GST registration in India: challenges

Author note

GST department sent my client’s registration in resubmission, asking for other supporting documents, though I submitted valid electricity bill. One reply made my client get the registration without any attachment

How? Read the article for the same and do comment your views. Happy Reading

Introduction

As we know, GST has revolutionised the indirect taxation by replacing many central and state level taxes such as sales tax, entertainment tax, VAT, etc. However, Nowadays the registration which is fully online is tough to get, due to various documentation and other issues.

As GST registration is the legal recognition of a business entity under GST, which give a authority to a business to collect tax on outward supplies or sales as well as avail input tax credit on inward supplies or purchases, subject to certain conditions.

Though in this article I won’t be discussing conditions with respect to blocked or ineligible credits, but we will discuss w.r.t. legal aspect which I analysed for my client.

Moving ahead, even after continuous reforms, including simplification measures introduced through GST Council decisions like GST 2.0 and various CBIC notifications coming from time to time, still the practical issues in obtaining and maintaining GST registration continue to challenge taxpayers. Issues in maintaining include retrospective cancellations and assessment orders.

It’s the fact if I say that for businesses, GST registration has a direct implication on working capital, customer/supplier relations, as well as on the regulatory standing.

Legal side of GST registration

Section 22 to 25 of the CGST Act, 2017 gives the legal power to collect tax after having a valid registration certificate, it deals with liability for registration, compulsory registration, procedure, and special provisions, etc

Secondly, Rule 8 to Rule 26 of the CGST Rules, 2017 that covers the detailed process and documents required for registration

Thirdly the circulars and instructions issued by CBIC, clarifying the above things from time to time, here I will discuss with you one of the circulars which I used in my client’s case.

The law states that: - “Every person whose aggregate turnover exceeds the prescribed threshold must obtain registration. Certain categories like inter-state suppliers, e-commerce operators, and non-resident taxable persons, etc require compulsory registration irrespective of turnover”

Irrespective of law, there are many practical issues in GST that are faced by clients, let’s discuss them.

Practical issues

First is related to the proof of business premises, I saw that approx 90% of the resubmission cases are due to this issue, hence in my opinion this is one of the most common hurdles in GST registration, it relates to documentation for the place of business. Here the GST act requires the applicant to prove ownership, lease rights, or consent for using the premises.

Relief by department

CBIC Instruction No. 03/2025-GST dated 17 April 2025clarified that where the premises is self-owned, and any one valid ownership document like electricity bill, property tax receipt, or municipal khata copy is produced then it is the valid proof of ownership.

Earlier, the officers often insisted on multiple documents or additional proofs like sale deed, registry papers, or notarised affidavits, leading to unwarranted delays in granting the GST number, hence after this instruction, the burden of proof on taxpayer is now reduced.

Practical challenges post this instruction

Electricity bill in the name of a family member or related entity of taxpayer often cause rejection while in rural areas, absence of municipal records complicates the compliance for registration.

Nowadays, a concept of shared business is prevailing, where the businesses operate from shared workspaces, hence in that case the ownership documents may not clearly establish exclusive use. For this, one must always align the ownership document with the applicant’s name in PAN card or aadhaar card, and where mismatch exists, a supporting affidavit or no objection certificate on a stamp paper of Rs. 50 should be filed upfront.

Secondly, the aadhaar authentication and physical verification that means, the aadhaar based authentication has been introduced to streamline registrations and prevent fake entities also applicants failing aadhaar authentication are automatically flagged for mandatory physical verification, this delays the registration by further 15 to 30 days. Physical verification is often scheduled at inconvenient times, leading to failed visits and further delays.

Startups and small service providers operating from residential addresses face objections from officers questioning the 'commercial nature' of the premises, like in one instance, my client started a company for education business, operating from his residence in Ajmer he faced rejection as the officer insisted on proof of the property being of commercial nature, despite the law allows residential premises for business.

As I discussed earlier, the GST portal is online driven, but inspite of this, the officer’s discretion plays a vital role in approvals of registrations, the common rejection reasons include the mismatch in applicant’s name on PAN and Aadhaar, or the mismatch in Bank account details with the trade name. Also, uploading of blurred or scanned copies leads to objections, or misclassification of nature of business in registration application such as showing wholesale instead of retail.

