Is GST mandatory for OPC: Navigating the Tax Landscape

First and foremost one must be well clear with what is One Person Company (OPC), so what is OPC? The company which is formed by one person and carries out the entire business by himself is called OPC. The registration of OPC is legal and provided under SEC2(62) in companies act 2013. Many OPC companies have enrolled for registering GST. Now after great development in technology, GST registration can be done entirely online. No need to submit the physical documents for registering. The OPC has to submit certain documents for the registration of GST. Here are the listed documents which are required for GST registration.

TABLE OF CONTENTS

• Documents Required for GST Registration for OPC:
• Who is required and not required to register for GST?
• Restrictions of One Person Company
• FAQ

DOCUMENTS REQUIRED FOR GST REGISTRATION FOR OPC:

• PAN Card of the company is needed.?

• Registration Certificate of the company.

• Memorandum of Association /Articles of Association of the company?

• PAN card, Photo and aadhar card of the director of opc

• Bank details – a copy bank statement

• Proof of appointment of the authorized signatory which means the letter of authorization

• Proof of address for the primary and secondary places of business (Basically premise)

• Copy of certain bills like electricity bill, landline bill, water bill, municipal khata copy and property tax receipt of the company owned?

• In the case of a rented office, the owner’s no-objection certificate (NOC) must be submitted.

WHO IS REQUIRED AND NOT REQUIRED TO REGISTER FOR GST?

Required to register:

The OPC Companies who sell goods or services and which have the annual sales adding up to more than Rs. 20 Lakhs for only Services and Rs. 40 Lakhs for only Goods are eligible and must register for GST. One Person company for GST Registration Regardless its annual turnover, the company must be involved in supplying goods and services must register for GST. For example: An OPC registered in Karnataka who supplies goods to Tamil Nadu must register for GST.

Not required to register:

The one who is required to register for GST is farmers and entities who are engaged only in the business of supplying goods or services are fully exempt from tax and entities engaged in the business of selling and distributing agricultural products, are not entitled to register under GST. Some other examples are: the Non-taxable goods like petrol and alcohol for human consumption are not required to register for GST and Special Economic Zones fall under the GST exemption list

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RESTRICTIONS OF ONE PERSON COMPANY

Here are some restrictions of One Person Company:

• Only One Shareholder: As it is well known that section 2(62) of companies act 2013 provides that the company can be formed with one director and one member. Likewise when it comes to the shareholder, the opc can have only one shareholder. This is one of the restriction faced in opc. the shareholder must be a natural person , resident of India and above 18 years
• Nominee Shareholder: If in case, the shareholder is dead, the nominee of that shareholder can enter into the company and proceed with the business. The nominee should have the same eligibility that has been specified for shareholders
• Limited Investment: The major restriction faced in OPC is limited investments. The opc cannot invest more as it faces a struggle to fulfill the expenses by a single member.?
• Capital Threshold: yes , opc have capital threshold. As there is only one member in one person company and the capital which is invested is low, so the law has decided and fixed the maximum limit of capital for OPC which is Rs.50,00,000 (Rupees fifty lakhs).
• Conversion of OPC into Pvt. Ltd. Co.: Now it is known that, OPCs have a capital limit, which is RS. 50, 00,000 So, if any OPC exceeds the threshold limit of capital or, should compulsorily convert into Private Company or a public co., which must be done legally.?
• No. of OPC: A person cannot be a member of more than one OPC, In an OPC only one person shall be present at a time.
• Director Qualification: there are certain qualifications for the director of OPC like he must be a natural person , resident of India, above 18 years and the director must be residing ( must not absent) in India from the last 180 days in the preceding 1 year.
• Restricted Activities: The opc is restricted in Non-Banking Financial Investment activities which includes the investment in securities of any other body corporate.

A person may establish a company with one member and one director in accordance with the Companies Act. It is provided in section 2(62) of companies act 2013. Numerous OPC companies have registered for GST since after the introduction of the GST on July 1, 2017. The GST registration can be done online. It is not required to provide tangible proof. Based on the company’s PAN number, the GST Number will also be provided in fifteen-digit numbers.

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FAQ

1. CAN ONE START A BUSINESS WITHOUT GST REGISTRATION?

Small businesses can operate in India without registering, but doing so is advised to take advantage of certain benefits and to maintain legal compliance. A business entity that has not finished the official registration process and does not have official governmental recognition is referred to as an unregistered firm. Unincorporated business is another name for this type of company. In India, sole proprietorships and partnerships, where one or a few people own and run the business, are examples of unregistered companies.

2. WHAT IS THE TURNOVER LIMIT FOR OPC?

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 Private Limited Company

3. IS AUDIT COMPULSORY FOR OPC ?

OPCs (One Person Companies) must name an auditor by submitting Form ADT-1. An essential compliance step that guarantees the independent review and verification of the Company’s financial statements is the engagement of an auditor.

4. CAN A PERSON WITHOUT GST REGISTRATION COLLECT TAX?

No, a person who has not registered for GST is unable to collect GST from clients or to claim any input tax credits for GST that he has already paid.

5. IS ANNUAL RETURN MANDATORY FOR OPC?

The Ministry of Corporate Affairs has a department called the Registrar of Companies that handles business management. You must abide by the ROC filing requirements. If you are the sole proprietor of a One Person Company (OPC), you must submit all required ROC files, including annual returns and financial statements.

6. CAN OPC HAVE MORE EMPLOYEES?

Absolutely. One Person Company (OPC) designates a business where you, the sole shareholder, will possess all of the company’s shares. This has nothing to do with employee hiring and is only related to business ownership. Even more than one director is permitted in your OPC.

7. WHAT IS THE CAPITAL RESTRICTION FOR OPC?

If an OPC’s turnover surpasses 2 crores and its paid-up share capital exceeds 50 lakhs, it loses the right to function as a one-person business and is required to change to a private or public limited company. Continue reading to learn more. The notion of an OPC was established in the Companies Act of 2013.

8. IS AGM MANDATORY FOR OPC?

OPC is not required to hold an annual general meeting, but the deadline for filing Form MGT 7 is 60 days after the end of the 6-month period following the end of the fiscal year, which means the deadline is on the 60th day after September 27.

9. IS GST REGISTRATION NOT REQUIRED FOR BELOW 20 LAKHS?

Businesses having yearly income up to Rs. 40 lakhs (or Rs. 20 lakhs for states that fall under a specified category) are excluded from GST registration, according to the GST Act. The threshold ceiling or GST exemption ceiling are common names for this ceiling restriction.

10. WHAT IS THE PENALTY FOR NOT REGISTERING THE GST?

A taxable person who fails to register for GST despite being obliged to do so by the CGST Act is subject to a penalty of Rs. 10,000 or the amount of tax evaded or any short tax due, whichever is larger, in accordance with Section 122 of the CGST Act.