GST Registration

Here’s How You Can Do GST Registration


If you are a business owner or a budding entrepreneur looking forward to starting a new business, registering it with the Department of Goods and Services Tax (GST) is essential. GST was an idea initially conceived in 2000 but was brought into effect on 1st July 2017. Companies get taxed by the government at almost every stage of their business, from manufacturing to distribution, etc. In simple terms, GST is the single indirect tax levied on the value addition provided by companies via their goods and services.

Now, are you wondering “What is GST Registration?” and “Why companies are required to do it? ”In this article, we’ll discuss GST, its importance, registration process, and more. Let’s get started!

Before diving into the details of the GST Registration process, let’s first try to understand what GST (Goods and Services Tax) is all about.

What is GST?

GST denotes the Goods and Services Tax, indirect taxation which is usually paid by the consumer. Since GST came into effect on 1st July 2017, it has replaced other indirect taxes like VAT, service tax, entry tax, luxury tax, and excise duty. GST is generally calculated based on the value-added to any goods and is a destination-based, comprehensive and multi-stage tax.

Now, let’s have a look at these terms in detail.

Destination-based: GST is usually imposed in a state where the product is sold rather than where it was manufactured. For example, if the products were manufactured in Karnataka and sold in Maharashtra, the GST will be collected in Maharashtra.

Multi-stage: There are many stages in the production of goods and services. The various stages include collection of raw materials, production, warehousing, selling to retailers, wholesalers, and finally the consumers. GST is levied at every stage and thus it is a multi-stage or multi-valued tax.

Importance of GST in India

GST aims to replace all the indirect taxes imposed on goods and services by the Indian Government. GST falls under a single comprehensive tax, eliminating the cascading effect of taxes on the production and distribution of goods and services. Also, combining several central and state taxes into a single tax would help avoid double taxation thus leading to a common national market. From the consumers' point of view, it is a reduction in the overall tax burden.

GST also helps in reducing tax evasion and even out tax structures across various states, eliminating location bias. It leads to a unified market as individual taxes imposed by the central and state governments are cut down. This in turn boosts the movement of goods across borders due to reduced business costs. GST expands the tax base and increases the revenue received by the central and state governments. Most importantly, GST improves tax governance and experts believe that it will lower the costs of goods and services in the long run.

Types of GST

GST in India has a four-fold break-up of goods and services tax. It includes the GST for central government, state government, union territories, and the integrated goods and services tax.

    1. State Goods and Services Tax - State Goods and Services Tax or SGST is calculated on service transactions and intrastate goods. The state government receives this tax.

    2. Central Goods and Services Tax - Central Goods and Services Tax or CGST is levied by the central government. It is levied in addition to the State Goods and Services Tax and the Union Territory Goods and Services Tax.

    3. Union Territory Goods and Services Tax - It is the same as SGST except that is implemented only in the Union Territories like Pondicherry, Daman and Diu, etc.

    4. Integrated Goods and Services Tax - Integrated Goods and Services Tax is levied on inter-state goods and service transactions. This applies to both imports and exports of goods. The tax is divided by the state and central governments.

What is GST Registration?

GST registration is a process through which taxpayers get registered under GST. According to the Goods and Services Tax, businesses with a turnover that exceeds a threshold limit of Rs. 40 lakhs or Rs. 20 lakhs or Rs. 10 lakhs, must register as a normal taxable person.

GST registration is mandatory for most businesses these days, and it is considered an offense if it is not done and a penalty of 10% of the due tax amount subject to a minimum of Rs. 10,000 will be imposed. If the offender deliberately evades paying taxes, then the penalty will be at the rate of 100% of the due tax amount.

Note: If a business operates from more than one state, then separate GST registrations for each state are necessary.

It is important for businesses with GST registration to know how the input tax credit works. Input tax credit implies that tax paid while purchasing a service or product can be adjusted with the tax on sales and the remaining amount can be paid to the government.

