Letter of Authorization for GST: When applying for a new GST registration, the applicant has to provide certain documents to the department. One such document is the Letter of Authorisation for GST registration. It is a little difficult for the average man to understand the purpose and importance of the authority letter for GST. Not every business is run by one person; generally, accounting and finance are handled by a specialised person. The authority letter provides a third party with the power to represent the company or firm in the GST department. An authorised signatory letter for GST is required in every sphere of the business world.
The article provides insight into the meaning of an authorisation letter for GST registration, its need, authorization letter format for GST, and more.
What Is Authorization Letter?
A company or firm is owned by multiple people. If all owners decide to manage the company, it will result in mismanagement. It is critical in such cases to delegate different powers to different people.This segregation of powers and duties makes the day-to-day working of the business easy and smooth. The document that shows the assignment of power to a person is called an authorization letter, and the person to whom authority is given is called an authorised signatory. This is legally enforceable and, thus, a very crucial document.
What Is Authorization Letter for GST?
A Letter of Authorization for GST (Goods and Services Tax) is a document that authorizes an individual or entity to act on behalf of another entity in matters related to GST. This letter is often used when a business or individual designates a representative, such as an accountant or tax consultant, to interact with tax authorities, file GST returns, and perform other GST-related activities on their behalf.
While applying for the GST number, the taxpayer is required to submit the following documents:
- Document of business establishment
- Photo of the partner in case of a firm, the promoter in case of a company, and the business owner in case of a sole proprietorship
- Letter of authorization along with the acceptance of authorization
- Photo of an authorised signatory
- As well as proof of business location.
An authorised signatory letter for GST is one of the most important business requirements for regulating business transactions as per GST rules and regulations. Every business organisation, except solo entrepreneurs and firms that are run by a single person, needs an authority letter for GST registration to regulate GST activity within the firm. Even sole proprietorship companies can also provide their employees with an authorization letter for GST registration to start common GST duties on the company’s behalf.
The letter of authority for GST denotes the responsibilities of the named individual concerning the day-to-day operations of GST. This person will represent the firm or company and be responsible for compliance with GST provisions.
Key Component When Writing a Letter of Authorization for GST
This table provides a detailed description of each key component when writing a Letter of Authorization for GST.
| S.no | Key Components | Description |
|---|---|---|
| 1. | Sender’s Details | Full name and address of the entity authorizing someone to act on their behalf. |
| 2. | Recipient’s Details | Full name, address, and GSTIN of the authorized representative. |
| 3. | Introduction | Clearly state that the letter is a formal authorization for GST-related matters. |
| 4. | Authorization Statement | Clearly state that the authorized representative has permission to act on behalf of the entity for GST-related tasks. |
| 5. | Scope of Authorization | Specify the specific tasks or activities the authorized representative is permitted to handle. |
| 6. | Duration of Authorization | Specify the start and end dates of the authorization if it is not open-ended. |
| 7. | Declaration and Signatures | Include a declaration of accuracy and signatures by an authorized signatory. |
| 8. | Witness or Notary (if required) | Depending on the jurisdiction, include a witness or notary if necessary. |
What Are the Responsibilities of Authorised Signatory?
Before understanding what the responsibilities of an authorised signatory are, let’s understand who is an authorised signatory. An authorised signatory is someone who has the right to sign documents on behalf of an organization. In simpler words, an authorised signatory is a signer who has the authority to sign the document. The authorised signatory will perform the following tasks on behalf of the business entity:
- Apply for the GSTIN.
- Have the power to make any amendments to the details provided to the department.
- Apply for cancellation of GST registration.
- Sign documents that are pertinent to GST, like returns, invoices, etc.
- Timely filing of returns and compliance with GST provisions and corresponding rules
- Respond to the letters and notices sent by the GST department.
- When required, physically visits the GST office and represents the firm or company in assessment proceedings or any other matter.
What Is the Correct Format of GST Authority Letter?
The GST Act does not prescribe any fixed format for the GST authorisation letter, but there are key aspects that should be covered in the letter to make it a GST authorised signatory letter. The letter should specify the authorised person and their responsibilities.
Following are the essential details that will form part of the authorization letter for the GST:
- The registered name of the firm or company
- The official address of the place of business
- The company’s or firm’s contact details, such as email address, phone number, etc.
- Name of the taxpayer (applicant or owner)
- Name and address of the authorised signatory, as well as their position in the company
- Aadhar and PAN details of the taxpayer and authorised signatory
- Date, place, and signatures
Things to Remember While Drafting Letter of Authorization for GST
When drafting a letter of authorization for GST format, the following points should be considered:
- The letter of authorization should be issued on the letterhead of the business.
- Attach proof of address for the principal place of business, like a purchase deed, a rent agreement, etc.
