Goods and Services Tax

GST Registration

GST Registration is mandatory for every business which has a specific turnover of more than Rs. 20 Lakhs per annum. For particular types of businesses, this form of registration is compulsory. Such businesses include e-commerce businesses, dealers, aggregators and other businesses. When a business goes for the process of GST registration, a number is provided to the business. This number is known as the GST registration number. Carrying out business operations without a GST registration number is an offence. Hence it is essential to compulsorily register the business as per the requirements of the GST.

GST Registration- An Overview

Under section 279A of the Constitution of India, the GST council is formed. The GST council comprises of the Union Finance Minister, Union Minister of the State Revenue Minister and the Union Minister of Finance and Tax for the respective state councils. All the respective laws and rules which apply to GST registration for a business would be in the respective central and state websites. GST is an abbreviation for Goods and Services Tax.

This law was brought in 01 July 2017 with a view of removing all the other forms of indirect taxes in the country. GST applies to any form of service or products which are produced and manufactured in India. This would also apply to freelancers as per the new labour law amendments.

As a result of GST other forms of taxes such as VAT, Entertainment Tax, Sales Tax, Octroi have been combined and incorporated into one law. For every step in the supply chain, a specific amount of rate of GST is charged. The procedure for GST registration is completely an online process. Hence businesses would not have to go offline to carry out this form of registration.

What are the benefits of GST Registration?
A business would get multiple benefits for registering under GST
  1. Recognition: Businesses that have registered themselves with the requirements of GST would be recognised in the eyes of the law. Public and consumers will recognise businesses that have registered as per the requirements of the government.
  2. Appropriate Accounting: Appropriate accounting cycles can be followed up by registering with GST authorities.
  3. Benefits & Government Incentives: There are different forms of benefits and government incentives offered for businesses that consider GST registration.
  4. Lower Tax Rates: If a taxpayer is having a turnover of lesser than Rs 1.5 crore per annum, then the taxpayer can choose for composition tax scheme. Under the composition tax scheme, there is an incentive to pay a lesser amount of tax.
  5. Double Taxation: Any business that is registered with GST as per the government requirements would get reliefs and exemptions from double taxation.
  6. E-way Bill: By utilizing this form of registration, a new system of logistics can be utilized through the E-Way Bill system.
What are the Elements of GST?
There are three components of GST which are predominantly called
  1. Central Goods and Services Tax (CGST): CGST is the amount of tax charged on the intrastate supply of different forms of goods and services. This is usually charged and levied by the Central Government. As per this, both the Central Governments and State Governments would combine their GST collections and share the revenue equally.
  2. State Goods and Services Tax (SGST): This is the amount of tax charged on the intrastate supply of different forms of goods and services. One of the key indicators is that the State Government charges this tax.
  3. Integrated Goods and Services Tax (IGST): The amount of tax which is charged on the interstate supply of different forms of goods and services is understood as integrated goods and services tax. Here again, the amount of IGST is collected and shared between the respective Central government and the State Government.
Which businesses or Entities require GST Registration?

The following businesses require registering as per the requirements of the GST:

  1. All Businesses: Whose Taxable Turnover is more than Rs 20 Lakhs in case of the supply of services or 40 lakhs in case of the supply of goods. The yearly turnover of the business is taken for taxation of GST.
  2. Interstate Outward Supply: All businesses that make an interstate Outward supply of goods and services would have to compulsory consider the process of GST registration.
  3. E-Commerce Entities: Usually, e-commerce entities require considering GST registration. As per the recent notification e-commerce entities which have an annual turnover of lesser than Rs. 20 Lakhs per annum do not require to make any such registration.
Input Tax Credit (ITC) under the GST Regime

ITC or input tax credit allows you as a business owner to pay lesser taxes on the inputs of a specific amount of products. The main benefit of paying input tax credit is to reduce your tax liability on the products.

So usually when a business buys some form of product, then a specific amount of tax would be paid when the product is received from a seller who is registered. When the business pays the specific amount of tax, the same can be added to taxes paid at the time of purchase. Hence ITC would allow the registered business to consider adjustments.

Tax Rates for GST Registration

The Government has brought out different tax rates for GST registration process. These rates are likely to change as per the requirements of the government. A full list of the GST tax rates is present in the following link The government levies the following rates:

  1. Basic Necessities: No Amount of GST tax is levied on necessities.
  2. House Hold Necessities and Drugs: A rate of 5% is charged on basic household necessities and drug applications.
  3. Computer Products and Processed Food: A rate of 12% is charged on computer products and other forms of processed foods.
  4. Hair Oil, Capital Goods, Raw Materials and Other forms of Industrial Goods: The rate of 18% is charged on consumer goods and capital goods which are used in different forms of industrial processes.
  5. Luxury Items: The rate of GST charged on Luxury Goods stands at 28%. Luxury goods can be cars and other forms of goods which fall under the category of goods classified as luxury.
Eligibility Criteria for GST Registration
The following Eligibility Criteria has to be sufficed by the business for GST Registration Process:
  1. Type of Business: Usually, every business that satisfies the primary eligibility criteria would have to go for the process of GST registration.
  2. Turnover Threshold: All businesses which have a turnover of more than a specific amount would have to go for GST registration process. Usually, a business which carries out the supply of services requires more than Rs. 20 Lakhs per annum and business which carries out the supply of trading and products would have to have an annual turnover of more than Rs. 40 Lakhs.
  3. Resident Status: Every Casual Taxable individual or a Non-Resident taxable individual would have to go for the process of GST registration.
  4. Agents: Any form of input service distributor and the agent of a particular supplier would have to consider the process of GST registration.
  5. Reverse Charge Mechanism: Any business or individual that is paying some form of tax in the reverse charge mechanism form would also have to go for GST registration.
  6. E-Commerce Entities: Any form of E-Commerce entity would have to go for the process of GST registration. However, any entity whose annual turnover is lesser than Rs. 20 lakhs per annum would not have to register under GST.
  7. E-Commerce Aggregators: Every e-commerce aggregator must consider the registration of GST as a mandatory requirement.
  8. Database Access: Any form of individual or a company providing data base access or some form of streaming system to a person resident in India have to register as per the requirements of GST.
Penalty for Non-Compliance with GST Registration

