Can You Start Multiple Businesses with One GST Number?
If you’re an entrepreneur planning to expand your business horizons, you might wonder if it’s possible to run more than one business with a single GST number. The answer is yes—but there are specific conditions to be aware of. Let’s break down the regulations to help you navigate the complexities of GST registration in India.
GST Registration for Multiple Businesses: The Basics
Under GST law, a single GST registration is allowed for multiple businesses, provided they operate under the same legal entity. This is beneficial for business owners running multiple units, such as retail and consultancy, under the same PAN card. Since GST registration is PAN-based, all businesses must fall under the same legal structure.
When Can You Use One GST Number for Multiple Businesses?
If your businesses are in the same state and fall under different sectors or categories, you can list them as separate verticals of the same legal entity. During your GST registration, you need to declare these business verticals. This allows for easier compliance and unified tax filings. However, each business vertical must be properly documented in your GST application.
For example, if you own a retail store and an event management company in Maharashtra under the same proprietorship or company, you can register both as distinct business verticals using one GST number. This reduces paperwork and simplifies tax management.
When Separate GST Registrations Are Required
If you operate businesses in different states, you must obtain separate GST numbers for each state, even if the businesses fall under the same legal entity. GST law mandates a state-specific registration structure, which means that geographical location decides how your GST registrations should be organized.
Consider a scenario where your business has branches in both Maharashtra and Karnataka. Even if these branches are under the same ownership, you must apply for a distinct GST number for each state.
Key Considerations for Running Multiple Businesses Under One GST Number
- Record-Keeping and Compliance: Each business vertical must maintain separate records to ensure transparency. While the GST number might be the same, accounting records for different business segments should be distinct.
- Penalties for Non-Compliance: Non-compliance with GST requirements, such as improper documentation of distinct business verticals or failing to register a new business vertical, can lead to penalties. Recent case laws, such as the ruling in ABC Industries vs. GST Authority, have highlighted the importance of accurate documentation for distinct business activities.
- Professional Guidance: Consulting a tax professional is advisable when deciding on the best way to register multiple businesses under GST. A professional can help ensure you meet all compliance requirements and avoid complications.
Conclusion
Running multiple businesses with a single GST number is a practical approach for entrepreneurs operating within the same state under a single legal entity. Declaring your businesses as distinct verticals streamlines your tax obligations and helps in easy management of finances. However, if your businesses span across different states, you must register for separate GST numbers to remain compliant.
Takeaway Tip: Always ensure that your distinct business verticals are well-documented, and seek professional advice to avoid compliance issues. Whether your business expands within the state or crosses borders, understanding GST registration rules will help you grow while staying compliant.