The Goods and Services Tax (GST) is an indirect tax that took the place of various other indirect taxes. This article discusses the basics of the GST and the GST registration process.
What is GST?
The tax that is imposed on the sale of goods and services in India is called the GST. It is the tax that replaced various other indirect taxes such as Service Tax, State VAT, Central Sales Tax, Entertainment Tax, Advertisement Tax, Luxury Tax, etc. It has been enforced from 1st July 2017.
GST is a Destination based tax that is levied at the time of consumption on each value-addition and not the origin. It is a multi-stage tax that is imposed at every stage of the supply chain of a product.
GST Registration in India
The businesses that are involved in trading the goods and services need to register for the GST and the process is known as GST registration.
The registration process completion generally takes 2-6 days.
Multiple state operating businesses need to take the registrations from every state they are functioning in.
Goods and Service Tax Identification Number (GSTIN) is issued after the successful completion of the GST registration. It has 15 alphanumeric digits, out of which, first 2 is the state code, then 10 alphanumeric PAN, 1 the serial number of the registration of GST in a state, and the last the 2 digits are random.
The eligibility and the criteria are as follows:
- When the turnover of the businesses that supply the goods surpasses ₹ 40 Lakhs and for the service-based businesses this limit is 20 Lakhs, then they need to get registered as a normal taxable person
- This threshold limit is ₹ 10 Lakhs for specific states of the northeast such as J&K, Himachal Pradesh, and Uttarakhand.
- If the businesses or individuals were registered priorly under other tax laws such as excise, service tax, VAT, etc, they are eligible for GST registration
- In case of the interstate taxable supply of goods or the distribution of the services by the businesses themselves or the agents on behalf of others, need to get the GST registration.
- When businesses do not have a permanent business place and are supplying the goods or services at events or exhibitions then they need to get the GST registration as the Casual taxpayer with the validity of 90 days.
- Similarly, when an NRI starts a business in India and does not have a business place in India, then he needs to apply for GST registration before the commencement of business as the NRI taxpayer with the validity of 90 days.
- GST registration is required by the businesses who need to make the tax payment under the reverse charge mechanism.
- eCommerce needs to register for GST and also the sellers who are selling through the eCommerce marketplace.
Benefits of GST Registration
Let us understand how it is beneficial for businesses to get the GST registration. Below are some of the benefits:
- After the introduction of GST, the multiple taxations on the goods are eliminated, and thus no more cascading effect exists. This has resulted in a decrease in the tax liability on the businesses.
- It is a simple and self-service procedure to get registered with the GST on the GST portal.
- With the replacement of the GST with other indirect taxes, the compliances, registration, and filing procedures have been reduced.
- Getting GST registration enhances the reputation of the businesses as it gives them recognition as being legally registered. This makes them better in the competition.
- The Input tax credit can be claimed and used for the tax payments, saving the costs.
- The various opportunities can open such as eCommerce selling, interstate selling, application to the Government tenders, etc. This is because these require GSTIN.
List of Documents required for the GST registration
- Applicant’s PAN
- Aadhar Card
- Address proof of the business place
- The bank account statement, canceled cheque
- Digital Signature of Applicant
- Authorization letter or the board resolution for authorized signatory
- Certificate of incorporation or the Partnership Deed, i.e. a legal document for the business or the license
- ID proof and Address proof of the Directors of the company
Online GST Registration Process
The GST registration process can be done online through the GST portal and below is an overview through a step-by-step guide.
1. Go to https://www.gst.gov.in/
2. Click on Services > Registration > New Registration
If you are going through the GST registration the first time, you can proceed with the ‘New Registration’. TRN can help you to continue with the registration if you have an incomplete registration application. We shall see the ‘New Registration’ here.
3. Select which type of Taxpayer you are, state, legal business name (as per PAN), PAN number, email address, and mobile number of the primary authorized signatory (OTP will be received on these), and then click on Proceed.
4. The next step includes the verification of OTP sent on email and mobile numbers. The OTP is valid for 10 minutes. After successful verification of OTP, the TRN is generated.
5. Further, log in with the TRN on the GST portal as mentioned before step 2, verify the captcha, and complete the verification with OTP.
6. Start the GST registration by clicking on the Action icon
7. Enter the business details in the first tab – business trade name, select business constitution, District, Sector/ Circle / Ward / Charge/ Unit from the drop-down, Commissionerate Code, Division Code, Range Code from the list, ‘On’ the radio button if you are a casual taxpayer or under composition scheme, enter the business commencement date and Date on which liability to register arises.
The date on which liability to register arises means the date when the threshold was surpassed. The entity must apply for the GST registration within 30 days of the emergence of the liability. And it is 5 days before the business incorporation for a Casual Taxpayer or Non-resident taxable person.
8. Enter the promoters’ and directors’ details or proprietors’ details in the next tab. Up to 10 promoters’ or partners’ details can be entered here. The details include – name, date of birth, address, mobile number, email address, gender, PAN, Aadhar, designation, Director Identification Number (this is applicable for Private Limited, Public Limited, Public Sector Undertaking, Unlimited Company or Foreign Company registered in India.), and photo.
Applicants can use Aadhar e-sign in place of Digital Signature if he provides Aadhar.
9. The promoters would nominate one of them as the Authorized Signatory who would be responsible for filing GST returns, maintaining the required compliances, carrying out the transactions representing the other promoters, and will get complete access to the GST portal.
10. Next is the details about the Principal place of business which is the main business location for operation in the specified state.
The details to be provided are address, official contact details, and nature of possession of premises. (Choose ‘Others’ and upload the required government documents proof if the business place is situated in SEZ or the applicant is the SEZ developer).
Provide the ownership proof and business nature. If there is any additional business place then the same can be provided selecting ‘Yes’.
11. Moving towards the next tab for Goods and Service Details. Here you need to provide the top 5 HSN codes for a supply of goods or SAC codes for services.
12. Under the Bank Accounts tab, provide the details of all the bank accounts and a copy of the bank statement or passbook.
13. Next, review and verify the details and then select the verification checkbox of the authorized signatory, give the place name and sign the application with the Digital Signature Certificate (DSC)/ E-Signature or EVC. For LLP and companies, DSC is compulsory.
14. After this, a Success message comes up and the Application Reference Number (ARN) is sent with the acknowledgment message in the registered email address and mobile number. ARN can be used to track the GST registration.
The applicant shall receive the GST registration certificate and GSTIN within 7 days of the ARN generation.
The penalty for non-registration for the businesses that mandatorily need to register is 10% of the payable tax amount of ₹ 10000 whichever is more.
GST registration is an important legal document beneficial to businesses for various purposes. With the self-service portal, it has become very easy to get registered for tax compliance. You can get registered with the GST document as one of the options under the business documents for the PayKun merchant account.