Launched on July 1 2017, the Goods & Services Tax (GST) applies to all Indian service providers (including freelancers), traders and manufacturers. A variety of Central taxes like Service Tax, Excise Duty, CST and state taxes like Entertainment Tax, Luxury Tax, Octroi, VAT are absorbed in one tax – GST, implemented on 01.07.2017. GST is to be charged at every step of the supply chain, with full set-off benefits available. The procedure for GST is entirely online and requires no manual intervention.
Every product goes through multiple stages along the supply chain, which includes the purchasing of raw materials, manufacturing, sale to the wholesaler, selling to the retailer and then the final sale to the consumer. Interestingly, GST will be levied on all of these 3 stages. Let’s say if a product is produced in West Bengal but is being consumed in Uttar Pradesh, the entire revenue will go to Uttar Pradesh.
Also, taxpayers with a turnover of less than Rs.1.5 crore can choose composition schemes to get rid of tedious GST formalities and pay GST at a fixed rate of turnover.
What are the components of GST?
GST will have 3 tax components, which includes a central component (Central Goods and Services Tax or CGST) and a state component (State Goods and Services Tax or SGST) where centre and state will levy GST on all entities, i.e. when a transaction happens within a state. Inter-state transactions will attract the Integrated Goods and Services Tax (IGST), to be levied by the centre, i.e. when a transaction happens from one state to another.
What is the input tax credit?
Input tax credit lets you reduce your tax you have already paid on inputs and pay the remaining amount at the time of paying tax.
You pay taxes on the purchase when a product is purchased from a registered seller, and when you sell the product, you too collect the tax. With input credit, you can adjust the taxes paid at the time of purchase with the amount of tax on sales (output tax) and pay the balance liability of tax, i.e. tax on sale minus tax on the purchase.
Who Needs a GST Registration?
Every business or corporation that is involved in the buying and selling and good of services has to register for GST. It is mandatory for companies whose turnover is more than Rs.20 lakhs (for supply of services) and Rs. 40 lakhs ( for supply of goods) yearly to register for a GST.
All businesses making interstate outward supplies of goods have to register for a GST too. The same applies to businesses making taxable supplies on behalf of other taxable persons, example Agents and Brokers.
Also, as per the recent notification, e-commerce sellers/aggregators need not register if total sales are less than Rs.20 lakhs.
What are the GST tax rates?
- Items that are considered basic necessities come under exempt list i.e. they are not taxed.
- Household necessities and life-saving drugs etc. are taxed at 5%.
- Products like computers and processed food are taxed at 12%.
- Hair oil, toothpaste and soaps, capital goods, industrial intermediaries and services are taxed at 18%.
- Luxury items are taxed at 28%.
Check out the GST calculator which comes in handy to calculate the Goods and Service Tax using different slabs.
What is a GST Return?
A GST Return is a document containing details of income that is required to be filed as per the law with the tax authorities. Under the GST law, a taxpayer has to submit two returns on a monthly basis and one such return annually. All returns have to be filed online. Please note that there is no provision for revising the returns. All invoices for the previous tax period that went unreported must be included in the current month.
Under GST, a registered dealer has to file GST returns that include: Purchases, Sales, Output, GST (On sales) and Input tax credit (GST paid on purchases).
What is GSTIN?
GSTIN is a unique identification number given to each GST taxpayer. To verify a GSTIN number a person who has a GST number can log onto the GST portal.
What is the GSTN (Goods and Service Tax Network)?
The Goods and Service Tax Network (or GSTN) is section 8 (non-profit), non-government, private limited company. GSTN is a one-stop solution for all your indirect tax requirements. GSTN is responsible for maintaining Indirect Taxation platform for GST to help you prepare, file, rectify returns and make payments of your indirect tax liabilities.
Mandatory documents for Online GST registration
The list of documents required for registration of GST for various business are as follows:
- PAN Card and address proof of proprietor
- PAN Card of LLP
- LLP Agreement
- Partners’ names and address proof
Private Limited Company
- Certificate of Incorporation
- PAN Card of Company
- Articles of Association, AOA
- Memorandum of Association, MOA
- Resolution signed by board members
- Identity and address proof of directors
- Digital Signature
The following can be shown as proof of address of a director:-
- Voter Identity Card
- Aadhar Card
- Ration Card
- Telephone or Electricity Bill
- Driving License
- Bank Account Statement
Add what works as identity proof, One can use a PAN Card, Aadhar Card as identity proof. For address proof, any of the director’s can show their voters ID, passport, telephone bill, electricity bill and telephone bill.
Preparation of GST application
One of our GST representatives will collect all the required documents and process the GST application through the iCFO platform.
Once all the documents are collected, the application will be processed and filed. Then immediately the ARN number will be issued.
GST Registration Certificate
The GST registration certificate and GSTIN will be issued upon verification of GST application and other mandatory documents by the GST officer. Be aware that no hard copies of the certificate will be issued and the GST registration certificate can be downloaded from the GST Portal.
Penalties For Failure To GST Registration
As per the Section 122 of the CGST act, in India, there is a direct penalty for all those taxable persons who fail to register for GST.
