When firms want to bring efficiency to their supply chain, they rely on leased premises to store their merchandise. But, to carry out their operations smoothly in India, one has to register lease premises like warehouses for GST, or with the best warehouse management systems in Hyderabad, which stands for goods and services tax. A frequently asked question in this context is: Is registration for GST possible by a third party for a leased warehouse?
The answer is yes, but that only comes with some conditions, a set of documentation, and a few things to consider, which we will see in this blog.
What does GST Registration for Warehouses Mean?
According to the Indian GST laws, a warehouse has to be registered in case the warehouse satisfies the meaning of a place of business through the storage of goods, their distribution, or otherwise. An unregistered warehouse may result in compliance complications, penalties, or even shutdown of business, especially for business entities that seek to recover ITC on goods stored in the warehouse.
Pre-Register Conditions for Third-Party
- Ownership or Lease Agreement: The third party is bound to have some form of contract with the owner of the warehouse. A lease agreement or rental is usually preferred as a valid means to provide evidence of possession, development, or usage of the premises in relation to business.
- Authorization: The third party should have written consent or permission from the warehouse owner to use the warehouse for GST registration. This is even more relevant when the warehouse owner is not engaged in the business processes most of the time.
- Compliance with GST Norms: They should either be registered as a GST or intend to register as a GST in case their annual turnover reaches the taxable limit as prescribed by the government.
Documents Required for GST Registration of a Leased Warehouse by a Third Party
In the following, the documents required by the third party to register a leased warehouse with the best warehouse management systems in Hyderabad for GST are listed down:
1. Lease Agreement or Rental Contract: An essential document of the lease agreement that confirms the right of the third party to use the warehouse. This document should contain how long the lease will take, the service agreement, and the users, involving both the warehouse owner and the third party.
2. Ownership Proof of the Warehouse: In this case, a photocopy of the title deed or property tax receipt to ensure the actual owner of the warehouse is identified.
3. No-Objection Certificate (NOC): The consent from the warehouse owner availing of or written NOC that states that the third party is free to use the date Warehousing as the address for GST registration.
4. Proof of Identity and Address of the Third Party: PAN, Aadhar card/Passport for identification proof, and proof of address; utility bills like Electricity bill, water bill, etc.
5. Other Supporting Documents: The third party may be required to provide other relevant documents, for example, bank statements, licenses to carry out business activities, and others to prove one’s connection with the warehouse.
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Why Should a Third Party Register a Leased Warehouse for GST?
- Compliance with Legal Requirements: Basically, signing up a warehouse for GST enables a business to undertake tax compliance in India to avoid being charged additional penalties or fines for non-compliance with the law.
- Input Tax Credit (ITC) Benefits: Registered warehouses enable a business to make ITC for any stored good used for business and thus lead to reduced taxation.
CONCLUSION
It is legal and in many cases essential to register a GST-liable leased warehouse under the third party’s name. Whether you own the property and provide warehouses for businesses or if you are an owner of a third-party logistics company, you need to keep yourself and your business updated to avoid legal consequences and delays in the course of your operation. For more valuable insights, contact Scalar, the best warehouse management systems in Hyderabad today!