What is compulsory registration under GST?
What is compulsory registration under GST?
The Goods and Services Tax (GST) is a unified tax that was introduced in India on 1st July 2017. It replaced all the existing indirect taxes levied by the central and state governments. Under the GST, businesses in India are required to register themselves if their turnover exceeds a certain threshold. This is known as compulsory registration under GST.
Compulsory Registration under GST:
Registration under GST is mandatory for all businesses whose annual turnover exceeds Rs 40 lakhs in a financial year. This threshold is Rs 20 lakhs for special category states such as Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand.
Compulsory registration under GST is done through the GST Common Portal. It is a web-based platform allowing businesses to register and file their tax returns. Companies can also use the portal to track their GST payments and check their refunds.
Once a business is registered under GST, it is required to comply with all the GST rules and regulations. This includes maintaining records of all transactions, filing GST returns, paying taxes, and submitting returns on time. Businesses that fail to comply with the rules and regulations may be liable to pay penalties and interest.
Benefits of Compulsory GST Registration:
1. Avoidance of Multiple Taxes:
GST registration allows businesses to avoid the levy of multiple taxes. The GST system has replaced most of the indirect taxes imposed by the central and state governments. This means companies must pay only one tax instead of multiple taxes.
2. Input Tax Credit:
Businesses that have registered for GST are eligible to receive input tax credit on the taxes paid on the inputs. This means businesses can reduce the tax burden on their output.
3. Increased Profits:
GST registration allows businesses to reduce their tax outgo and increase their profits. This is because companies can claim input tax credit on the taxes paid on inputs, which reduces their tax outgo.
4. Transparency:
GST registration makes the entire taxation system more transparent. The GST system tracks all the taxes paid by businesses, making it easier for the government to detect tax evasion.
5. Easy Compliance:
GST registration simplifies the process of filing taxes. Businesses must file only one return instead of multiple returns every month or quarter.
Compulsory registration under GST is an essential step towards a unified tax system in India. It helps the government collect taxes from businesses more efficiently and ensures that companies comply with the GST rules and regulations. It also helps reduce tax evasion and increases transparency in the system.