Voluntary Registration Under GST (for Companies With A Turnover Below Rs.20 Lakhs)
Any small business with turnover less than 20 lakh can voluntarily register for GST even though it is not compulsory by law. Voluntary GST registration has its own advantages and some of them are:
- Take input credit: In GST, there is a flow of input credit right from manufacturers of the goods till the consumers, across the country. Input credit means a taxpayer while paying tax on output can deduct the tax that has already been paid on inputs and pay only the remaining amount. Voluntarily registered businesses can increase their margins and profits through this.
- Do inter-state selling with no restrictions: SMEs can increase the scope of their businesses and find prospective customers and explore online platforms
- Register on e-commerce websites: SMEs can widen their market by registering through e-commerce sites.
- Have a competitive advantage compared to other businesses.
GST Return Filing
A GST Return Filing is a return document that contains details of the income of the taxpayer. It has to be filed with the GST administrative authority. The document is used by tax authorities to calculate the tax liability of a GST taxpayer. A GST Return Filing form has to include the following details.
- Output GST (On sales)
- Input tax credit (GST paid on purchases)
For filing a GST Return, you need to have GST compliant sales and purchase invoices attached.
How can we help you? – Why Startupgenie?
Some of the best reasons to choose us are:
- Easy to get GST registration and GST Identification Number online.
- No hassle compliances as we completely take control of them.
- All your returns will be filed duly
Our legal representatives are available to explain the whole process and clear any queries you may have.
Although the GST portal has a user-friendly interface, the GST Forms have a lot of complex fields. Hence, it is highly recommended that you seek the help of a professional for submitting the application, the required procedures, filing your returns and completing other formalities in the portal.
FAQs on GST Registration
Can I apply for GST Registration online?
Yes, you can apply for GST Registration online. You can simply register your business on the official GST portal and then scan and upload all the required documents. You will then receive an acknowledgement. A GSTIN will be generated on acceptance of the application and a temporary password and login will be sent. GSTIN is a unique 15-digit ID. A GSTIN Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura must get a GST registration if their supply turnover exceeds Rs. 10 lakh. As mentioned above, this threshold limit applies only to businesses that operate within their home state. A business that conducts trade with another state must seek registration regardless of turnover.
Is the GST threshold limit the same for all Indian states?
The exemption limit is a supply turnover of Rs. 20 lakh for businesses in all except for the Indian states in the northeast region. Businesses in Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland, and Tripura must get a GST registration if their supply turnover exceeds Rs. 10 lakh. As mentioned above, this threshold limit applies only to businesses that operate within their home state. A business that conducts trade with another state must seek registration regardless of turnover.
How would the composition scheme work under GST?
The composition scheme under GST would be applicable to businesses with a turnover of up to Rs. 50 lakh. Small businesses with turnover less than Rs. 1 crore* (Rs. 75 Lakhs for Northeastern states) can opt for composition scheme. Such taxpayers would pay a fixed percentage of its turnover and cannot avail of the benefits of input tax credit. Such businesses cannot collect tax from its customers. The floor rate of tax cannot be less than 1%. *GST Council has decided to increase the limit to Rs. 1.5 crores but official notification is awaited.
Composition dealers are required to pay tax based on their business types.
- They need to file only one return on a quarterly basis. Whereas normal taxpayers are required to file three returns on a monthly basis.
- Composition dealers cannot collect taxes from customers
- They cannot issue taxable invoices, i.e., collect tax from customers and are required to pay the tax out of their own pocket.
- No input tax credits can be claimed
Persons who are not eligible for GST composition scheme include:
- Service providers (except restaurant owners)
- Non-taxable goods suppliers
- Sellers operating through an e-commerce platform
- Suppliers involved in the inter-state supply of goods
- Manufacturers of notified goods
Does GST apply to all businesses?
Yes, GST applies to all service providers, manufacturers, and traders. It extends to any dealers, bloggers, and writers, earnings from Google AdWords through PayPal, import-export businesses, all kinds of startups and companies, whether they are LLPs, proprietorships, partnerships or private limited companies. It also applies, regardless of the threshold limit,
- Businesses operating outside their home state
- A business not registered to the state
- Businesses paying a reverse charge
- Input service distributor
- E-commerce operators
- Aggregators selling services under own brand name (Ola, for example)
- Online sellers
- Suppliers or agents
For a complete list of FAQs on GST Registration, please click here.
When to apply for multiple GST registrations?
- Under the GST regime, only one registration is allowed against one PAN. However, businesses, which operate in more than one state must have
- When a person runs a business in more than one state, then he must have a separate GST registration for each state.
- If the business has multiple verticals within a state, then the registration has to be done for each business vertical.
What is ARN in GST Registration?
ARN which stands for Application Reference Number is generated ARN stands for Application Reference Number. It is the conclusive proof of successful submission of the application to the GST servers. It is generated after the TRN (Temporary Reference Number) & uploading of requisite documents.
Should I physically need to be present during the GST Registration process?
No. Startupgenie completely provides the GST registration service online. So, you need not have to be physically present during the registration process. All we need is just a computer or laptop or phone, Internet connection, and the required papers. We can get the job done for you, even if you are at the remotest location in India.