If you are conducting any business in India, it is important to understand the Goods and Services Tax (GST) and the benefits of registering for it. The GST is a direct tax that has replaced several other indirect taxes in India, including excise duty, VAT, and services tax. As of July 1, 2017, anyone conducting business in India must register for the GST, regardless of their turnover. However, registration limits vary depending on the type of business and where it is located. In this post, we will share some valuable information regarding the GST registration process in India.
1. Introduction to GST Registration
The and Service Tax Act (GST Act) was initiated by the Indian Government on July 1, 2017. This act was created to abolish various other indirect taxes in India and create a single taxation regime for ease of collection and increased efficiency. GST registration is mandatory for businesses with an annual turnover of Rs. 40 Lakh and above, while it is compulsory for companies earning more than Rs. 10 Lakh yearly revenue in the North-East and Hill states. The process of GST registration is relatively simple and takes 2 to 6 working days to complete. Before a business can determine its GST liability, assessing the type of GST applicable is essential. In India, each GST registration can be divided into four categories based on the transaction type, namely SGST, CGST, UTGST, and IGST. Businesses and individuals who were registered under pre-GST laws, have an annual turnover of over Rs. 40 Lakh, supply goods through an e-commerce aggregator, and entities paying taxes under a reverse charge mechanism are eligible for the GST registration process. Documents needed for registration include PAN, proof of business registration or incorporation certificate, identity and address proof, and an authorization letter. GST registration is easy and free, with a fine for not filing for it being 1000 INR or 10% of the due amount.
2. Eligibility Criteria for GST Registration
To for GST in India, a business must meet certain eligibility criteria. The first requirement is that the company must have an annual turnover of Rs. 40 lakhs or more. However, there are certain exceptions where businesses must register even if their turnover is below Rs. 40 lakhs. For instance, businesses that conduct inter-state taxable supplies, sell products on e-commerce sites, or conduct trade and commerce anywhere in India are required to register under GST.
In addition, to register for GST, you need to have a PAN (Permanent Account Number) and other relevant documents. Your PAN is mandatory to obtain GST registration as GST Registration numbers are PAN-based. In terms of documentation, you need to provide proof of identity, proof of address for the office, bank details, and a certificate of incorporation if your company is a private limited company.
Overall, it is essential for businesses with an annual turnover of Rs. 40 lakhs or more to register under GST. Failure to do so could result in penalties and legal issues. As a taxable person under GST, it helps establish your brand as reliable and authentic while enabling your enterprise to operate legally.
3. Turnover Limits for GST Registration
To ease compliance under GST, the GST Council has increased the GST registration threshold limits, which vary for different categories of states. Previously, businesses with turnover of up to Rs.20 lakh were exempt from GST registration, but the limit has now been doubled to Rs.40 lakh for most states. However, for special category states and northeastern states, the limit stands at Rs.10 lakh. It is important to note that these limits apply to the aggregate turnover for the current financial year.
While the threshold limits for service providers remain the same at Rs.20 lakh for most states and Rs.10 lakh for special category states, mandatory registration is required for certain individuals and businesses as determined by the government. The rise in the threshold turnover limits of GST registration allows businesses to maximize input tax credit claims, and it streamlines the compliance process under GST.
As per the Central Board of Indirect Taxes and Customs (CBIC), businesses must obtain GST registration if their aggregate turnover exceeds Rs.20 lakh (for normal category states) and Rs.10 lakh (for special category states). The exemption limit has been increased to Rs.40 lakh for most states from the earlier Rs.20 lakh. Businesses operating without GST registration may face heavy penalties as per the GST rules.