- Although proprietorship does not require the appointment of an authorised signatory, if the taxpayer wants, they can appoint an authorised signatory.
- The authorization letter should be attached to the consent letter of the person stating their acceptance of the role of authorised signatory.
- In the case of a company, the authorization letter should be supported by a copy of a duly passed board resolution.
- The partnership firm’s letter of authorization will be considered valid only when it is signed by all the partners.
- In the absence of the authorised signatory, the partners and directors of the company can act as authorised signatories.
- The GST portal allows a maximum of 10 authorised signatories. But in such cases where multiple authorised signatories are added, one primary authorised signatory is appointed.
Authorization Letter for GST – Sample Format
Below is a sample to help you better understand the concept and content of GST authorised representative letter format.
| Firm/Company’s Letterhead The Declaration for authorized signatory I/we.. (Owner/Karta/Partner/Promoter/Director) of M/s(Name of Business/Partnership firm/ Company) hereby declare that we appoint Mr, who is partner/director/Accounts officer/Chief financial officer of the company, as the Authorized signatory on behalf of the M/s.(name of the business) for the matters related to GST. He is responsible for handling GST registration, timely filing of GST returns, making any amendments, responding to GST authorities, and overlooking GST compliance requirements. All his actions related to the GST will be binding on the firm/Company. M/s(Firm/Company name) (Signatures of Owner/Karta/Directors/Partners) Designation Date Place Declaration of Acceptance I hereby declare my acceptance of the position of Authorized signatory for the above-mentioned responsibilities related to GST for M/s..(Firm/Company). Signature of the authorized signatory Designation Date Place |
Additional Information for Writing Letter of Authorization for GST
Here’s some additional important information related to writing a Letter of Authorization for GST:
| S.no | Additional Information related to writing a Letter of Authorization for GST |
|---|---|
| 1. | Legal Compliance: Ensure that the letter complies with relevant legal requirements and regulations governing GST authorizations. |
| 2. | Clear Language: Use clear and concise language to avoid any ambiguity in the authorization terms and conditions. |
| 3. | Specificity: Clearly outline the specific tasks or actions the authorized representative is empowered to perform on behalf of the entity. |
| 4. | Authorization Revocation: Specify the process for revoking the authorization and under what circumstances it may be revoked. |
| 5. | Communication Channels: Indicate preferred communication channels between the authorized representative and the entity for updates and queries. |
| 6. | Confidentiality: Emphasize the need for the authorized representative to maintain confidentiality regarding sensitive financial and business information. |
| 7. | Acknowledgment: Request an acknowledgment from the authorized representative confirming their acceptance and understanding of the authorization terms. |
| 8. | Notarization (if required): If the document requires notarization, ensure that it is duly notarized to enhance its legal validity. |
| 9. | Retention of Records: Specify how long records of the authorization will be retained and how they will be securely stored. |
| 10. | Contact Information: Provide up-to-date contact information for both the entity and the authorized representative for ease of communication. |
These points add depth to the authorization letter, addressing legal, communication, and procedural aspects to ensure a comprehensive and effective document.
FAQs on Letter of Authorization for Virtual Office
Now that you know how to draft a letter of authorization, here are some FAQs to help clear any remaining doubts.
What is a letter of authorization?
A letter of authorization is a legally enforceable document that states the appointment of a person other than the owner, partner, or promoter to act on behalf of the business, and their acts will be binding on the company. This person is the authorised signatory of the company or form.
Why is there a need for the appointment of the authorised signatory?
The business is run and owned by more than one person, and it is impossible to manage all the activities. Thus, segregation of duties and responsibilities is crucial. Appointing an authorised signatory for the GST purpose relieves owners from managing legal compliance and allows them to better focus on other aspects of the business.
What is the prescribed GST authorised signatory letter format in the GST Act 2017?
As per the GST Act, there is no prescribed GST authority letter format. But the valid letter of authorization should mention the name of the company, the name of the partner, director, or owner, and the name of the authorised signatory along with the designation. The letter of authorization should be followed by the acceptance declaration.
What are the key responsibilities of the authorised signatory?
The authorised signatory will be responsible for the following:
1. GST registration
2. Making any amendments to the previously provided information
3. Cancellation of the GST number
4. Replying to the letters and notices of the GST departments
What is the content of the authorization letter?
The letter should provide the following basic information:
1. Name of the business, firm, or company
2. Name of the owner, partners, or directors of the company
3. Name of the authorised signatory along with the designation
4. Signatures of both parties
To Conclude
The letter of authorization is a crucial document. It is not only used in GST but also for smoothly carrying out activities like opening bank accounts, routine banking transactions, routine business transactions, and signing documents on behalf of the firm or owner. This article aims to provide you with a better understanding of the importance and use of the GST letter of authorisation.
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