Indian sectors, such as agriculture, industry, manufacturing or service, have been considerably impacted by the GST (Goods and Services Tax) reform. GST is one of the most significant tax reforms in Indian history. In this article, we discuss GST, its advantages, and the process of GST registration.

The Indian government passed the Goods and Service Tax (GST) Act in July 2017. The Goods and Services Tax (GST) is a multi-stage, destination-based tax levied on all value additions in India. Let us take a look at what you should know about GST.

What is GST?

GST applies to all service providers, retailers, wholesalers, and producers who are doing business in India. Several central taxes, including service tax, excise duty, and CST, and state taxes, such as entertainment tax, luxury tax, octroi, and VAT, are combined into a single tax- GST.

This will make tax collection easier, reduce double taxation, and increase process efficiency. It will also result in a single uniform tax system across India. Furthermore, the consumer is responsible for the final tax in GST.

Who Needs to Register for GST?

  • The registration of any business organization under the GST Law involves acquiring a unique number from the tax authority to collect taxes on behalf of the government and claim an Input tax credit (ITC) for taxes paid on inward supply.
  • GST registration is required for any firm or entity that engages in purchasing and selling goods or services. Firms with a yearly turnover of more than Rs.20 lakhs (for the supply of services) and Rs. 40 lakhs (for the supply of goods) must register for GST. Here is a table to help you understand the threshold limits better –
Business Activity Aggregate Turnover (For Normal Category States) Aggregate Turnover (For Special Category States)
Dealing in Goods 40 Lakhs 20Lakhs 10Lakhs
Providing Services 20 Lakhs 10Lakhs
Deals in both goods & services 20 Lakhs 10Lakhs

Note – The total turnover is computed on a pan-India basis. If you have two units in two different states, the threshold limit will be calculated by adding the turnover of both units.

  • Businesses that conduct interstate export of products must also register for GST. Businesses that make taxable supplies on behalf of other taxable persons, such as Agents and Brokers, are subject to the same rules.
  • E-commerce sellers/vendors need to register even if their total sales are less than Rs.20 lakhs.

What are the Advantages of GST Registration?

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The advantages of GST registration are as follows:

  • Legal recognition by the law
  • You are authorized to collect tax from its consumers
  • You can avail deductions for taxes paid on purchases.
  • Single compliance instead of multiple taxes such as Excise, Service Tax, VAT etc.

A person who is not registered can neither collect taxes from his customers nor claim any input tax credit (ITC) for taxes he has paid.

What are the Types of GST Registration?

There are mainly two types of GST registrations, which are explained below:

Normal Scheme Registration

  • When a person’s turnover surpasses the threshold mentioned above, they must register under the normal scheme. In this structure, a person must file GST returns monthly or quarterly (depending on their turnover).

Composition Scheme Registration

  • A person who is registered under the composition scheme cannot charge tax to their customers or claim ITC on their purchases.
  • They must pay the government a predetermined percentage of their revenue as GST. Payment has to be made by the 18th of the month following the end of the quarter.

Who is Allowed to Take GST Registration Under the Composition Scheme?

  • If you are a goods supplier (trader or producer) with a turnover of up to Rs. 1.5 crore in the previous financial year, you can register under the composition scheme and pay a flat rate of tax, which is a fixed percentage of your turnover.
  • Similarly, if you are a service provider with a turnover of up to Rs. 50 lakh in the previous financial year, you can register under the composition scheme and pay a flat rate of tax, which is a fixed percentage of your turnover. We have summarised the rates in the table below:
Category of Registered Person GST Rates
Manufacturers, other than manufacturers of ice cream, pan masala, and tobacco (0.5% + 0.5%) = 1% of the turnover in the State or Union Territory
Restaurant and Outdoor Catering Services (2.5% + 2.5%) = 5% of the turnover in the State or Union Territory
Any other supplier eligible for composition levy (0.5% + 0.5%) = 1% of the turnover of taxable supplies of goods and services in the State or Union Territory
Services Supplier (3% + 3%) = 6% of the turnover in the State or Union Territory

The following people are not eligible for the composition scheme:

  • Non-Resident Taxable person
  • Manufacturer of pan masala, ice-cream or tobacco
  • Persons making Inter-state supplies
  • Businesses that supply goods through an e-commerce operator

What does Voluntary Registration Mean?

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If you do not fall into any of the above categories but still want to register your business under the GST Act, the law does not prevent you from doing so.

In the following situations, registering for GST will be beneficial to you:

  • Assume you’re making purchases from a GST-registered merchant. There will be a GST component to the invoice he will send you.
    Because you are not registered, you cannot claim the GST, and it will be included in your costs. As a result, your entire buying costs will be higher than those of your peers.
  • You can choose the composition scheme if you wish to expand your firm. There are fewer taxes to pay and fewer regulations to follow.
  • It is much easier to obtain a bank loan after you have registered.

All of the GST provisions will apply to voluntary registrants.

Further apart from above, GST law has provisions for following category of registrations :-

  • Casual Taxable Person
  • Input Service Distributor
  • Non-Resident Taxable Person
  • Non-Resident Online Service Distributor.
  • Embassy/UN Body/ Other Notified Persons.
  • Special Economic Zone (SEZ) Developer/ Unit

What is the GST Registration Process?

We will obtain GSTIN for your business in a few simple steps as follows:

  • Get in touch with our GST team of professionals, who have extensive knowledge and experience in the field of GST registrations.
  • Submit all the required documents for the registration to our team.
  • After the submission, our team will upload your application along with your documents on the online GST registration portal.
  • After your documents and application are approved, the portal will generate your Application Reference Number(ARN).
  • Finally, you will receive your GSTIN number without any hassle.

Conclusion

If a person wants to start a business or carry out their business, they need to have a GSTIN number compulsorily. GST registration allows your business to operate legally and establishes your brand as one that everybody can trust.

Why Choose InCorp Global?

The GST registration forms feature a lot of difficult & complex fields. It is strongly advised that you get professional assistance in applying, completing the relevant procedures, filing your returns, and completing other portal obligations. Our team of professionals will advise you on the GST applicability and compliance requirements for your business, as well as help you register for GST.

Our service scope includes:

Authored by:
InCorp Advisory | GST

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