GST Registration

GST refers to Goods and Services Tax. GST is India’s most ambitious and significant tax reform since independence. Its aim is to levy a single uniform tax on all the goods and services across India. GST seeks to replace various central and state-level taxes, bringing more producers within the tax net thereby making the Indian market more integrated. By enhancing the efficiency of the tax regime can substantially boost growth and government finances

GST is an indirect tax that seeks to replace various indirect taxes in India such as VAT, service tax, and excise duty. GST Act became applicable throughout the nation from 1st July 2017. GST is a multi-stage, destination-based tax regime that is levied on every value addition. GST is a multi-stage, comprehensive tax system that applies to the sale of goods and services. The primary aim of this tax regime which is applicable throughout India is to curb the cascading effect of multiple indirect taxes.

In a nutshell, GST is an indirect tax that is levied on the sale, manufacture, and consumption of goods and services. It applies to the entire nation and seeks to make it a common unified market. With the support of a uniform tax structure, GST will enable smooth supply across the whole supply chain in all states.

GST Registration Turnover Thresholds

As per the provisions of the GST Act, 2017, any business with an annual turnover of Rs. 40 lakhs and above should register for GST. For hill states and north eastern states, the threshold of turnover is Rs. 10 lakhs. Moreover, following individuals also need to register for GST and acquire GSTIN.

• Inter-state supply: GST registration is mandatory for those individuals making the interstate supply of goods and services.
• E-commerce operators: All the e-commerce operators and those who supply goods and services via e-commerce operators need to register for GST and obtain a 15-digit GST Identification Number.
• Annual turnover criteria: Those individuals who provide intra-state services having an annual turnover of more than 20 lakhs and those individuals providing intra-state goods having a turnover of more than 40 lakhs must register for GST.
• Existing taxpayers: Enterprises who are already registered for VAT, service tax or central excise must register for GST.
• Casual taxable persons: This category includes anyone who supplies goods or services on a sporadic basis and does not have a set location.

Voluntary GST Registration1

What is a GST composition scheme?

The composition scheme is a GST tax levy alternative meant to make compliance easier and lower compliance expenses for small taxpayers.

The key feature of this scheme is that businesses or individuals who choose to pay tax under it can pay a flat percentage rate of turnovers every quarter rather than paying tax at a monthly rate.

The composition scheme of the GST now has more flexible restrictions, including a higher turnover threshold for applicability, the inclusion of service providers, and lower tax rates. This policy also applies to under-construction, ready-to-move-in, and cheap homes in the real estate sector.

Eligibility for GST composition scheme:

Manufacturers or traders with a taxable business turnover of up to 1.5 crores (75 lakh in the case of North-Eastern States) are eligible for the composition scheme. If a service provider's taxable turnover is less than $50 lakh, he is eligible for the scheme. Businesses with interstate deliveries, ice cream, pan masala, and tobacco manufacturers, as well as e-commerce players, are not eligible for the composition plan.

Importance of GST composition scheme:

By giving relief on GST filings, procedures, and tax rates, the composition scheme effectively recognizes the importance of the MSME sector.

Benefits of composition scheme:

Compliance is simplified because no detailed accounts and records need to be maintained, and no tax invoices are required to be produced. The filing of quarterly tax returns has been simplified. Payment of tax on a quarterly basis and at a lower rate has been simplified. Composition taxpayers are required to pay tax at a lower rate than the usual GST rate of 18 percent, resulting in a smaller impact on their working capital. There will be no regular tax invoices sent. In the case of a NIL return, the same might be submitted via SMS.

GST Components

There are 4 types of GST that are used to distinguish between inter-state and intra-state supplies. This distinction helps to reduce the burden of indirect taxes.

