Introducing Goods and Services Tax (GST) has been a big tax reform in India. And so much time has passed since its introduction that questions like “what is GST Registration” do not sound right. So here is a brief introduction
India has a Dual GST Model. Under this tax maybe levied simultaneously by both Central and State governments on certain taxable supplies. Such as on inter-state supplies, tax is levied by Central Government.
Features | Central GST – CGST | State GST – SGST | Integrated GST – IGST |
---|---|---|---|
Tax Levied By | Central Government on Intra-State supplies of Goods and/or Services | State Government, on Intra-State supplies | Central Government, on Inter-State supplies |
Applicability | Supplies inside a state | Supplies inside a state | Interstate supplies and import |
Input Tax Credit | Against CGST and IGST | Against SGST and IGST | Against CGST, SGST, and IGST |
Tax Revenue Sharing | Central Government | State Government | Shared between State and Central governments |
Free Supplies | Applicable | Applicable | Applicable |
All businesses involved in buying or selling goods or providing services, or both, should register for GST. But for below-listed persons, GST Registration is compulsory.
Previous Law Converted Taxpayer – All individuals or companies registered under the Pre-GST tax laws like Service Tax or Excise or VAT, etc.
Turnover for Goods Provider – If your sales or turnover of goods is crossing Rs. 40 lakh in a year then GST Registration is mandatory. For the Special Category Status, the limit is Rs. 20 lakh in a year.
Turnover for Service Provider – If you are a service provider & sales or turnover is crossing Rs. 20 lakh in a year then GST Registration is mandatory. For the Special Category Status, the limit is Rs. 10 lakh in a year
Casual Taxpayer – If you supply goods or services, in events/exhibitions, and not have a permanent place of doing business. In such cases, GST is charged based on an estimated turnover of 90 days. The validity of the Registration is also 90 days.
Agents of Suppliers or Input Service Distributor (ISD) – All supplier agents and ISD, to earn benefits of Input Tax Credit, need GST Registration.
NRI Taxable Person – If you are an NRI or handling the business of NRI in India.
Reverse Charge Mechanism (RCM) – Businesses who need to pay taxes under the RCM also need to be GST registered.
E-Commerce Portals & Sellers – Every e-commerce portal (such as Amazon or Flipkart) under which multiple vendors are selling their products. Or for all vendors. You need a GST Registration.
Outside India Online Portal – For suppliers of online information and database access or retrieval services from a place outside India to Indian Residents.
Transferee – When the business has been transferred.
Inter-State Operations – Persons making an inter-state supply. Whatever the turnover.
Brands – Aggregator who supplies service under his Brand or Trade Name.
Other Taxation – Persons who are required to deduct tax u/s 37 (TDS) of the Income Tax Act.
Voluntary GST Registration – Any entity can obtain GST registration at any-time. Even when the above mandatory conditions don’t apply to them.
Inter-State Registration – If you are a supplier in more than one state you need GST Registration in all the states that you supply goods or services to.
Branches – If your business has multiple branches in multiple states, register one particular branch as the main office or head office and the remaining branches as additional. (Not applicable if the business has separate verticals as listed in Section 2 (18) of the CGST Act, 2017.)
The Special Category States under GST Act are:
(a) Arunachal Pradesh, (b) Assam, (c) Sikkim, (d) Meghalaya, (e) Tripura, (f) Mizoram, (g) Manipur, (h) Nagaland, and (i) Himachal Pradesh. These states can opt for tax payable at a concessional rate
Fill the simple application form provided on our website or Call us
Send your documents that are required according to your category of business.
We will file all your forms on behalf of you along with the declaration.
As soon as we will get your GST number, we will send you by E-mail.
Aadhaar card, PAN card, and a photograph of the sole proprietor
Details of Bank account- Bank statement or a canceled cheque
Office address proof:
Rented office – Rent agreement and NOC (No objection certificate) from the owner.
Aadhaar card, PAN card, Photograph of all partners.
Details of Bank such as a copy of canceled cheque or bank statement
Proof of address of Principal place of business and additional place of business
In case of LLP- Registration Certificate of the LLP, Copy of board resolution
Appointment Proof of authorized signatory- letter of authorization
Company’s PAN card
Certificate of Registration
MOA (Memorandum of Association) /AOA (Articles of Association)
Aadhar card, PAN card, a photograph of all Directors
Details of Bank- bank statement or a canceled cheque
Proof of Address of Principal place of business and additional place of business:-
Appointment Proof of authorized signatory- letter of authorization
A copy of PAN card of HUF
Aadhar card of Karta
Photograph
Details of Bank- bank statement or a copy of a canceled cheque
Pan Card of society/Club/Trust
Certificate of Registration
PAN Card and Photo of Promotor/ Partners
Details of Bank- a copy of canceled cheque or bank statement
Proof of Address of registered office :
Appointment Proof of authorized signatory- letter of authorization
All GST Returns must be filed by the 20th of the following month. There are strict laws under the GST Act for non-compliance with the Rules & Regulations.
Penalty for Not Getting GST Registration, when a business is coming under the purview. The penalty is 100% of the tax amount if the offender has not filed for GST registration and intends to purposefully avoid it. The amount is the tax as applicable. Or Rs. 10,000, whichever is higher.
