GST Registration – Everything You Need to Know
GST registration allows your business to function legitimately and positions your brand as trustworthy and authentic. With the GST portal having simplified many processes, starting from application to filing returns, GST registration is the first step to managing your company taxes efficiently.
Table of Contents
- Who is eligible to register for GST?
- What are the GST registration documents you need?
- What are the steps to follow for GST registration?
- What is GSTIN?
- When should you apply for more than one GST registrations?
- When does a business need the GST Composition Scheme?
- Why should you register for GST?
- GST Registration FAQs
Whether you are a business owner, a service provider or even a customer, you have heard of the Goods and Services Tax (GST). The GST came into effect in India on July 1, 2017, and changed the entire taxation process of the country.
In layman terms, it is a single indirect tax charged on the value addition provided by a business through their goods and services. At every stage, from manufacture to distribution, companies get taxed by the Government of India only on their respective offering, and the final consumer bears the burden of the tax.
The process of paying the GST begins with first registering your business in the GST portal. If you are a start-up owner, chances are you may find the process overwhelming. Here’s a quick guide for you to know everything you need about GST registration for your business.
Who is eligible to register for GST?
To apply for GST registration, your annual turnover should meet one of the following thresholds:
- For the manufacturing sector, the threshold is Rs. 40 lakhs or more
- For the service sector, the threshold is Rs. 20 lakhs or more
- For businesses in the North-eastern and hill states, the threshold is Rs. 10 lakhs or more
Further, if you meet any of the below criteria, you must apply for GST registration:
- You sell goods or services in a state other than the one you are located in
- You utilise e-commerce platforms like Flipkart or Amazon to sell your products
- You are in the business of import-export
- You would like to generate tax invoices for your consumers
- You are a company participating as Casual Taxable Payer in an exhibition or an event outside your state
- You are taxable under reverse charge mechanism
- You are an agent working on behalf of a registered taxpayer
- You are an Input Service Distributor (ISD)
- You operate an e-commerce site or have an aggregator business
- You are an overseas OIDAR (Online Information Database Access and Retrieval) service provider to India
Note: If despite meeting these criteria, you do not apply for GST registration, then your business is liable to pay a fine of 100% of the tax due or Rs. 10,000, whichever is higher.
What are the GST registration documents you need?
To register for GST, you need to keep the following documents ready:
- Photographs (passport size)
- Company PAN Card
- Identity proofs like Aadhar Card/Passport/Driving Licence
- Proof of address for your offices
- Bank details via a statement or a cancelled cheque or a passbook
- Certificate of Incorporation for Private Ltd Company or LLP or OPC
- Partnership deed for partnership firms
What are the steps to follow for GST registration?
The GST portal allows you to do GST registration online. This is a free process or you may ask for a tax consultant to do so for a nominal fee. The steps to follow are:
Step 1) When you visit the portal, select Services > Registration > New Registration
Step 2) In the next screen, select the ‘New Registration’ option. Choose ‘Taxpayer’ in the first dropdown, fill the rest of the form and click on the ‘Proceed’ button.
Step 3) Once you receive the OTP, provide the same in the next screen. If you did not receive an OTP on your phone or email, click on the button Resend OTP to get a new one.
Step 4) A Temporary Reference Number or TRN will be generated. Further, it will be emailed to you and sent as an SMS to your mobile number. Make a note of it.
Step 5) Go back to GST portal > Services > Registration > New Registration, and this time, select the radio button Temporary Reference Number. Input the details from the previous step.
Step 6) You will have to perform OTP verification again.
Step 7) A new application is created, which can be edited to supply the primary details.
Step 8) You will have to provide all the necessary details with proofs section-wise.
Step 9) When you reach the Verification section, select the checkbox next to the declaration. Then, submit the form to complete the application.
Once you have submitted the application, an Application Reference Number or ARN will be generated. You can track your application with this number on the GST portal.
What is GSTIN?
