GST registration: key hurdles for freelancers and small businesses

Entrepreneurs face unexpected compliance demands and additional paperwork despite meeting requirements

- Shipra Singh

Registering for GST as a freelancer or small business owner seems simple on paper. A quick look at the mandatory requirements on the official website shows that you need just two documents—your picture and proof of the residence where you will conduct your business, like an electricity bill or a rent agreement.

The next step is the online registration process—uploading the documents and submitting the application and Aadhaar authentication through OTP. However, the process may not be as simple as it sounds. GST (goods and services tax) officers often ask for additional allied registrations, such as shops and establishment licences, MSME Udyam certificates and no-objection certificates (NOC), among other things, though these are not mandated by law.

The process becomes tricky for sole proprietor businesses, such as freelancers or those running an inventory-free e-commerce platform, as they may not even qualify for some of these certificates or licences.

The added difficulty is that the GST registration-related standard operating procedures (SOP) are not well defined, and the on-ground practices followed vary from jurisdiction to jurisdiction, says Ranjeet Mahtani, partner, Dhruva Advisors. "Consequently, the documentation requirements vary depending on the GST officer handling the case."

This means applicants can only find out what extra paperwork is needed once the officer raises an enquiry, causing unexpected delays.

"These practical challenges often lead to confusion, delays and additional compliance burdens," said Vijaykumar Puri, partner at VPRP & Co LLP, Chartered Accountants.

Mint lists out some of the common additional compliance requirements asked across different states during GST registration.