GST Registration
Registering for GST has become a crucial aspect for any business. The Goods and Services Tax (GST) is a comprehensive indirect tax levied on the supply of goods and services across India, and its registration is mandatory for businesses with an annual turnover above a certain threshold.
Overview
Whether you are a small business owner, a freelancer, or a large corporation, GST Registration services can help you with all aspects of the GST registration process. This includes everything from filing your GST application to obtaining your GST registration certificate. if you’re looking for a reliable partner to help you with your GST registration and compliance needs, consider Pioneer One’s GST Registration services today.
GST Registration – Types of GST Registration, Documents and Fees
The Indian Government introduced the Goods and Service Tax Act (GST Act) on July 1, 2017. This legislation, which aimed to simplify the indirect tax system in India by merging multiple taxes into one and improving the collection process, was officially approved by Parliament on March 29th of the same year. GST is an indirect tax that was created to eliminate several existing indirect taxes in India and establish a unified taxation regime for increased efficiency and ease of collection.
New GST registration is now mandatory for businesses with an annual turnover of at least Rs. 40 Lakh. In the North East and Hill states, the threshold is set at an annual revenue of over Rs. 10 Lakh. The process of obtaining a GSTIN registration is uncomplicated and can typically be completed within a period of 2 to 6 working days.
To begin with, let’s take a look at the different types of GST in use in India.
Types of GST
In order to determine a business’s GST liability, it is important to understand the type of transaction involved. GST can be classified into four sections, which are detailed in the accompanying table.
| GST Types | What It Is |
|---|---|
| State Goods and Services Tax (SGST) | SGST refers to the tax payable on the sale of services and products within a state. It replaces previous taxes, including, Value Added Tax, Entry Tax, State Sales Tax, Entertainment Tax, surcharges and cesses. |
| Central Goods and Services Tax (CGST) | The tax levied on the supply of intra-state products is CGST. The Central Government charges this tax. CGST replaced many taxes levied by the Centre, including Service Tax, Central Excise Duty, CST, SAD, Customs Duty, etc. |
| Union Territory Goods and Services Tax (UTGST) | Taxes applicable to the sale of products and services in Union Territories, such as Andaman and Nicobar, Daman and Diu, Chandigarh, Dadra, etc. |
| Integrated Goods and Services Tax (IGST) | Sale of inter-state products and services leads to taxation. This is IGST. Basically, when businesses transfer services and products from one state to another need to pay this form of GST. |
Who Should Register for GST?
As per the Goods and Services Act, business operators that meet any of the specified criteria are required to register for GST-
- Individuals and businesses who were registered under pre-GST laws must register under GST as well.
- Businesses that exceed a yearly turnover of Rs. 40 Lakh (Rs. 10 Lakh for businesses in the North-Eastern or hilly areas) are eligible for GST registration online
- Any individual supplying products through an e-commerce aggregator.
- E-commerce aggregators are liable to pay GST as well.
- Non-resident and casual taxable person.
- Individuals paying taxes under a reverse charge mechanism are also eligible for new GST registration . In such cases, the receiver is liable to pay taxes, instead of the supplier of goods and services.
To ensure a smooth registration process, it’s important for eligible individuals or businesses to be aware of and comply with the relevant eligibility and documentation requirements.
Types of GST Registration
Registration under GST is divided into several types. Undergoing the registration procedure is difficult without recognising its different forms. Take a look at the table below to acquire a better idea regarding the types.
| Who is Eligible? | Type of Registration |
|---|---|
| Average taxpayer | No deposits are necessary from businesses or individuals filing GST this category. Most companies in India fall under this classification |
| Casual Taxable Individual | Individuals setting up occasional or seasonal businesses need to register their GST under this category. The person needs to make a deposit equal to the GST liability from the occasional business. The tenure for registration is 3 months. However, businesses can apply for renewal and extensions. |
| Non-Resident Taxable Individual | People who reside outside India but occasionally supply goods or provide service as agents, principals, or in other capacities to Indian residents are liable to file for registration under this category. The business owner must pay a deposit equal to the expected GST liability during the GST active tenure. The normal tenure is three months. However, taxpayers can extend or renew the registration if required. |
| Composition Registration | Composition registration process reduces the hassle involved with GST registration greatly. In this case, businesses need to deposit a fixed yearly payment irrespective of their actual earnings. Only companies that have a yearly turnover of up to Rs. 1 Crore are eligible for such a registration process. |
Documents Necessary for new GST registration online
Completing the GST registration process successfully requires the submission of certain mandatory documents. The required documentation, however, varies depending on whether it is a business or an individual that is applying for registration.