A penalty of 100% tax due or Rs. 10,000, whichever is higher, is also applicable to those who choose Composition Scheme despite not being eligible to it.
Any offender not paying his due tax or making short payments (genuine errors) is liable to pay a penalty of 10% of the tax amount. This amount cannot be less than Rs 10,000.
A person guilty of not providing the GST invoice is liable to be charged 100% tax due or Rs. 10,000. Whichever is higher.
An offender will be charged a fine of Rs. 25,000 for incorrect invoicing.
If a person has not filed for unpaid tax, there is a penalty of Rs. 50 per day. Rs. 20 per day if he was to file for NIL returns. And the maximum amount must not exceed Rs. 5,000.
There is also a provision of the penalty by a jail term for tax offenders to commit fraud.
One of the benefits of GST is the elimination of multiple indirect taxes that existed earlier. So many taxes have been replaced. Taxes like excise, octroi, sales tax, Service tax, CENVAT, turnover tax, etc are not applicable anymore and all those have come under common tax called GST.
GST applicability has resulted in the elimination of double charging in the system for a common man. Through this, the price of goods and services has reduced & helping the common man saving more money.
GST brought the concept of “One Nation One Tax”. That unhealthy competition that existed earlier among the States has benefited businesses wishing to do interstate business.
From manufacturing to consumption, GST is applicable at all stages. It is providing tax credit benefits at every stage in the chain. In the earlier scenario, at every stage, the margin used to get added and tax was paid on the whole amount. Under GST the businesses are taking benefit of Input Tax Credit and tax is being paid on the amount of value addition only. GST has reduced the cascading effect of tax thereby reducing the cost of the product.
Because GST has reduced the cost of products, the demand, for some – if not all, products have increased. With the increase in demand, to meet the increase in supply, the employment graph has started going up.
The higher the demand, the higher will be the production. This results in a higher Gross Domestic Product (GDP).
Goods and services tax is a single tax that includes various earlier taxes
and has made the system efficient with fewer chances of corruption and Tax Evasion.
Manufacturing has become more competitive with GST eliminating the cascading effect of the tax, inter-state tax, high logistics cost. Bringing competitiveness as GST will address the cascading effect of the tax, inter-state tax, high log benefits to the businessman and consumer.
Under the GST regime, 17 indirect taxes have been replaced into a single tax. The increase in product demand means higher tax revenue for state and central government.
Elimination of Multiple Taxes
Saving More Money
Ease of business
Cascading Effect Reduction
More Employment
Increase in GDP
Reduction in Tax Evasion
More Competitive Product
Increase in Revenue
A person who is not liable, still files for GST application, can get registered. However, then, it becomes essential for him to file Returns, after getting a GST number. Else, he will have to pay a penalty, as applicable.
You can choose to register for GST voluntarily too.
Especially if you are wishing to claim Input Tax Credit. Even if you are not liable to be registered, you can be registered voluntarily. After registration, you will also have to comply with regulations as applicable to those required to be registered.
Benefits of registering voluntarily under GST
Inputs are all those goods that went into creating the finished products provided to the final consumer. Businesses are charged GST on goods/services that are used as inputs. The ITC mechanism allows GST registered businesses to receive refunds on the GST paid for purchasing all inputs. This helps prevent the cascading taxation effect, which was the primary reason behind the introduction of the GST.
For instance: GST payable on the supply of the final product of a manufacturer is Rs. 850 and the GST paid on inputs is Rs. 725. The manufacturer can claim the Rs. 725 as ITC. This brings the net tax payable at the time of supply to Rs. 125 only (Rs. 850 – Rs. 725).
Under the previous indirect tax regime of levy of Service Tax, VAT, and Excise – a lot of input tax credit was not properly utilized.
Who are eligible to claim Input Tax Credit?
ITC is available only to those entities who have registered under the GST Act. Only GST registered businesses can claim ITC on the tax paid for the purchase of any business relevant inputs.
Who cannot claim ITC?
Input Tax Credit can be claimed only for business purposes. It is not available for goods or services exclusively used for:
Apart from the above, there are some other cases where ITC will be reversed. Such as Credit Note issued to ISD, Non-payment of invoices within 180 days, assets bought partly or wholly for exempted supplies or personal use, etc.
Conditions for claiming Input Tax Credit
ITC cannot be claimed if :
Input tax credits can be used as:
Small businesses with an annual turnover of less than Rs. 1.5 crore (Rs. 75 Lakhs for the Special Category States) can opt for the Composition scheme.
Who can opt for the Composition scheme?
Which businesses are not eligible to apply for the Composition Scheme?
Composition scheme does not apply to:
How to apply for the Composition Scheme?
GSTIN is a unique 15-digit alphanumeric code that is allotted to each Firm/Company/Individual, who are registered under GST.
The government has ensured that everything under GST is digital so that there is maximum transparency with minimum corruption.
The first 2 digits of the GSTIN represent the state code which is given as per the 2011 census.
The next 10 digits are the PAN number of the entity.
The 14th digit is Z by default.
The 15th or the last digit is the Checksum digit. It comes, automatically, as a result of the calculation of the other 14 digits.