Vertical Registration, Goods and Services Tax - GST

[KERAGODEGOPALARAO ANANTHARAO]

Dear sir,

In one our client mother who is registered person in renting of immovable property in other district is demised leaving her only son.

Khatha transfer is completed

Son is a regsitered person supplying taxable goods

In this situation, is it preferable to go foe vertical registration since one is supply of goods other is supply of services.

If vertical registration is advisable what is the procedure?

Yours faithfully,

K G Anantharao

Posts / Replies

[YAGAY andSUN]

This is a great and very practical question. Let’s break down the scenario and then see if vertical registration is necessary, advisable, or even applicable in this case.

🧾 Scenario Recap:

• Mother (now deceased) was a registered person, supplying taxable service (renting of immovable property) in another district.
• Only legal heir is her son (also GST-registered), who supplies taxable goods.
• Khatha (property ownership) is transferred to the son.
• Son now owns both:
  • His existing goods business
  • The inherited property which earns rental income (service)

✅ Key Questions to Answer:

❓1. Can the son operate both businesses under the same GST registration?

Yes, if both activities are in the same state, he can run both supply of goods and services under one GST registration.

There is no restriction under GST law on supplying both goods and services under one registration — as long as:

• The place of business or additional place of business is declared properly in the GST portal.
• Proper accounting is maintained.

❓2. What is Vertical Registration and is it required here?

Under Rule 11 of CGST Rules, a person having multiple business verticals in the same state may obtain separate registration for each vertical.

🧾 Meaning of "Business Vertical":

As per Section 2(18) of CGST Act:

"Business vertical" means a distinguishable component of an enterprise that is engaged in supplying an individual product or service or a group of related products/services and that is subject to risks and returns that are different from those of the other business verticals.

So technically, goods trading and property rental service are distinct business verticals.

✅ Therefore, vertical registration is allowed, but not mandatory.

🔍 Is It Advisable?

Let’s consider pros and cons:

Consideration	Same Registration	Separate (Vertical) Registration
Compliance Simplicity	✅ Easier (one return, one registration)	❌ More complex (multiple returns)
ITC Management	✅ All ITC under one pool	✅ Easier segregation if businesses unrelated
Audit Trail	❌ May be harder to separate cost/revenue	✅ Cleaner audit trail for each activity
GST Rates and Types	✅ Mixed supplies possible	✅ Keeps supply of goods/services distinct
Location Specifics	❗️Only feasible if both in same state	✅ If in different states, separate GSTIN mandatory

✅ Conclusion:

• If both activities (rental & goods) are in the same state, and you want simple compliance, continue with a single registration.
• If they are in different states, separate registration is mandatory.
• If in the same state, and you prefer to segregate business clearly (e.g., separate accounting, billing, ITC), then vertical registration is optional but allowed.

🛠️ Procedure for Vertical Registration (Same State):

1. Login to GST Portal: https://www.gst.gov.in
2. Go to Services > Registration > New Registration
3. Select:
   • "I am a Taxpayer"
   • Enter PAN, State, District
   • Select “Yes” for “Are you registering for a different business vertical in the same state?”
4. Proceed to fill in business details, including place of business (new property for renting).
5. Upload documents:
   • Proof of ownership (Khatha certificate, etc.)
   • PAN
   • Aadhaar (for e-KYC)
   • Photos, declaration, etc.
6. Submit with EVC or DSC
7. Receive ARN and track status

Let me know which state(s) the two businesses are in — that’s the key to deciding between optional vs mandatory dual registration.

[KERAGODEGOPALARAO ANANTHARAO]

THANK YOU SO MUCH FOR YOUR  DETAILED REPLY SIR