Goods and Services Tax (GST), in simple words, means instead of paying taxes at every level in the form of VAT, excise duty, sales tax, customs, luxury tax and service tax, you pay a single tax at the end of the supply chain.
Goods and Services Tax (GST)
Everything You Need To Know About Goods and Services Tax (GST)
GST Registration
In order to supply goods and products in India, it is mandatory to do GST registration.
Registration ensures safe taxation and also lets you enjoy various benefits. Multiple input taxes paid at every stage build up and cause cumbersome interaction with tax authorities. This can be avoided by adding value for each stage and a final tax being paid by the customer to the last dealer from whom the product is being bought or services were taken.
GST Registration steps
Registration involves a simple step wise procedure
- First, find out if GST registration will be under compulsory or voluntary registration for your specific case.
- Check the documents required to register for GST and arrange those properly
- Check the documents by a professional to avoid rejection
- Upload the documents on GSTN website along with application form
- On being evaluated and being approved the GST registration usually takes only a few days to get processed. The registration certificate will be granted accordingly.
Documents checklist for GST online registration in India
Proof for Business
- Passport Size Photo
- Partnership deal or business registration certificate
- Bank statement
- Authorization form
Address proof documents
- Proof of ownership of property
- If rented then rent agreement
- NOC
GST Registration Process
The registration process is pretty simple and is handled by an expert team. The procedure is explained in a layman way.
Time & Cost for GST Registration in India
For private companies, the registration usually takes around 3 days. An amount of 3,499 INR will be charged as a professional fee.
Professional Fee for GST Registration
₹3,499 (inclusive all of taxes)
GST Exemption and Remedies
There are basically two types of exemption and remedies available to the taxpayer, one is basic exemption and another is the composition scheme. Let us understand both:
1. Basic Exemption
This rule lays down that GST registration is a must for a supply of goods or services that incur value of 20 lakhs or more and the registration has to be applied for within 30 days. The following states namely Jammu and Kashmir, Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Himachal Pradesh, Uttarakhand, Sikkim, Tripura, and Nagaland will be exempt from this rule and the cut off for these states is 10 lakhs and beyond.
2. Composition Scheme (LEVY)
If the turnover is less than 50 lakhs, one can apply for the composition scheme. Business can’t be done outside the state and a composition rate of 2.5% will be applied to the manufacturer and others have to pay 1%.
Compulsory requirements for GST
GST being a new concept may take a while for people to understand, therefore, more care has to be taken to comprehend the various requirements that will ensure smooth registration process and approval of the same.
- Company registration certificate, AOP, in the case of partnership and trust the society and registration deed is required.
- Residence proof in case of own property or rental agreement in case of rented property
- A copy of bank statement showing transactions and also the first page of bank pass book containing all details like IFSC Code, MICR code and Account Number.
- Passport size photo
- Authorization letter
Mandatory GST Registration Cases
In spite of any exemption or remedies, the following cases will need GST registration compulsorily even if turn-over is less.
- Person making any inter state taxable supply.
- Casual taxable person making any taxable supply.
- Persons who are required to pay tax under Reverse Charge.
- Non resident taxable person making any taxable supply.
- Every person providing online information database access from outside India – AWS, Godaddy etc.
- Anything else notified by the Government from time to time.
- Person supplying goods/services on behalf of someone else (agent).
- Input service Distributor – Whether or not register.
- Person selling on e-commerce platform like Flipkart, amazon etc.
- Every e-commerce operator – Flipkart, amazon, snapdeal etc.
- Persons who are required to deduct TDS (Govt Departments).
Cases of GST exemption
There are only two cases where GST registration is not required at all even if the turnover is more than 20 lakh. The two cases are as follows:
1. Exempted Goods / Service Supplier
Any supplier of goods or services that are exempt from being taxed or can’t be taxed even if the turnover is more than 20 lakhs.
2. An agriculturist who supplies produce cultivated on land
An agriculturist cultivates land by himself or by employing others is also exempt from GST if he supplies the land produce.
Difference between GST, Excise, VAT/Sales Tax and Service tax
Let us discuss some of the most important difference between the existing excise duty, VAT/sales tax, service and new GST.
