In the Indian tax system, an Unregistered Person refers to an individual or business entity that is not registered under the Goods and Services Tax (GST) law. This means they do not have a GSTIN (Goods and Services Tax Identification Number) and are not authorized to collect GST on their sales or claim input tax credit on purchases.
A person may remain unregistered either because their annual turnover is below the GST registration threshold (₹40 lakhs for goods, ₹20 lakhs for services in most states), or because their nature of activity is exempt from GST. However, certain businesses—like those involved in inter-state trade or e-commerce—are required to register under GST regardless of turnover.
The term is especially important during compliance processes such as filing GST returns, issuing invoices, or making purchases. For instance, if a registered business purchases goods or services from an unregistered person, they may need to pay GST under the reverse charge mechanism (RCM). This adds a layer of compliance responsibility on the buyer.
Understanding whether someone is an unregistered person is also crucial when starting a business. If your business is dealing with such persons, you may have additional tax implications and reporting duties. To ensure full compliance and avoid penalties, it’s advisable to evaluate your GST registration requirements carefully.
For more guidance on GST registration, compliance, and tailored solutions for your business, you can explore FinTax24’s GST services.