For instance, just imagine that you bought a product worth Rs.200 with a 10% tax. Then, you sell the product for Rs.250 and collect a tax of Rs.15 from the buyer which has to be paid to the government. Since you have already paid Rs.10 (the input tax credit), you will need to pay only Rs 5 as tax. However, businesses that have not completed GST registration may not be able to claim the input tax credit.

GST Registration Number

After a successful GST registration, a unique registration number known as the Goods and Services Tax Identification Number (GSTIN) is assigned. It is a 15-digit number allotted to all that is important to identify a firm/company. This number is created and issued based on the PAN number and the state code. The structure of the GST Registration Number is as mentioned below.

  • 1, 2 State code.
  • 3 - 12 - PAN number.
  • 13 - Entity code.
  • 14, 15 - Check digit.
Who are eligible for GST registration?
  • Normal Taxpayers -
    • Businesses/individuals whose turnover from sales of goods and services exceeds Rs.40 lakhs can be registered as normal taxable individuals. For businesses operating in the North East or hilly states like Jammu & Kashmir, Himachal Pradesh, and Uttrakhand the limit is Rs.10 lakhs.

  • Composition Taxpayers -
    • This applies to businesses that have a turnover of up to Rs.1.5 crores annually. As per this scheme, taxpayers must pay a fixed amount of GST irrespective of their annual turnover,

  • Casual Taxable Individuals -
    • This applies to somebody whose business is infrequent or seasonal. The tenure for registration is usually 3 months, however, businesses can apply for renewal.

  • Non-resident Taxable individuals -
    • This tax pertains to an individual who is an NRI occasionally supplying goods and services to India.

      Also, there are certain businesses for which GST registration is mandatory irrespective of the annual turnover.

    1. Input Service Distributors & Agents of a supplier

    2. Individuals registered under the Pre-GST law

    3. Individuals paying taxes under the reverse charge mechanism

    4. E-commerce aggregators

    5. People who supply via e-commerce aggregators

    6. Any service provider

    7. TCS/TDS deductors

    8. Online data access and retrieval service providers

Documents required for successful GST Registration

The documents required for GST registration differ based on the firms and partnerships.

The documents that are necessary for a proprietor/ individual/ HUF are:

  • PAN card of the owner/applicant
  • Aadhar card or voter ID of the owner/applicant
  • His/Her photograph
  • Bank details (Account statement/canceled cheque)
  • Address proof of the business owner and place of operation
  • Digital Signature
  • Board Resolution for Authorized Signatory/Letter of Authorization

LLP / partnership firms require more details such as a copy of their partnership deed, registration certificate/Board resolution of LLP. A private or public company requires the Certification of Incorporation and Articles of Association along with the other necessary documents.

GST Registration Process

GST registration is a tedious process involving a lot of documents and details and may take 3 - 6 days. You can obtain GST registration though FreeTaxFiler with easy process. Our experts will take care of it.

GST Rigistration

GST Registration - Key Highlights
  • GST registration is mandatory for any business with a turnover of over 20 lakh INR.
  • There is no registration fee.
  • Failing to do GST registration will result in a fine of Rs.10,000 or 10% of the due tax amount.
  • GST has two components namely CGST and SGST.
  • The final consumer usually bears the GST amount charged by the last dealer in the supply chain.
  • GST offers transparency, boosts GDP growth rate, efficient tax compliance, and benefits both the government and citizens at large.
  • The unorganized business sector has been largely organized with the advent of GST.
  • The number of compliance is reduced and there is only one return to be filed.
  • The composition scheme under GST helps small-scale businesses by reducing their tax burden.

GST is a great reform in India’s tax system. It greatly helps in simplifying and streamlining taxation while making compliance transparent. Did you know that you can save a lot of time and effort by reaching out to our experts at FreeTax Filer? They would assist you with the end-to-end process making it absolutely safe, reliable, and hassle-free!

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