Freelancers and small businesses struggle with GST registration

Freelancers and small business owners face challenges when registering for Goods and Services Tax (GST). The process requires more documents than many expect, leading to potential delays. At first glance, the requirements for GST registration appear straightforward. Applicants need only a photo and proof of their business address, such as a utility bill. However, GST officers often request additional documents, like shop licenses or no-objection certificates (NOCs), which complicates the process. This is especially true for sole proprietors and e-commerce businesses that may not qualify for these extra certificates. According to experts, the rules for GST registration can vary widely based on local practices. Ranjeet Mahtani from Dhruva Advisors noted that applicants often learn about the need for more paperwork only after submitting their applications. This leads to confusion and can significantly delay the process. One common issue is obtaining a shop and establishment license. Many city regulations force home-based businesses to secure this license, even when it seems unnecessary. Vijaykumar Puri, a partner at VPRP & Co LLP, explained that in some states, these licenses are only mandatory for larger businesses. However, GST officers may still require them from sole proprietors to complete their applications. In cases where businesses operate from rented properties, GST officers may demand notarized consent letters from landlords, even if these are not legally required. This can create additional delays, particularly for businesses sharing office spaces. Experts also point out that while these extra requirements aim to prevent fraud, they can burden legitimate businesses. In some cases, GST applications are rejected simply because officers do not see a declared storage facility, especially for dropshipping businesses that do not hold inventory. Freelancers and small business owners are encouraged to persist through these hurdles. It’s crucial to understand the specific documentation required for local GST offices. This can help smooth the registration process and minimize delays in starting business operations.