Is GST mandatory for OPC Registration in India

First 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. As, GST Mandatory for OPC, the registration of OPC is legal and provided under SEC 2(62) in Companies Act 2013.

Many OPC companies have enrolled to register GST. After development in technology, GST registration can be done entirely online. No need to submit the physical documents for registration. The OPC has to submit certain documents for GST registration.

Is GST mandatory for OPC in India?

In India, GST mandatory for OPC if goods or services sales and has an annual turnover surpassing Rs. 20 lakhs for services or Rs. 40 lakhs for goods, it is required to register for GST.

What are the documents required for OPC GST Registration?

The documents required for OPC GST Registration are as follows;

Documents required for GST Registration
  • PAN Card of company
  • Registration Certificate of company
  • Memorandum of Association (MoA) /Articles of Association (AoA) of company 
  • PAN card, Photo and Aadhar card of the director
  • Copy of bank statement
  • Proof of appointment of the authorized signatory; ie, Letter of Authorization
  • Proof of address for the primary and secondary places of business
  • Copy of utility bills like electricity bill, landline bill, water bill, municipal khata copy and property tax receipt
  • If 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.
OPC Registration Service in Bangalore

What are the restrictions of one person company?

As GST mandatory for OPC, 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, 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 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.
  • Conversion of OPC into Pvt. Ltd. Co.:
    If any OPC exceeds the threshold limit of capital or, should compulsorily convert into Private or Public company, which must be done legally.
  • Number 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:
    The director must be a natural person, resident of India, above 18 years and the director must be residing 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.

Conclusion

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 mandatory for OPC 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.

FAQs

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.

2. What is the turnover limit for OPC?

If the annual sales revenue exceeds INR 2 crores or its paid up capital exceeds INR 50 lakhs, the One Person Company must be legally changed into a Private Limited Company

3. Is audit compulsory for OPC ?

Yes, OPCs 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 MCA has a department called the Registrar of Companies that handles business management. If you are the sole proprietor of an OPC, you must submit all required ROC files, including annual returns and financial statements.

6. Can OPC have more employees?

The directors and employees in an OPC can be more than one.
One Person Company 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.

7. Is AGM mandatory for OPC?

No, 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.

8. Is GST registration not required for below 20 lakhs?

No, 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.

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