• CGST(Central Goods and Services Tax): CGST is levied on intra-state sale and purchase of goods and services. The revenue generated from the CGST goes to the central government.
• SGST(State Goods and Services Tax): SGST is levied on the sale of goods and services within the state. SGST subsumes within itself various types of taxes charged earlier by the state such as VAT, luxury tax, entertainment tax, octroi tax, tax on lottery, etc.
• IGST( Integrated Goods and Services Tax): IGST is levied on the inter-state transaction of goods and services. It is applicable to imports and exports as well. Under IGST, taxes levied are shared by the center as well as the state. SGST part of the Integrated GST goes to the state in which the goods and services are consumed as GST is a destination-based tax.
• UTGST( Union Territory Goods and Services Tax): UTGST applies to the sale and purchase of goods and services within the Union Territories i.e., Andaman and Nicobar Islands, Lakshadweep Islands, Dadra and Nagar Haveli & Daman, and Diu, Delhi, Chandigarh, Jammu, and Kashmir. UTGST is charged along with CGST.

What is GSTIN?

The GSTIN is a unique 15-digit code that is given to every taxpayer. GSTIN is generated based on the PAN and the state you live in. Before the introduction of GST, all registered dealers under the state VAT were used to get a TIN number. Now, GSTIN has subsumed TIN.

Working of GST

• At the manufacturing stage: The manufacturer would have to pay GST on the purchase of raw materials as well as on any value addition that is done to make the product.
• At the stage of service provider: The service provider would have to pay GST on the amount that is paid for the product as well as on the value that is added to it. However, the tax paid at the manufacturing stage can be deducted from the overall tax that is to be paid.
• Retailer: Retailer would have to pay GST on the product purchased from the distributor along with the margin added. However, tax that has been paid by the retailer can be deducted from the overall GST that is to be paid.
• Consumer: GST would pe paid on the product purchased by the consumer as per the tax slab.

Types of GST Registration

There are various types of GST registration such as

• Normal taxpayer: This GST registration category is for taxpayers who do business in India. Taxpayers who register as regular taxpayers do not have to pay a deposit and have an unlimited validity period.
• Composition taxpayer: The individual must join the GST Composition Scheme to become a Composition Taxpayer. The Composition Scheme allows taxpayers to pay a fixed GST rate. The taxpayer, on the other hand, would be unable to claim the input tax credit.
• Casual taxable person: Anyone who sets up a stall or a seasonal shop must register as a Casual Taxable Person. The taxpayer needs to make a deposit equal to the amount of GST liabilities in order to register as a casual taxable person. The responsibility should correspond to the registration periods that are active. For a period of three months, the registration would remain active.
• Non-resident taxable person: The Individuals living outside of India are classified as non-resident taxable persons. Taxpayers should consider supplying goods or services to Indian citizens. The taxpayer must make a deposit equal to the amount of GST liabilities in order to register as a casual taxable person. The responsibility should correspond to the registration periods that are active. For a period of three months, the registration would remain active.

Advantage of GST over previous Tax schemes

• Uniformity in Taxation: GST seeks to ensure that the structure of tax rates is common and uniform across the country.
• Eliminates cascading effect: Cascading effect on tax may be described as ‘Tax on tax’, and GST aims to provide a seamless tax system throughout the value chain by reducing the cascading effect of taxes. This would consequently reduce the hidden cost of doing business.
• Reduced tax evasion: Due to robust IT infrastructure, GST would lead to better tax compliance.
• Integration of national market with one tax system: GST is an indirect tax that seeks to replace various indirect taxes in India such as VAT, service tax, and excise duty. It applies to the entire nation and seeks to make it a common unified market.
• Completely Online: Since GST will be mainly technology-driven, taxpayers will have to access a common portal i.e., GSTN. Various operations including tax payments, registration, refunds, registration, and returns will be automated and streamlined. All activities would be done via GSTN including paying taxes, filing returns, filing return claims, and registration. Verification of input tax credit will also be done online, making the process more transparent and accountable. Online mode will make the process significantly faster.

Benefits of GST Registration Online

There are various advantages of GST registration such as:

• Recognized as a legal supplier of goods and services.
• GST registration makes the business eligible for availing benefits under many government schemes and initiatives.
• Better customer loyalty
• Better accounting of taxes paid on input products or services that can be used to pay GST owing to the business's provision of goods or services, or both.
• Legally permitted to collect tax from his customers and credit the taxes paid on the goods or services provided to customers or beneficiaries.

Penalty for not applying for GST Registration

What is the GSTN (Goods and Service Tax Network)?