4. Types of GST Registrations
Under GST Act, there are various types of GST registrations, and it is essential to know them before registering as a new taxpayer. The different types of GST registration include Regular, Composition, Non-Resident Taxpayer, and Casual Taxpayer. A Regular GST registration is needed by most Indian businesses and does not require a deposit or renewal. The Composition scheme is available for businesses with an annual turnover of up to ₹1.5 crore and cannot claim input tax credit. Non-Resident Taxpayers are those who do not have a fixed place of business in India but come occasionally to conduct business. Casual Taxpayers are those who do not have a permanent office or factory and have to make an advance deposit of tax. When choosing the appropriate type of registration, it’s essential to consider your business’s eligibility for GST registration and the benefits it offers, such as improved brand value and increased opportunities for business growth. Being GST registered also makes it easier to sell goods across the country and avail input tax credit. It is best to consult with a tax professional or use expert-assisted tax filing to ensure appropriate registration and hassle-free compliance with GST regulations.
5. Documents Required for GST Registration
When comes to registering for GST in India, businesses need to ensure they have the necessary documents to complete the process. The required documents vary depending on the type of GST registration and the constitution of the business. At a minimum, businesses will need proof of ownership or lease of their principal place of business, the PAN card of the applicant or authorized signatories, and Aadhar card of the authorized signatory. Additionally, phone numbers and email addresses for the primary authorized signatory are required.
Other documents that may be required include photographs of the owners and authorized signatories, address proof of partners, certificates of incorporation, and bank account details. Businesses also need to provide a complete list of goods and services offered to accurately determine their tax obligations.
To make the registration process easier, the Central Board of Indirect Taxes and Customs (CBIC) has made the process available online. This simplifies the application process by providing a one-stop solution for registration, payment, and compliance. Businesses can also claim maximum Input Tax Credit with AI-driven engines and use 20+ PAN-level reports to manage their GST transactions more effectively. By having all the necessary documents ready, businesses can expedite the registration process and start conducting business with the assurance that they are compliant with GST regulations.
6. Online GST Registration Process
The online GST registration process is fairly simple and can be done on the government website, gst.gov.in. This process is mandatory for every dealer whose annual turnover exceeds Rs.20 lakh (Rs.40 lakh or Rs.10 lakh as may vary depending upon state and kind of supplies). The process can be completed in two parts: Part-A and Part-B. In Part-A, one needs to enter details such as the name and PAN of the business, email address, and mobile number. After entering all the details, an OTP is received on the registered email address and mobile number or PAN-linked contact details. Once the OTP is entered, a 15-digit Temporary Reference Number (TRN) is generated, which needs to be noted down. The Part-B of the process has ten sections, and one needs to fill in all the details and submit appropriate documents. It takes around 6 working days to complete the registration process, and if it is not completed, heavy penalties will be levied for non-registration.
“The online registration process has made the process of applying for GST registration much easier and convenient. It saves a lot of time and effort that could have been wasted in physical trips and paperwork. Plus, with the help of an AI-driven engine, one can claim maximum ITC in an accurate and efficient manner.”
7. Benefits of GST Registration
The introduction of GST in India brought a lot of benefits for businesses. Here are some of the key benefits of GST registration:
1. Reduced Cost of Goods and Services: The introduction of GST has eliminated the cascading effect of multiple taxes, which has resulted in the reduction of cost of goods and services. As a result, businesses can offer their products at a lower price, making them more competitive.
2. Centralized Taxation System: With GST registration, businesses can file their tax returns every quarter through an online process. This centralized system helps businesses to avoid lengthy taxation processes and streamline their operations.
3. Higher Threshold for Registration: In the VAT system, any business with a turnover of more than Rs 5 lakh was liable to pay VAT in India. Under the GST system, this threshold has been increased to Rs 20 lakh, which exempts many small traders and service providers from paying GST.
4.GST registration in India has many advantages that businesses can avail of. Here are some benefits of GST registration that businesses and individuals can benefit from:
– Easy online procedure: The procedure for GST registration is now entirely online, making it easier for people to register and file returns. This technology-driven process has made it easier for companies starting out in the industry.
– Higher threshold for registration: The threshold limit for GST registration has increased to Rs 20 lakh, which exempts many small traders and service providers. This move has brought down the tax and compliance burden on many small businesses.