While these are the minor clerical errors, these rejections leads to reapplication or resubmission, which causes unnecessary compliance cost.

Use of co-working spaces and shared offices

As due-to heavy renting costs, the co-working culture is increasing day by day, particularly post COVID era, many businesses use shared spaces. However, obtaining GST registration at such premises faces hurdles like demand of specific cabin allotment letters by officers, beyond the general lease agreement between the co-working provider and the applicant, Lack of utility bills in the applicant’s name becomes a reason for rejection, etc.

Despite many clarifications by CBIC, field officers sometimes insist on 'exclusive use' proof, that means evidence to establish the sole right to use a property or asset, restricting others from doing so that is contrary to the law.

Registration for multiple states and branches

Businesses operating across states must obtain separate GST registration in each state (dual model of GST). Taxpayers face many challenges in it like duplication of documentation for each state, the requirement to maintain separate books of accounts for each GSTIN, difficulty in proving premises ownership/lease in states where the business does not directly own property but operates through franchise/agent models.

Case of non resident taxable persons & casual taxable persons

In the case of NRTPs and CTPs, the registration process is more stringent, there is a mandatory advance deposit of estimated tax liability for the period of operation, with a limited validity of registration, also they are unable to claim refund of excess deposit smoothly.

This framework discourages the foreign entities from establishing a short-term business in India, thereby indirectly impacting ease of doing business, it may be linked with the intent for permanent establishment of entities or long term approach.

Technical glitches on GST portal

Despite several upgrades, the GSTN portal still faces recurring issues like not accepting  certain file formats or large document uploads, 'session expired' errors leading to incomplete submissions, and also errors like non-synchronisation of PAN/Aadhaar validation with the databases of CBDT or UIDAI. Such glitches waste professional time and frustrate genuine taxpayers.

Show cause notices in registration

Post-application, the officers often issue SCNs seeking clarifications. While this is legally valid under Rule 9(2), but sometimes the notices are vague, with templated objections like 'submit ownership proof' even when documents are already attached, also the responses made are often not read thoroughly, leading to rejection regardless of compliance, in these cases the applicants are compelled to reapply fresh registeration, leading to duplication of work.

Voluntary vs. compulsory registration

Businesses below threshold sometimes opt for voluntary registration to avail ITC. However, practical issues in it are the officers questiones the bona fides of voluntary applicants, the small businesses lacks the proper documentation such as the trade license or lease deeds, also they face the burden of compliance i.e. monthly/quarterly returns, annual return, which discourages micro-entities.

I agree recently with the Notification No. 15/2025- Central Tax Dated: 17th September 2025, If the turnover of a client is Rs. 2 crore or less, then he is not required to file GSTR-9 (Annual Return) from FY 2024-25 onwards.

Post registration issues

Obtaining registration is only the first step, amendments to GST registration such as change in address, addition of trade name, or addition of directors/partners also face practical hurdles like the system restricts certain changes like PAN, constitution of business.

Even minor changes trigger verification and fresh SCNs, also the processing delays disrupt business operations like when the trade name in GSTIN does not match invoices, it leads to issues.

achieving ease of doing business

There is a need of standardisation of document requirements across jurisdictions, with a mandatory adherence by officers to CBIC instructions such as Instruction 03/2025 as I discussed in the above article. There should be a better integration of GSTN with PAN, Aadhaar, and MCA databases to reduce manual verifications. Along with this there should be expansion of facilitation centres for the small taxpayers.

Anything else by which you think “ease of doing business” could be achieved? You may comment below

Conclusion

GST registration is the first step of compliance under GST. While the statutory provisions are straightforward, practical issues arising from documentation, portal glitches, and officer discretion make the process more complicated.

The latest CBIC Instruction No. 03/2025-GST is a good step which I personally used in a resubmission case, as it played a role in reducing the documentary burden for proving ownership of premises. However, unless implemented consistently at the ground level, businesses, especially small and medium enterprises may continue to struggle.

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Author can be contacted at [email protected]