Check out the table illustrated below for a better idea about the documents necessary.
| Section | Documents Required |
|---|---|
| Sole Proprietors and individuals |
|
| Hindu Undivided Families |
|
| LLPs and Partnerships |
|
| Companies |
|
By providing all the necessary documentation, a 15-digit GSTIN will be assigned exclusively to each registered business operating in India. There are no fees for this registration process.
Fines for Not Registering Under GST
In case a GST-eligible individual or business does not pay taxes, either fully or partially, he/she has to pay penalty charges for it. If the error of payment is genuine, i.e. unintentional, the individual or business in question has to pay 10% of the total tax. However, this is only applicable if the total tax burden is higher than Rs. 1 Lakh. If the error of payment is intentional, the culpable entity needs to pay the entire due amount as penalty.
What are the Advantages of GST Registration?
There are numerous advantages that business entities can reap under GST, including:
- Abolition of cascading effect – The introduction of GST has eliminated the previously noted cascading effect in indirect taxation, causing double taxation in every step. This measure has lowered the tax liability of business entities.
- Convenient application procedure – The application procedure for GST registration online as well as filing of GST can be conveniently done through the GSTN portal , making it time-efficient and easy.
- Lesser compliance – Under the previous tax regime, businesses had to file multiple returns accorded with different indirect taxes – VAT, excise, and service tax. As GST is a unified and singular tax regime, the number of filings has come down, making it less hassling for entities to file a return.
- The benefit of composition scheme – SMEs with annual turnover less than Rs. 1 Crore can enjoy lower tax rates and less stringent terms of compliance if registered under the GST Composition Scheme.
- Less stringent terms on logistics – Under GST, the terms for logistics are comparatively less strict than under the previous tax regime.
- Regulation of unorganised sector – Registration under GST comprises several provisions such as compliances, payment of taxes, and benefit of input credit, ensuring transparency in the tax collection system.
Such benefits notably reduced the hassle of filing taxes, ensuring efficient indirection tax collection regime.
When is GST Deregistration Possible?
Entities that have already registered their businesses or ventures under GST may need to cancel or surrender their GST registration at a later stage.
There are several circumstances that prompt cancellation or surrendering of GST registration. These circumstances are discussed below –
- Turnover below the minimum limit: If a business’s annual revenue falls below the minimum threshold set for its state after registering for GST, it can apply for deregistration. For example, if a company operating in Maharashtra registered for GST when its annual revenue was 50 lakhs, but later it fell to 20 lakhs, the company can opt to cancel its GST registration as the minimum threshold in Maharashtra is 40 lakhs. However, businesses that supply goods to other states must still register for GST, regardless of their annual revenue.
- Discontinuation of business: If a business entity discontinues its operations, it needs to apply for a cancellation of its GST registration.
- Change in business status: The cancellation of GST registration can also be applied for by businesses that experience a change in their ownership status.
- Change in business constitution : If a business has undergone any changes to its constitutional status, it must surrender its GSTIN registration and apply for a new one under the updated constitution. For example, if a business has changed its structure from a partnership firm to a private limited company, it must cancel its registration as a partnership firm and re-register as a private limited company under GST.
How to Apply for Cancellation of GST Registration?
Individuals can apply for the cancellation of their GST registration by submitting a form GST REG-29. The form should include the following relevant details provided by the taxpayer –
- Details of inputs or raw materials along with goods in work-in-progress and finished goods in the inventory on the date of application for cancellation.
- Liabilities, as shown in the Balance Sheet on the date of application for deregistration.
The cancellation process must be overseen by an officer, who will then issue a formal order in Form GST REG-19 within a month of the application submission. This officer will determine the effective date of cancellation and promptly inform the concerned taxpayer.
The process of registering and deregistering for GST is complicated and requires careful attention to detail and a thorough understanding of GST regulations. Taxpayers must stay informed about GST laws and ensure they are in compliance to avoid any legal consequences.
In addition to improved tax collection efficiency, registering businesses for GST can also result in lower tax liabilities due to the changes in the indirect tax rate structure under the Goods and Services Tax Act. As a result, registering for GST can bring multiple benefits to businesses.
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