Once your GST registration is complete, a GST officer will go through your entire application. If they approve it, they will provide you with a unique GST Identification Number or GSTIN, which you must include in your invoices.
The entire process – from registration to receiving GSTIN – roughly takes two to six days.
When should you apply for more than one GST registrations?
There are cases when you are permitted to register for multiple GST numbers:
- If your business is operating from more than one state – e.g. delivering goods to several states – then you need a GST registration for each state.
- If your business is operating from one state but has many verticals, then you can register for multiple GSTs to simplify your accounting process.
- If a business is operating from a single state but is delivering goods and services to all states of India, then it need not apply for multiple GST registrations.
When does a business need the GST composition scheme?
The Composition Scheme was devised to help small business owners and taxpayers, whose turnover does not exceed Rs. 1.5 crores (or Rs. 75 lakhs for North-East states).
The benefits these taxpayers enjoy are as follows:
- They can file only one return per quarter instead of filing monthly returns like other taxpayers.
- They have limited tax liability.
- They have fewer compliances to follow, in terms of books and records, invoices, etc.
But the scheme has its flip side too:
- Taxpayers cannot get an input tax credit.
- They cannot raise a tax invoice.
- They cannot carry out inter-state transactions.
The following dealers cannot avail the composition scheme:
- Service providers
- Sellers on e-commerce platforms
- Suppliers of goods that are not taxable
- Businesses selling inter-state
- Notified goods manufacturers
Why should you register for GST?
There are many advantages of GST registration for business owners in the long run. These include:
- The tax you pay to the Government can come down, as you only need to pay for the value-addition done by your business, and not incur other “tax on tax.”
- The GSTIN is a symbol of authenticity for your clients, e-commerce platforms, government tenders, banks and financial institutions, MNCs and more. Without a GST registration, these entities will refuse to collaborate with you.
- Since there is only one return to be filed under GST, there are fewer compliances you need to follow.
- For e-commerce brands, GST has explicit provisions on the inter-state movement of goods, which were not previously defined.
At the end of the day, GST registration allows your business to function legitimately and positions your brand as a trustworthy, authentic one. With the GST portal having simplified many processes, starting from application to filing returns, GST registration is the first step to managing your company taxes efficiently.
GST registration – FAQs
- Can a person or organization without GST claim ITC?
No, a person or organization without GST registration ax can not collect GST form his customer. They also can’t claim any input tax credit.
- Is the registration same for a person operating his business in various states having a single PAN number?
No. Every person should get registered separately for each of the States where his business operates. He/she is liable to pay GST according to the of Sub-section (1) of Section 22 of the CGST/SGST Act.
- What is ISD?
Input Service Distributor or ISD is defined under Section 2(61) of the CGST/SGST Act. It is a medium that collects tax invoices towards receipt of input services. They also distribute the credit to supplier units.
- Can a taxpayer have more than one ISDs?
Yes, multiple offices of the taxpayer can have particular ISDs.
- How are imports and exports taxed under GST?
The imports of Goods and Services are treated as inter state supplies. IGST will be levied on it. While exports are treated as zero rated supplies. There is no tax levied for exports of goods and services. Credit of input tax is refunded to the exporters.
- What are the documents required for the GST registration process?
- PAN card
- Proof of business registration
- Proof of identity
- Photographs and Address proof of persons in charge
- Business address proof
- Bank statements
- What is the current turnover cap for exemption in GST registration?
Businesses with an annual turnover of up to Rs 20 lakh are exempt from GST registration. For north eastern states, the turnover cap is limited to Rs 10 lakh.
- Can I sell products online without GST?
Yes, you can sell products online without GST registration until your turnover reaches the cap decided by the authorities. If it exceeds the cap, you should get your registration done. Online marketplaces like Amazon and Flipkart etc, ask for seller GST for registration.
- What is aggregate turnover?
Aggregate turnover sums up the values of all the taxable and non taxable supplies, exempt supplies and exports of goods or services comes under the same PAN.
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