The CBIC has issued a notification that not filing of GST return by an entity would lead to strict penalties on the defaulter. Attachment of bank accounts of the defaulter would be one of the penalties incurred. Hence the applicant must file online mode of GST in appropriate form.

As per the CGST and SGST the penalty for non-compliance is Rs. 100 per day and a delay in such payment would lead to Rs. 200. According to section 122 of the CGST act non-compliance with the rules related to GST registration can attract strict penalties.

Documents required for GST Registration
The following mandatory documents are required for GST registration
  1. Sole Proprietorship
    • Information of the sole proprietor. (PAN CARD, ADHAAR CARD & PP SIZE PHOTO OF PROPRIETOR)
    • Information of business & Place of Business. (Cancelled cheque, Address Proof of place of business- electric bill, rent agreement if rented, Working Details of business)
  2. Limited Liability Partnership
    • PAN card of the Limited Liability Partnership
    • LLP Agreement
    • Address Proof of the LLP
    • Partners Name and all Information
  3. Private Limited Company
    • Certificate of Incorporation
    • Memorandum of Association and Articles of Association
    • PAN Card
    • Board Resolution Signed by the Directors
    • DIN number
    • Digital Signature Certificate
    • Registered Address of the Business
    • Identity Proof of all the Directors- Voter ID, Aadhaar Card, Bank Account Statement and Driving License.
Frequently Asked Questions

1. Is GST Registration Mandatory?

Yes, GST registration is mandatory for every business. The Government of India brought out the requirement of registration for businesses in India. Even businesses that utilised previous indirect taxation regime are required to follow GST registration.

2. Do MSME require to register with GST?

Yes Micro, Small and Medium Enterprises have to register with GST. However, the basis of threshold would be considered for GST registration.

3. What would happen if there are multiple business operations for GST?

If a business operator has different forms of businesses operating in the country, then multiple GST registration can be considered. For example if the business is present in Delhi and Karnataka, separate state GST should be considered for both states.

4. Is it possible to obtain multiple GST registrations within one state?

Yes it is possible to obtain multiple GST registrations within one state. This would be possible for the business with different business verticals and products.

5. What is the meaning of ARN in GST?

ARN is an abbreviation for application reference number. It is a conclusive proof that GST registration has been submitted to the GST portal.

6. What is the meaning of composition scheme under GST?

Composition Scheme would be applicable for specific businesses which have the turnover more than a particular amount. Usually businesses which have a turnover of more than 50 lakhs can make an application for the composition scheme. Such taxpayers would pay a fixed percentage of its turnover and cannot avail of the benefits of input tax credit.

7. What is the meaning of GST filing and return filing?

GST return filing is a document which contains all the information related to the taxpayer. This document would indicate the tax liability which has to be paid by the tax payer. The following details would be present on GST Return filing:

  • Output
  • Input
  • Sales and Purchases

8. What is the meaning of GSTIN?

GSTIN is an identification number. Such number is considered as a unique identification number for verification. This number is allocated to the applicant to utilise the same in the portal.

9. Will any form of B2B and other network transactions be subjected to GST?

When a company goes for the process of GST registration, then this form of business would be required to carry out GST registration. E-commerce companies have to mandatorily carry out the processes and procedures related to GST registration. Hence B2B businesses would also be required to comply with the above requirements.

10. What is the meaning of a casual taxable person under GST registration?

Casual taxable individuals are entities that do not have a specific place of business. Usually such businesses would be taking other forms of business such as supply of services and act as a form of a middleman.

11. Are there any form of entities that are exempted from the requirement of filing GST returns?

Yes there are specific businesses that do not require to file GST returns:

  • Businesses which have annual turnover of less than Rs. 40 Lakhs in case of a trading business
  • Businesses which have an annual turnover of less than Rs. 20 Lakhs in case of service business
  • Such businesses are exempt from the requirement of filing GST

12. What is the meaning of reverse charge?

Reverse Charge is a mechanism where the receiver of the goods is liable to pay the form of GST. This is usually the case, where the receiver is not a registered user under the system of GST.

13. Would GST regime be applicable for exports?

Yes, for exports a specific amount of IGST would be taxed. A specific amount of zero tax rates would be applicable for exports.

14. What is the meaning of aggregate turnover?

This would be the total amount of taxable income which is liable to be considered for the purposes of calculating the total amount of GST. This would be considered for the business for the rate of calculation of GST.

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