– Easy transportation of goods: With GST, any part of the country, no matter how remote, should have no complications regarding the inter-state movement of goods.
– More systematic and regulated process: Companies are no longer going haywire with their taxations and are adhering to more regulated internal functioning.
– Reduced costs of products and services: The cascading effect of VATs and taxes has been erased, resulting in a reduction of cost of goods and services.
– Helps in avoiding lengthy taxation services: Service providers with a turnover of less than 20 lakhs and goods provider with a turnover of less than 40 lakhs are exempt from paying the GST.
– Aimed at reducing corruption and sales without receipts: GST was introduced with an aim of reducing corruption and sales without receipts.
In conclusion, GST registration in India holds immense advantages for businesses and individuals alike. The benefits of GST registration, including reduced costs, easier transportation of goods, and a more regulated process, make it a must-have for businesses above the threshold limits.
8. Penalties for Not Obtaining GST Registration
Under the CGST Act, there are strict provisions for offences and penalties related to GST. Businesses who fail to obtain GST registration may face penalties as outlined in Section 122 of the CGST Act. Any taxable person who fails to register for GST, despite being liable to do so, may face a penalty of Rs.10,000 or the tax amount evaded, whichever is higher. This penalty is applicable even in the case of late GST registration.
Late registration penalties can be avoided if a person is not caught by the department. However, if the department issues a notice and the person applies for registration, the penalty described above will be applicable. In addition, non-registration could impact a business’s compliance rating, which assesses the creditworthiness of the taxpayer. Failing to file GST returns on time, or not taking GST registration, could lead to a negative impact on the compliance rating.
It is essential for businesses to obtain GST registration to avoid facing penalties and ensure compliance with the government’s regulations. By doing so, businesses can claim maximum input tax credit and operate with peace of mind. Remember that ignorance of the law is not an excuse and it’s better to comply with the law and avoid the penalties.
9. Common Mistakes to Avoid During GST Registration
When it comes to GST registration in India, it’s important for businesses to avoid common mistakes that can lead to heavy consequences in the near future. Here are some of the most common errors made by dealers/taxpayers which must be corrected at the earliest:
– Choosing incorrect invoice format, calculating taxes wrongly, and not mentioning the HSN code in the invoice can cause denial of input tax credit to the purchaser and attract unnecessary penalty from the department.
– Not issuing the e-way bill, not displaying the GST number at the business premises, and not filing GST return can lead to heavy penalties. It is important to file the appropriate GST returns adequately and hold a valid GST invoice while claiming for GST credit.
– Confusion between GSTR-3B and GSTR-1 is another common mistake. It is important to know the purpose of various GST returns and file them accordingly.
– Getting ITC against bogus bills can result in legal action in the future.
To avoid these mistakes, businesses need to have adequate knowledge of the GST law and comply with the rules strictly. It is advisable to take the services of a knowledgeable accountant/bookkeeper who can help in avoiding such errors. Remember, prevention is better than cure!
10. Conclusion: Importance of GST Registration for Businesses
In conclusion, the importance of GST registration for businesses cannot be ignored. The implementation of GST in India has brought about many advantages for businesses, such as the elimination of cascading tax effects, simplification of the tax structure, and increased ease of doing business. The real GDP growth of the Indian economy is expected to improve with the implementation of GST. Moreover, small and medium enterprises can register under the composition scheme introduced by GST, allowing them to pay taxes in accordance with their annual turnover. This has reduced the tax burden for businesses and encouraged more entrepreneurs to start new ventures.
However, there are some misses of GST, such as the need for recovery and delayed IGST refund, which has impacted exporters. The admission of ITC is currently being allowed on a provisional basis, causing concern among taxpayers. Nevertheless, authorities are working towards resolving these issues, and the GST Council’s strong technological support will help improve the GST system in the months to come.
To sum it up, the GST registration process is simple and straightforward, and it offers many benefits to businesses. As MSMEs and small taxpayers have benefitted from the GST system with a number of relaxations, it is recommended that businesses get GST registered to avail of these benefits. In the words of the GST Council, “5 years from now, India will not be recognized without GST”.
