Guide to Understand the GST Registration in India

 

What is GST?

On July 1st, 2017, the Goods and Services Tax (GST) tax was introduced in India. It replaced various indirect taxes like service tax, central excise duty, value-added tax (VAT), etc. It aims to establish a common market for goods and services and simplify the tax structure.

Under GST, taxes are subjected to the value-added at every stage of the supply chain, from the manufacturer to the retailer. It is a consumption-based tax, which signifies that it is applied only when a final consumer purchases a product or service.

Goods and services are taxed based on the category they fall into. Basic necessities like food items, education, and healthcare services are taxed at a lower rate of 5% while luxury goods like cigarettes and aerated drinks are taxed at a higher rate of 28%.

The GST has significantly affected various sectors of the economy. The tax rates real estate industry has been affected the most, as the tax rates have increased from 5.5% to 12% on under-construction properties. However, the government has introduced several measures to boost the industry, such as reducing GST rates on affordable housing.

What is GST Registration?

Businesses that supply products or services in India must register for GST to obtain a unique identification number known as the Goods and Services Tax Identification Number (GSTIN). Businesses with an annual turnover exceeding Rs. 40 lakhs (or Rs. 10 lakhs for businesses in the North-Eastern states of India) are required to register for GST. Even businesses that have a turnover below the threshold limit can opt for voluntary registration.

It allows businesses to avail of the input tax credit on the taxes paid on purchases made for business purposes. Additionally, It ensures businesses are compliant with tax laws, which minimizes the risk of penalties and legal action.

Eligibility criteria for GST registration

There are certain cases where GST registration is mandatory, irrespective of the annual turnover. Let's take a look at the eligibility criteria for GST registration in India:

1. Turnover: Businesses with an annual turnover exceeding Rs. 40 lakhs (or Rs. 10 lakhs for businesses in the North-Eastern states of India) need to register for GST.
2. Inter-state supply: GST registration is mandatory if the business is involved in the supply of goods or services across state borders irrespective of the annual turnover.
3. E-commerce: E-commerce operators and businesses that sell goods or services through e-commerce platforms need to register for GST.
4. Input service distributor: Businesses that are involved in the distribution of input tax credit need to register for GST.
5. Casual taxable person: Individuals or businesses that are involved in occasional or seasonal transactions need to register for GST, irrespective of the annual turnover.
6. Non-resident taxable person: Non-resident individuals or businesses that are involved in the supply of goods or services in India need to register for GST, irrespective of the annual turnover.
7. Reverse charge mechanism: Businesses that are required to pay tax under the reverse charge mechanism need to register for GST.

Process of GST registration

The process of GST registration in India is simple and online process. Here are the steps involved in the process of GST registration:

Step 1: Visit the GST portal

The first step is to visit the official GST portal

Step 2: Click on the ‘Services’ tab

On the homepage of the GST portal, click on the ‘Services’ tab and then select ‘Registration’.

Step 3: Fill in the details

You will be directed to the GST registration page. Here, you need to fill in the following details:

1. a) Type of taxpayer: Select the type of taxpayer from the drop-down menu. The options include regular taxpayer, casual taxpayer, non-resident taxable person, and so on.
2. b) State and district: Select the state and district where your business is located.
3. c) Legal name of the business: Enter the legal name of your business as per the PAN database.
4. d) PAN: Enter the PAN of the business.
5. e) Email address and mobile number: Enter a valid email address and mobile number.

Step 4: Verification of PAN, mobile number and email address

After you have entered the PAN, mobile number, and email address, the system will verify these details. An OTP will be sent to your mobile number and email address for verification.

Step 5: Fill in the form

After verification, you need to fill in the GST registration form. The form will require you to fill in details such as the address of the business, bank account details, authorized signatory details, and so on.

Step 6: Upload the documents

You will also be required to upload certain documents such as the PAN card of the business, proof of business registration such as a partnership deed or a company registration certificate, address proof of the place of business, and bank account details.

Step 7: Submit the application

After you have filled in all the details and uploaded the documents, you need to submit the application. You will receive an acknowledgement with an application reference number (ARN) after successful submission.

Step 8: Verification and approval

The application will be verified by the GST officer. If any additional information or documents are required, the GST officer will send a notice through the GST portal. If the application is approved, the GSTIN will be issued, and the registration certificate will be available for download on the GST portal.

Documents Required for GST Registration

The following is a list of documents required for GST registration in India:

1. PAN card of the business
2. Proof of business registration
3. Proof of place of business
4. Bank account details
5. Digital Signature
6. Photographs
7. Authorization letter
8. Business address proof
9. Memorandum of Association (MOA) and Articles of Association (AOA)
10. GST registration for non-resident taxable persons