGSTRegistrationforOPC: • PANCardofthecompanyisneeded. • Registration Certificateof the company. • MemorandumofAssociation/Articles of Association ofthecompany • PANcard,Photo andaadhar cardof thedirector of opc

  2. Bankdetails–a copybankstatement • Proof of appointment of the authorized signatory which means the letter of authorization • Proof of addressfortheprimaryand secondaryplaces ofbusiness(Basically premise) • Copyofcertainbillslikeelectricitybill,landlinebill,waterbill,municipal khatacopyand propertytaxreceipt of the companyowned • In thecase ofarentedoffice,the owner’sno-objectioncertificate(NOC)must besubmitted. Whoisrequired andnot required toregister forGST? Requiredtoregister: TheOPCCompanieswho sellgoodsor services and whichhave the annual sales adding up tomorethanRs.20 LakhsforonlyServices andRs. 40Lakhsforonly Goodsare eligibleand mustregisterforGST.OnePersoncompanyfor GST RegistrationRegardless itsannual turnover,the companymustbe involved in supplyinggoodsandservices mustregisterforGST. For example: AnOPC registeredin Karnatakawho supplies goodstoTamilNadu must registerforGST. Notrequiredtoregister: Theone who is required toregisterforGSTis farmers andentities who are engaged only in the business ofsupplying goodsor services arefullyexempt fromtax and entitiesengagedin thebusiness ofsellinganddistributingagriculturalproducts,are not entitledtoregisterunderGST.Some otherexamplesare:theNon-taxable goods

  3. like petrolandalcohol forhumanconsumption are notrequired to registerforGST and SpecialEconomic Zonesfallunderthe GST exemption list • Alsoreadrelatedarticles • ExperttipsforsuccessfulOPCRegistration • EXPLORINGTHE ADVANTAGES OFONE-PERSON COMPANY • RestrictionsofOnePerson Company • As GSTMandatory for OPC,Here aresomerestrictions ofOne PersonCompany: • OnlyOneShareholder:Asitiswellknownthatsection2(62)ofcompanies act 2013 provides thatthecompanycanbe formedwith one directorand one member.Likewisewhen itcomes to theshareholder,the opccanhaveonly one shareholder.Thisis one oftherestriction facedin opc.the shareholder mustbe a natural person , resident of Indiaand above 18 years • Nominee Shareholder: If in case, the shareholder is dead, the nominee of that shareholdercanenterintothecompanyand proceedwiththebusiness.The • nomineeshouldhavethesameeligibilitythathas beenspecifiedfor shareholders • Limited Investment:The majorrestriction facedin OPCis limited investments.Theopc cannotinvestmoreas it faces astruggletofulfillthe expensesby a single member. • CapitalThreshold:yes,opchavecapitalthreshold. As thereis onlyone memberin oneperson companyand thecapitalwhichisinvestedis low,so the lawhasdecidedandfixedthemaximumlimitofcapital forOPCwhich is Rs.50,00,000 (Rupeesfifty lakhs). • Conversion ofOPC intoPvt.Ltd.Co.:Now it isknown that, OPCshave a capital limit,which is • RS. 50, 00,000 So, if any OPC exceeds the threshold limit of capital or, should compulsorily convert intoPrivateCompanyora public co.,whichmustbe donelegally. • No. of OPC:A person cannotbe a memberof more than one OPC, In an OPC only one person shallbepresent at a time. • Director Qualification:there are certain qualificationsforthe director of OPC like he mustbe a natural person , resident of India,above 18 years and the • directormustberesiding (must notabsent) in India from thelast180daysin thepreceding 1 year. • Restricted Activities:Theopc is restrictedin Non-BankingFinancial Investmentactivitieswhichincludes theinvestmentinsecurities ofanyother body corporate.

  4. A personmayestablish acompanywith onememberand onedirectorin accordance with the Companies Act. Itisprovidedin section2(62) ofcompanies act 2013. NumerousOPCcompanieshaveregisteredforGSTsinceaftertheintroductionof the GSTonJuly 1,2017.TheGSTregistrationcanbedone online.Itisnotrequiredto providetangibleproof.Basedonthecompany’sPANnumber,theGSTNumberwill alsobe providedin fifteen-digitnumbers. FAQ Can onestartabusinesswithoutGSTregistration? Smallbusinessescanoperatein Indiawithoutregistering,butdoingsois advisedto take advantage ofcertain benefits and to maintain legal compliance.Abusiness entity that has notfinished theofficialregistration process anddoes nothave official governmentalrecognitionis referredtoas anunregisteredfirm.Unincorporated business is another name forthis type of company. InIndia,sole proprietorshipsand partnerships,whereone orafew peopleownandrun the business, are examples of unregisteredcompanies. Whatis theturnoverlimitforOPC? If a One Person Company’s annual sales revenue exceeds Rs. 2.00 crores or its paid up capital exceeds Rs. 50 lakhs, the One Person Company must be legally changed into a PrivateLimitedCompany Isaudit compulsory forOPC? OPCs (OnePersonCompanies)mustname anauditorbysubmittingForm ADT-1. An essentialcompliancestepthat guaranteestheindependentreview and verification oftheCompany’sfinancialstatements is the engagementofan auditor. Canapersonwithout GSTregistrationcollect tax? No, a person who has not registered for GST is unable to collect GST from clients or to claimany input tax credits forGSTthathehasalready paid. IsannualreturnMandatoryforOPC? TheMinistryofCorporateAffairs hasa departmentcalledtheRegistrarof Companiesthat handles businessmanagement. You mustabidebythe ROC filing requirements. IfyouarethesoleproprietorofaOnePersonCompany(OPC),you

  5. mustsubmitallrequiredROCfiles,includingannual returnsand financial statements. CanOPChavemoreemployees? Absolutely.OnePersonCompany(OPC)designates abusiness whereyou,thesole shareholder, willpossess allof thecompany’sshares.This hasnothingtodo with employeehiring andisonlyrelatedto business ownership. Even more thanone director ispermitted in your OPC. Whatis thecapitalrestrictionforOPC? If an OPC’s turnoversurpasses2 crores and its paid-up sharecapital exceeds 50 lakhs, it loses the right to function as a one-person business and is required to change to aprivateor publiclimitedcompany.Continuereading tolearn more.The notionof an OPCwas established intheCompanies Actof2013. Is AGMmandatory forOPC? OPC is notrequiredtohold anannualgeneralmeeting,but thedeadlineforfiling Form MGT 7 is 60 days afterthe end of the6-monthperiodfollowing theendof the fiscalyear,which meansthe deadline is onthe60thday afterSeptember 27. Is GSTregistrationnotrequiredfor below 20 lakhs? Businesses having yearly incomeuptoRs.40 lakhs (orRs. 20 lakhsforstates that fallunderaspecifiedcategory)are excludedfromGSTregistration,accordingtothe GSTAct.ThethresholdceilingorGSTexemptionceilingarecommonnames forthis ceiling restriction. Whatisthepenaltyfor notregisteringtheGST? A taxable personwhofails to registerforGSTdespitebeing obligedto do sobythe CGST Act issubject to a penalty ofRs. 10,000 or theamountoftax evaded or any shorttaxdue,whicheverislarger, in accordancewithSection122of the CGST Act.

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