What is the importance of obtaining a GSTIN through GST registration?

Obtaining a GSTIN through GST registration is crucial as it identifies your business in the national tax database, lending credibility and legitimacy to your operations. Additionally, it allows businesses to claim input tax credits, which helps in reducing the overall tax burden.

Who is required to register for GST and why is it mandatory for them?

Businesses exceeding the prescribed turnover threshold, interstate suppliers, casual taxable persons, and input service distributors are required to register for GST. It is mandatory for them because it ensures compliance with national tax regulations and enables them to legally conduct interstate trade.

What are the steps involved in the GST registration process?

The GST registration process involves accessing the GST portal and generating a Temporary Reference Number (TRN) by filling in the required details. Applicants must then submit a complete application and upload necessary documents, after which the application is verified by a GST officer who issues a GSTIN upon successful verification.

What are some common challenges businesses face during GST registration?

Businesses often face challenges such as document discrepancies, which can lead to delays or rejections, and technical glitches on the GST portal, especially during peak times. Additionally, new applicants may struggle with understanding the process without sufficient guidance.

How do recent updates impact the GST registration process?

Recent updates in the GST registration process, such as the integration of biometric and Aadhaar authentication, aim to prevent fraud and enhance efficiency. Changes like the introduction of e-Invoicing requirements and periodic reviews of turnover thresholds for registration exemptions reflect the system's ongoing efforts to streamline compliance and reporting.

Sreeram Viswanath

Expert

Published on: Jul 30, 2026

Personal Liability Of Directors

The liability of shareholders in a company, unlike that of a

sole proprietorship or partnership firm, is limited. The liability of the company is generally not transferred onto the directors. However, directors can be held personally liable for their acts under the Companies Act 2013, if there is a breach of fiduciary duty or instance of fraud. In this article, we look at instances where the directors can be held personally liable under the Companies Act, 2013. Know more about roles and responsibilities of a Director.

Breach in Fiduciary Duty

A director must comply with certain fiduciary duties, and any lapse on this part will make the directors personally liable in an action for tort. Some of these cases include fraud, breach of trust, fraudulent misrepresentation etc.

Issue of Prospectus with Intent to Defraud

If a director issues a prospectus with intent to defraud the applicants or other persons for any purpose, he/she will be personally held liable, without any limitation of liability, for the damages incurred by any person who has subscribed to the securities on the basis of such prospectus.

Acceptance of Deposits with the Intent to Defraud

If a company fails to repay the deposit or interest within the stipulated time, and it is established that the deposits were accepted for a fraudulent purpose, the concerned officer who was responsible for the acceptance of such deposit will be held personally accountable, without any limitation of liability, for all or any of the losses/damages incurred by the depositors.

Undue Advantage by Directors on Account of Fraud

An inspector may report on the occurrence of any fraudulent activity in a company. If any director, key managerial personnel, other officer of the company or any other person belonging to the company utilize this scenario in an inappropriate manner, whether in the form of asset property, cash or any other manner, the Central Government may file an application before the

National Company Law Tribunal seeking appropriate orders with regard to discharge of such asset, property or cash, and holding the concerned director, key managerial personnel, officer or other person personally liable, without any limitation of liability.

Liability for Fraudulent Conduct of Business

While

dissolving a company, if it is evident that any business of the entity has been pursued with intent to defraud the creditors of the company or any other persons, the National Company Law Tribunal, on the application of the Official Liquidator/Company Liquidator/Creditor/Contributor of the company, is entitled to declare that any person who is/has been a director, manager or officer of the company, or has been a part of it with the complete awareness of the events, shall be personally held liable, without any limitation of liability, for all or any of the debts or other liabilities of the company as directed by the Tribunal.

Proficiency of Directors

As per the latest amendments to the Company's rule (2014), [Rule-8, sub-rule(5), Clause(iii)], the director of a company has to undergo online proficiency self-assessment test every year. This test will be conducted by the Ministry of Corporate Affairs. The exact amendment text is provided below: "(iiia) a statement regarding opinion of the Board with regard to integrity, expertise and experience (including the proficiency) of the independent directors appointed during the year" The notification can be accessed below:

However, as per the latest notification on 28th February 2020, the directors does not need to undergo proficient self-assessment test for directors who serve a minimum of 10 years as on the date of inclusion in the database for a listed public company or unlisted company with a paid-up capital of minimum of ten crore or the corporate body listed in any of the stock exchange in India. The relevant notification can be accessed below:

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Frequently Asked Questions

Common questions about Personal Liability of Directors under Companies Act 2013.

A director has a fiduciary duty to act in good faith and in the best interests of the company. If a director breaches this duty, they can be held personally liable in an action for tort, which may include fraud, breach of trust, or fraudulent misrepresentation.

Yes, if a director issues a prospectus with the intent to defraud applicants or others for any purpose, they can be held personally liable without any limitation of liability for the damages incurred by any person who subscribed to the securities based on such a prospectus.

If a company fails to repay deposits or interest within the stipulated time, and it is established that the deposits were accepted for a fraudulent purpose, the officer responsible for accepting such deposits can be held personally accountable, without any limitation of liability, for all losses or damages incurred by the depositors.

Yes, if an inspector reports any fraudulent activity in a company, and any director, key managerial personnel, officer, or other person associated with the company utilizes this situation inappropriately, the Central Government can seek orders from the National Company Law Tribunal to hold them personally liable without any limitation of liability.

During the dissolution of a company, if it is evident that any business of the entity has been pursued with the intent to defraud creditors or others, the National Company Law Tribunal can declare that any person who is or has been a director, manager, or officer of the company, and was aware of the events, shall be personally held liable without any limitation of liability for all or any of the debts or other liabilities of the company.

Yes, according to the latest amendments to the Companies Rules (2014), directors of a company have to undergo an online proficiency self-assessment test every year, conducted by the Ministry of Corporate Affairs. However, this requirement is waived for directors who have served for at least 10 years in a listed public company, an unlisted company with a paid-up capital of at least 10 crores, or a corporate body listed on any stock exchange in India.

The proficiency self-assessment test for directors aims to assess their integrity, expertise, and experience, including their proficiency. This assessment is part of the statement regarding the opinion of the Board on the independent directors appointed during the year.

Yes, if it is evident that the business of the company has been conducted with the intent to defraud creditors, the National Company Law Tribunal can hold directors, managers, or officers of the company personally liable without any limitation of liability for all or any of the debts or other liabilities of the company.

The National Company Law Tribunal plays a crucial role in holding directors personally liable in cases of fraudulent conduct, undue advantage taken on account of fraud, and fraudulent conduct of business during dissolution. The Tribunal can issue orders to hold directors personally liable without any limitation of liability for damages or liabilities of the company.

Yes, if a company fails to repay deposits or interest within the stipulated time, and it is established that the deposits were accepted for a fraudulent purpose, the officer responsible for accepting such deposits can be held personally accountable, without any limitation of liability, for all losses or damages incurred by the depositors.