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Step-by-Step Guide to GST Registration for Businesses

Step-by-Step Guide to GST Registration for Businesses

Step-by-Step Guide to GST Registration for Businesses

GST registration is a crucial requirement for businesses operating in India. If your business turnover exceeds the specified threshold limits or falls under any specific categories mandating GST registration, you must complete the registration process to comply with the GST laws. In this comprehensive step-by-step guide, we will take you through the process of obtaining GST registration online and provide insights into the various aspects of GST that businesses need to be aware of.

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GST Registration Online – An Overview

Since its launch on 1 July 2017, Goods & Services Tax (GST) has applied to all Indian service providers, traders, and manufacturers, including freelancers. GST replaces Central and state taxes like Service Tax, Excise Duty, CST, Entertainment Tax, Luxury Tax, Octroi, and VAT, streamlining the taxation process.

Under GST, taxpayers with a turnover of less than ₹1.5 crore can choose a composition scheme to simplify GST formalities and pay tax at a fixed rate based on their turnover.

The GST system covers multiple stages in the supply chain, encompassing purchasing raw materials, manufacturing, wholesaling, retailing, and final sale to the consumer. Interestingly, GST is levied at each of these stages. For instance, if a product is manufactured in West Bengal but consumed in Uttar Pradesh, the entire GST revenue will go to Uttar Pradesh, highlighting the destination-based principle of GST.

Components of GST

Goods and Services Tax comprises three key components:

  • Central Goods and Services Tax (CGST): CGST is the tax levied by the Government on the supply of goods or services within a specific state. It applies to all transactions that occur within the boundaries of a single state.
  • State Goods and Services Tax): SGST is the tax component the State Government imposes on the supply of goods and services within its respective state. Like CGST, SGST applies to transactions within a single state’s borders.
  • Integrated Goods and Services Tax: The tax levied by the Government on the supply of goods or services between states or from one Union Territory to another. It comes into play when goods or services are moved across state borders.

These three components (CGST, SGST, and IGST) constitute the GST.

Benefits of GST Registration for Business

GST registration benefits businesses in various ways:

  • Legal Compliance: It ensures businesses adhere to tax laws, avoiding penalties.
  • Input Tax Credit: GST paid on purchases can be offset against GST collected on sales, reducing tax liability.
  • Inter-State Transactions: Facilitates seamless business across states without tax obstacles.
  • Removal of Cascading Effect: Eliminates tax-on-tax burden, lowering product/service costs.
  • Competitive Advantage: Builds trust, attracting more customers and business opportunities.
  • Access to Wider Market: Big companies prefer dealing with GST-registered vendors.
  • Better Cash Flow: Improved management with reduced tax liability.
  • Improved Credit Rating: Positive compliance record enhances creditworthiness.
  • Legal Protection: GST registration provides legal recognition and safeguards business interests.
  • Easy Compliance: Streamlined process with online filing and payments.
  • Transparent Supply Chain: Encourages accurate records, fostering trust and formality.

Is GST registration mandatory?

GST registration is mandatory if your turnover exceeds the specified threshold limits. Once your business reaches or crosses the threshold limit according to the GST laws, you must obtain GST registration and comply with the GST regulations and obligations.

Who should obtain GST registration?

  • Any business entity whose aggregate turnover in a financial year exceeds Rs. 40 lakhs (Rs. 20 lakhs for special category states in GST).
  • Service Providers whose aggregate turnover in a financial year exceeds Rs. 20 lakhs (Rs. 10 lakhs for special category states in GST).

Note: This threshold does not apply if the entity deals only with goods/services exempt under GST.

  • Entities registered under earlier tax laws (such as Excise, VAT, Service Tax, etc.) must register under Goods and Service Tax.
    • Any entity or supplier involved in the inter-state supply of goods.
    • Casual taxable person.
    • A taxpayer under the reverse charge mechanism.
    • Input service distributor and its agents.
    • E-Commerce operators or aggregators.
    • Non-resident taxable person.
    • Agents of a supplier.
    • A person who supplies through an E-commerce aggregator.

Entities providing online information, acquiring databases, or retrieval services from a location outside India to a person in India other than a registered taxable person. Documents Required for GST registration.

GST Certificate

A GST Certificate is an official document issued by the Indian government to businesses registered under the Goods and Services Tax (GST) system. This certificate is proof of the business’s registration under GST and contains essential information such as the business’s GST identification number, name, and address.

A valid GST Certificate is essential for businesses as it allows them to charge and collect GST from their customers. It also enables businesses to claim input tax credits for taxes paid on their purchases and expenses.

Apart from taxation, the GST Certificate is used for various other activities, including applying for loans, participating in government tenders, and establishing the business’s credibility in the market.

What is GSTIN?