11. Process of GST Registration
One the most crucial aspects of doing business in India is registering for GST. The GST registration process is relatively straightforward and can be completed in the comfort of your own home using the government website gst.gov.in. If your annual turnover exceeds Rs.20 lakh, you must register for GST. Here’s a step-by-step guide on how to complete the registration process online:
– Go to gst.gov.in and click on Services.
– Choose ‘Registration’ from the list of options.
– Select ‘New Registration’ and enter the necessary details.
– Once done with Part A of the form, a Temporary Reference Number (TRN) will be generated. Note it down.
– Return to the homepage and select ‘New Registration’ again. This time, select ‘TRN’ and enter your TRN and captcha code before clicking on ‘Proceed.’
– Submit Part B of the form and attach the required documents.
To make the process even smoother, there are GST Suvidha Providers (GSPs) available to help guide you through the process. With GST registration, you’ll have a legal identity as a supplier of goods or services, be authorized to collect tax, and have proper accounting of taxes paid on input goods and services. Plus, registering for GST means you’ll be eligible for numerous benefits such as booking ITC, which will help your business save on taxes. Don’t wait until the last minute; register for GST today and reap the rewards!
12. Frequently Asked Questions about GST Registration in India
Here are some of the most frequently asked questions and answers regarding GST registration in India:
Q.1- Does aggregate turnover include value of inward supplies received on which RCM is payable?
“Aggregate turnover does not include value of inward supplies on which tax is payable on reverse charge basis.”
Q.2- If the dealer migrated with the wrong PAN as the status of the firm was changed from proprietorship to partnership, what should be done?
“A new registration would be required as the partnership firm would have a new PAN.”
– A taxable person’s business is in manyGST – Frequently Asked Questions (FAQ)
Q.3- What is the meaning of aggregate turnover and does it include value of inward supplies on which RCM is payable?
“Aggregate turnover does not include value of inward supplies on which tax is payable on reverse charge basis.” – Section 2(6) of CGST Act.
Q.4- What if the dealer migrated with wrong PAN as the status of firm was changed from proprietorship to partnership?
“New registration would be required as partnership firm would have a new PAN.”
Q.5- Does aggregate turnover include value of inward supplies received on which RCM is payable?
“Aggregate turnover does not include value of inward supplies on which tax is payable on reverse charge basis.”
Q.6- If the dealer migrated with the wrong PAN as the status of the firm changed from proprietorship to partnership, what should be done?
“New registration would be required as the partnership firm would have a new PAN.”
Q.7- A taxable person’s business is in many states, and all supplies are below 10 Lakhs. He makes an inter-state supply from one state. Is he liable for registration?
“He is liable to register if the aggregate turnover (all India) is more than 20 lakhs or if he is engaged in inter-state supplies.”
Q.7- Can we use provisional GSTIN or do we get a new GSTIN? Can we start using provisional GSTIN till the new one is issued?
“Yes, provisional GSTIN can be used till the final GSTIN is issued within 90 days.”
Q.8- Is an advocate providing interstate supply chargeable under Reverse Charge liable for registration?
“Exemption from registration has been provided to such suppliers who are making only those supplies on which the recipient is liable to discharge GST.”
Q.9- If there are two SEZ units within the same state, whether two SEZs under the same PAN in a state require registrations are required to be obtained?
“One registration would suffice, as per the proviso to Section 25(1) of the CGST Act.”
Q.10- If someone trades only 0% GST items (grains, pulses), then is it necessary to register for GST if the turnover exceeds Rs. 20 lakhs?
“There is no liability of registration if the person is dealing with 100% exempt goods/services.”
Q.11- If I register voluntarily though turnover is less than 20 Lakhs, am I required to pay tax from the 1st supply I make post-registration?
“Yes, you would be treated as a normal taxpayer.”
These are some of the Frequently Asked Questions on GST Registration in India. For more information, please refer to the official GST website or seek professional advice.