Taxable Entities In GST

GST Tax Rates

GST Rates	Goods	Services
No tax	Essential commodities such as Sanitary napkins, Deities made up of wood, stone, or marble Rakhi made without any precious stones Food items like Vegetables, Fortified milk, Bread, curd, sugar Eggs, and natural honey Non-food items like Handloom, Bangles, Judicial papers, Stamps, Printed books and Newspaper.	Lodge and Hotel services carry a tariff below INR 1,000, Jan Dhan Yojana and Bank charges on savings accounts, etc.
5% GST	Food items such as Fish fillet Coffee Skimmed milk powder Frozen vegetables Pizza bread Spices Tea Sliced dry mango Cashew nuts Unbranded namkeen milk food for babies Cinnamon and cinnamon tree powder and edible mixtures, etc. Non Food items such as: Agarbatti, Fertilizers, Coal, Ayurvedic medicines, Kerosene, Insulin, Lifeboats Plastic waste, etc.	Restaurants in hotels that carry room tariffs less than INR 7,500, Non-AC and Standalone AC restaurants and the ones that serve liquor, special flights for pilgrims takeaway foods, newspaper printing and small restaurants, transportation services like railway and airways, supply of tour operators service, transport via radio taxis and cabs, tailoring services, etc.
12% GST	Food items such as Ghee, cheese butter frozen meat products fruit juices pickles namkeen sausages instant food mixes Non-food items such as umbrella, tooth powder, sewing machine, handbags, pouches, purses, jewelry box, artificial yarn, nuts, fruits, medicine, cell phones and wooden frames for the mirror, photographs or painting, Art ware of iron	Building construction for sale, Business-class air tickets, Guesthouses, Inns and hotels with room tariffs less than INR 7,500, Mining and drilling for crude or natural gas, Metro and monorail construction, Pollution control or effluent treatment plants, etc.
18% GST	Food items such as Pastries and cakes, Cornflakes, Pasta, flavored refined sugar, preserved vegetables, ice cream, Chocolate, mineral water, Soups, oil powder, sauces, Non-food items such as: Washing machine Detergents Glassware safety glass Pumps Mirror light fittings	Restaurant in hotels that carry room tariffs of more than INR 7,500 IT and Telecom services Outdoor catering Water parks Theme parks and Financial services, etc.
28% GST	Items such as Dishwasher Sunscreen Dye Tobacco, Bidis, Cigarette, Pan masala, etc. Automobiles, Aircraft for personal use Ceramic tiles	Betting on casinos Gambling Hotel stay bill above INR 7,500, Racing Five-star hotels Cinema and entertainment, etc.

Document required

Type of Entity	Documents Required
Sole Proprietor	PAN Card of applicant/owner ID Proof: PAN card of applicant/owner Address Proof: Ration card/ Aadhar Card/ Driving License/Voter ID of applicant/owner 2 Passport-sized photographs of applicant/owner Address proof of the place of business- any utility bill such as water/electricity/telephone/gas bill No Objection Certificate from the premises owner Notarized rental agreement in English (if rented property) Copy of property papers(if own property) A bank account statement that includes name, address, and a few transactions
Partnership and LLP	PAN Card of firm ID Proof: PAN card of Partners Address Proof: Ration card/ Aadhar Card/ Driving License/Voter ID 2 Passport-sized photographs of Partners Address proof of the place of business- any utility bill such as water/electricity/telephone/gas bill No Objection Certificate from the premises owner Notarized rental agreement in English (if rented property) Copy of property papers(if own property) A bank account statement that includes name, address, and a few transactions Digital signature for authorized signatory
Private Limited Company and Public Limited Company	A Certificate of Incorporation serves as a confirmation of a company's formation. Pan card of Company ID Proof: PAN card Address Proof: Ration card/ Aadhar Card/ Driving License/Voter ID 2 Passport-sized photographs of Directors Address proof of the place of business- any utility bill such as water/electricity/telephone/gas bill No Objection Certificate from the premises owner Notarized rental agreement in English (if rented property) Copy of property papers(if own property) A bank account statement that includes name, address, and a few transactions Digital signature for authorized signatory