GSTIN – Goods and Services Tax Identification Number is a unique identification number assigned to each taxpayer registered under the GST system in India. It is a 15-digit alphanumeric code that serves as a key identifier for businesses and individuals registered under GST.

GST Tax Rates

The Goods and Services Tax is a value-added tax applied to the supply of goods and services. The GST tax rates in India are categorized as follows:

  • 0% Tax Rate applies to essential items like grains, fresh vegetables, and medical supplies.
  • 5% Tax Rate: This rate applies to processed food, packaged food, and some household items.
  • 12% Tax Rate: This applies to mobile phones, laptops, and television sets.
  • The 18% Tax Rate applies to air conditioners, refrigerators, and washing machines.
  • 28% Tax Rate applies to luxury cars, tobacco products, and aerated beverages.

In addition to these standard rates, some special rates apply to specific goods and services. For instance, gold is taxed at 3%, while crude oil and natural gas are taxed at 6%. Additionally, services such as telecom, insurance, and banking are taxed at 18%.

Apart from taxation purposes, the GST Certificate is used for various other activities, including applying for loans, participating in government tenders, and establishing the business’s credibility in the market.

Voluntary Registration Under GST (for Companies With A Turnover Below ₹20 Lakhs)

Small businesses with a turnover below ₹20 lahks can voluntarily register for GST. This offers advantages like claiming input credit, expanding inter-state selling without restrictions, registering on e-commerce platforms, and gaining a competitive edge over non-registered businesses. Though not compulsory, voluntary GST registration opens growth opportunities and increases profits.

GST return filing

GST return filing provides the government with information about a registered taxpayer’s sales, purchases, and taxes collected and paid. In India, all registered taxpayers under GST must file returns regularly, irrespective of whether they had any sales or purchases during that period.

The essential components of a GST return are:

  • Output GST (tax collected on sales)
  • Details of sales
  • Input tax credit (GST paid on purchases)
  • Details of purchases

Documents required for GST registration

The following documents are typically required for GST registration:

  • PAN (Permanent Account Number) of the Applicant.
  • Aadhaar card of the Applicant.
  • Proof of business registration or Incorporation certificate 
  •  Address and Identity proof of Promoters or Directors with Photographs.
  • Address proof of the place of business. 
  • Bank Account statement or Cancelled cheque showing the account holder’s name and IFSC code.
  • Digital Signature (for certain types of businesses or individuals).
  • Letter of Authorization or Board Resolution for the Authorized Signatory (in case the authorized signatory is not a promoter or director).
  • GST Registration Fees (if applicable, the fee varies based on the type of business and turnover).

Penalty for not obtaining GST registration:

  • Non-Payment or Short Payments: If an offender fails to pay the tax amount or makes genuine errors resulting in short payments, a penalty of 10% of the tax amount due is applicable, with a minimum penalty of Rs. 10,000.
  • Deliberate Tax Evasion: In cases where the offender intentionally evades paying taxes, the penalty will be 100% of the tax amount due.

How to Register for GST India Online?

To register for GST in India online, follow these steps:

  • Visit the GST Portal: Go to the official GST portal.
  • Click on “Services” and then “Registration”: On the homepage, click on the Services option in the top menu and select “Registration” from the dropdown menu.
  • Choose “New Registration”: Under the “Registration” tab, click the New Registration option to initiate the registration process.
  • Select “Taxpayer” Category: Choose the “Taxpayer” option and proceed.
  • Fill out the GST Registration Form (REG-01): Fill out the GST registration form (Form REG-01) with the required details, including your PAN, mobile number, and email address. You will get an OTP on your mobile and email for verification.
  • Receive Application Reference Number (ARN): After successful submission, an Application Reference Number (ARN) will be generated and sent to the mobile and email.
  • Document Upload: Upload the necessary documents as per the checklist provided on the portal. These may include a PAN card, an Aadhaar card, business registration certificates, and bank account details.
  • Verification and Approval: The GST authorities will verify the application and documents. If everything is in order, they will approve the registration.
  • GSTIN Generation: Once approved, you will receive the Certificate of Registration containing your unique Goods and Services Tax Identification Number (GSTIN).

With your GST registration completed, your business is now compliant with GST laws, allowing you to conduct transactions seamlessly and enjoy the benefits of the GST system.

Fee for GST Registration

Under the GST law, there are no prescribed fees for obtaining GST registration through the GST portal.

Streamlining GST Registration through IndiaFilings

The registration process can be cumbersome as it involves multiple steps and submitting various business details and scanned documents.

You can purchase GST registration services through IndiaFilings to save time and effort. With IndiaFilings, a GST expert will assist you throughout the entire GST registration process, providing end-to-end support and guidance. This can be a convenient and efficient way to obtain GST registration for your business. The specific fees for availing IndiaFilings’ GST registration services may vary and can be obtained by contacting their team or visiting their website.

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