| Factors | GST Regime | Excise Duty | VAT/Sales Tax | Service Tax |
|---|---|---|---|---|
| Levied on | Supply of goods or services or both | Manufacture of Goods & not applicable on services | Trading or goods and not applicable on services | Applicable on rendering of services only |
| Levied by | Central & State government both | Central & Statement – max by Central Government | Levied by State Government – Central has no right | Levied only by central govt – state govt has no right |
| Average Tax rate | There are 5 rates; 0%, 5%, 12%, 18% and 28% | The excise duty rate is 12% on an average | There are five rates which also differ state to state | The current tax rate is 15% |
| Returns | 3 Monthly returns | 2 to 3 monthly returns | 4 Quarterly returns | 2 Half yearly returns |
| Basic Exemption | Upto Rs. 20 lakh (Rs. 10 lakh for North eastern states) | No excise duty upto 1.5 Cr | 10 to 20 lakh, differ state to state | SSI exemption of Rs. 10 lakh |
| Due date tax | Monthly by 20th of next month. | Monthly by 15th of next month. | Quarterly for individual / HUF monthly for others | Quarterly for individual / HUF monthly for others |
| ITC | Available in most cases | Less as compared to GST | Very complex & differ state to state | Available in most cases |
| Ease? | Complex structure | Highly complex | Height problematic | Less complex than GST |
Compliances after GST Registration
There are so many compliances under GST and if not complied properly, then there is a provision of high penalties. Here are three main compliances:
Frequently Asked Questions (Faq)
A primary Authorized Signatory is the person who is primarily responsible to perform action at the GST Common Portal on behalf of the taxpayer. All communication from the GST Common Portal relating to taxpayer will be sent to the primary Authorized Signatory.
| Type of Business | Who can be the Authorized Signatory? |
|---|---|
| Proprietor | The proprietor or any person authorized by the proprietor |
| Partnership | Any authorized partner or any person authorized by the partners |
| Company, LLP, Society or Trust | The person authorized by Board or Governing Body. can act as Primary Authorized Signatory |
In case there is a single Authorized Signatory for a business entity, the single Authorized Signatory will be assumed to be the primary Authorized Signatory.
In case there are multiple Authorized Signatories for a single business entity, one Authorized Signatory need to be designated as primary Authorized Signatory. The e-mail address and mobile number of the Authorized Signatory needs to be provided during enrolment.
Note: The Authorized Signatory or Primary Authorized cannot be Minor in age.
Following details are auto-populated from the VAT database in the Enrolment Application:
- PAN of the Business
- Legal Name of Business
- Name of the State
- Reason of liability to obtain registration
You cannot make changes to any of these fields as appearing in the Enrolment Application.
Principal Place of Business is the primary location within the State where a taxpayer’s business is performed. The principal place of business is generally the address where the business’s books of accounts and records are kept and is often where the head of the firm or at least top management is located.Additional Place of business is the place of business where taxpayer carries out business related activities within the State, in addition to the Principal Place of Business.
HSN stands for Harmonized System of Nomenclature which is internationally accepted product coding system used to maintain uniformity in classification of goods.
SAC stands for Service Accounting Codes which are adopted by the Central Board of Excise and Customs (CBEC) for identification of the services.
Enter the details of the bank accounts used for the purpose of carrying out business transactions in the Enrolment Application while enrolling with the GST Common Portal.
You can add up to 10 bank accounts while enrolling with GST Common Portal in the Enrolment Application.
Yes, you can submit the Enrolment Application at GST Common Portal without electronically signing it but you need to sign the application at a later date within the time allowed under the GST Act. Only signed Enrolment Applications shall be considered for issue of Final Registration Certificate. You can view the submitted application after login by accessing “My Saved Applications” at the GST Common Portal.
Electronically signing the Enrolment Application using DSC is mandatory for enrolment by Companies, Foreign Companies, Limited Liability Partnership (LLPs) and Foreign Limited Liability Partnership (FLLPs).
For other taxpayers, electronically signing using DSC is optional.
You cannot submit the Enrolment Application if your DSC is not registered with the GST Common Portal. Therefore, you need to register your DSC at the GST Common Portal by clicking the Register DSC menu.
During registration of DSC with the GST Common Portal, the PAN of the DSC holder will be matched with the PAN database of the CBDT. After validation you need to select the certificate that you need to register.
Note: Only Class -2 or Class 3 DSC can be registered at the GST Common Portal.
E-Sign stands for Electronic Signature. E-Sign is an online electronic signature service that allows an Aadhaar holder to digitally sign a document. If the taxpayer opts to electronically sign the Enrollment Application or any other document at the GST Common Portal using the E-Sign service, the following steps are performed:-
- The taxpayer clicks the E-sign button.
- The GST Common Portal prompts the taxpayer to enter the Aadhaar number of the Authorized Signatory.
- After validating the Aadhar Number, the GST Common Portal sends a request to UIDAI system to send an OTP.
- UIDAI system sends an OTP to e-mail address and mobile number registered against Aadhaar number.
- The GST System prompts the taxpayer to enter the OTP.
- The taxpayer enters the OTP and submits the Enrollment Application or the document. The e-Signing process is completed.
No, there is no charge applicable on submission of the Enrolment Application at the GST Common Portal.
ARN refers to Application Reference Number. It is a unique number assigned to each transaction completed at the GST Common Portal. It will also be generated on submission of the Enrolment Application that is electronically signed using DSC. ARN can be used for future correspondence with GSTN.
As one PAN allows one GST Registration in a State, you may register one business entity first. For the remaining business within the State please get in touch with your Jurisdictional Authority.