An Overview on GST Registration
GST is an abbreviation for Goods and Services Tax. 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.
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.
As mentioned earlier GST is levied on every stage of the process. The following cycle is utilised in GST:
- Raw Materials;
- Sale to Wholesalers and Retailers.
In the above list, when a product is introduced at the nascent stage, GST would be levied on raw materials. Similarly, when they are used in the manufacturing process, the same would be levied on manufacture. All the GST which is levied on the above two processes would be levied finally on the Sale to Wholesaler and Retailers.
Any business which has a specific amount of turnover annually would have to register as per the requirements of the government.
What are the benefits of GST Registration?
A business would get multiple benefits for registering under GST. Some of the common benefits are as follows:
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.
Appropriate accounting cycles can be followed up by registering with GST authorities.
Benefits and Government Incentives-
There are different forms of benefits and government incentives offered for businesses that perform GST registration.
Lower Tax Rates-
If a taxpayer is having a turnover of less 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.
Relief from Double Taxation-
Any business that is registered with GST as per the government requirements would get reliefs and exemptions from double taxation.
By utilising this form of registration, a new system of logistics can be utilised through the E-Way Bill system.
Protection from Penalty-
If your business satisfies the eligibility criteria for GST Registration then you must get registered under GST otherwise penalty and or fines may be levied.
What are the Components of GST?
There are three components of GST which are predominantly called:
- Central Goods and Services Tax (CGST)
- State Goods and Services Tax (SGST)
- Integrated Goods and Services Tax (IGST)
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.
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.
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:
Businesses with specified threshold limit-
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.
Interstate Outward Supply-
All businesses that make an interstate Outward supply of goods and services would have to compulsorily consider the process of GST registration.
Usually, e-commerce entities require considering GST registration especially persons supplying through e-commerce aggregator and every e-commerce aggregator. However, 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 https://cbic-gst.gov.in/gst-goods-services-rates.html
The government levies the following rates:
No Amount of GST tax is levied on necessities.
House Hold Necessities and Drugs-
A rate of 5% is charged on basic household necessities and drug applications.
Computer Products and Processed Food-
A rate of 12% is charged on computer products and other forms of processed foods.
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.
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:
All entities that have been paying some forms of indirect taxes such as entertainment tax, sales tax and Octroi would have to go for GST registration.
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.
Every Casual Taxable individual or a Non-Resident taxable individual would have to go for the process of GST registration.
Any form of input service distributor and the agent of a particular supplier would have to consider the process of GST registration.
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.
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.
Every e-commerce aggregator must consider the registration of GST as a mandatory requirement.
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.
Procedure for GST Registration (Online GST Registration)
GST Registration in India is completely an online process. This law was brought out in 2017; hence the government have made it automated in its functioning. The following steps have to be carried out for GST registration in India:
Login to the Website-
The applicant has to login to the following website https://www.gst.gov.in/
Then the applicant has to click on the services tab and click on GST Registration. After this, the applicant has to click on GST new registration. The applicant would be redirected to the portal, asking login information and details.
Fill in the Information-
In the next step, the applicant has to fill in the information requested. This will include the name of the business entity, entity type and PAN information.
Include Email id and Mobile Number-
In the next step, the applicant must include information such as Email Id and Mobile number. All future communications would be received through the email id and the mobile number.
Generate Temporary Reference Number (TRN)-
Once all the information is put in by the applicant, an OTP (One Time Password) will be generated, and a TRN also would receive by the applicant. This TRN is known as the temporary reference number.
Input Details of Captcha-
In the next step, the applicant would be required to input details of the TRN and the Captcha image, which is displayed. After this the applicant has to click on proceed.
GST Registration Page-
In the next step the applicant would be redirected to another page known as the GST registration page. The applicant must submit all information related to the business. This will include all business information. The Date of commencement of the business must also be included in this form.
Fill in Details-
All the information related to the promoters or directors must be provided. If it is a partnership firm then the information on the partners must be submitted. All the information related to the goods must be provided in the form. Any other additional place of business of goods must be provided in the application form.
Upload Required Documents-
The applicant must upload all the documents of the business.
Save and Receive ARN number-
In the final step the applicant has to save and submit the application to the concerned authority. The ARN number will be generated in the email and the SMS.
Penalty for Non-Compliance with GST Registration
The CBIC has issued a notification that not filing 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. The maximum amount shall be 5000 rupees. There is no late fee on IGST, if there is a delayed filing. It may be noted that along with the late fee under GST, interest shall also be charged @18%. It must be calculated by the taxpayer on the tax to be paid.
According to section 122 of the CGST act non-compliance with the rules related to GST registration can attract strict penalties.
Due Date for GST Returns
|GST FORM||FILING PERIOD||DUE DATES|
|GSTR 1||Monthly||11th of every month|
|GSTR 3B||Monthly and Quarterly||20th of every month and Quarterly 22nd of the month|
|GSTR 4||Annually||30th April of the year following the relevant financial year|
|GSTR 5||Monthly||20th of every month|
|GSTR 5A||Monthly||20th of every month|
|GSTR 6||Monthly||13th of every month|
|GSTR 7||Monthly||10th of every month|
|GSTR 8||Monthly||10th of every month|
|GSTR 9||Annually||31st December of the year after the relevant financial year|
|GSTR 9A||Annually||Currently suspended|
|GSTR 9C||Annually||31st December of the year after the relevant financial year|
|GSTR 10||Filed when registration is cancelled||Within 3 months from the date of cancellation/cancellation order.|
|GSTR 11||Monthly||28th of the month after the month when inward supply is obtained|
Documents required for GST Registration
The following mandatory documents are required for GST registration:
- Information of the sole proprietor
- PAN Card and Address Proof of the sole proprietor
Limited Liability Partnership
- PAN card of the Limited Liability Partnership
- LLP Agreement
- Address Proof of the LLP
- Partners Name and all Information
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.
Latest GST Updates
E-invoicing system related to GST where invoices are generated for a business with revenue of more than Rs. 500 crores. Previously only 8 lakh invoices were generated. After the introduction, more than 20 lakh invoices have been generated.
Registration of GST would only be granted if there is a complete physical verification of the business. This would only be carried out if the Aadhaar is not authenticated.
MSME with GST would not require UAN for any form of interest subvention scheme.