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Introduction:
In the past, businesses were burdened with a multitude of taxes such as service tax, excise, VAT, entertainment tax, luxury tax, and octroi. These multiple taxations created complexity and added pressure to businesses. To simplify the tax structure and bring uniformity, the Goods and Services Tax (GST) was introduced, replacing numerous Central and State taxes.
Mandatory GST Registration:
GST registration is mandatory for businesses involved in the sale of goods, with a total turnover exceeding Rs. 40 lakhs (or Rs. 20 lakhs for businesses in Arunachal Pradesh, Uttarakhand, Manipur, Mizoram, Sikkim, Meghalaya, Nagaland, or Tripura). Service providers must register if their turnover exceeds Rs. 20 lakhs (or Rs. 10 lakhs in the aforementioned states). Voluntary registration for GST is also an option.
Online and PAN-Based Registration:
GST registration in India is a seamless online process. It is PAN-based and specific to the state where goods and services are supplied. Every registered GST taxpayer is allocated a unique 15-digit GSTIN (Goods and Services Tax Identification Number). The GSTIN comprises the state code (first 2 digits), PAN of the entity (next 10 digits), entity code (following 2 digits), and a check digit.
Key Benefits of GST Registration:
- Input Tax Credit: You can claim a credit for GST paid to previous suppliers for your business activities.
- Legal Recognition: GST registration legally establishes you as a supplier of goods and services.
- Interstate Trade: You can conduct interstate business without restrictions.
- E-commerce Selling: GST registration allows you to sell products online through e-commerce platforms.
- Tax Collection: Registered suppliers can collect taxes legally.
Documents Required for GST Registration:
To obtain GST registration for a non-resident taxable person, the following documents are necessary:
Principal Place of Business Proof:
- For own business: Provide documents supporting ownership of the premises, such as the latest property tax receipt, municipal khata, or electricity bill.
- For rented or leased premises: Submit a copy of the valid rent or lease agreement, along with documents supporting the lessor’s ownership, such as the property tax receipt or municipal khata copy.
- For other premises: Include a consent letter along with documents supporting the owner’s ownership, such as the municipal khata or electricity bill copy.
Identity Proof:
- For non-resident taxable persons, provide a scanned copy of the passport with VISA details.
- For foreign business entities, submit the registration application along with the tax identification number or unique government identification number and PAN, if available.
- For companies, societies, LLCs, FCNRs, etc., provide a scanned copy of the incorporation certificate (if registered outside India) and any relevant licenses or certificates.
Bank Account Proof:
- Include a scanned copy of the first page of the bank passbook or a one-page bank statement that contains account details, including the account number, account holder’s name, MICR, IFSC code, and branch details.
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When Must You Register for GST?
GST registration becomes obligatory under specific circumstances. For businesses engaged in the sale of goods, registration is compulsory when the total turnover surpasses Rs. 40 lakhs (or Rs. 20 lakhs in the case of businesses operating in the North Eastern states and Uttarakhand). Service providers must register if their turnover exceeds Rs. 20 lakhs (or Rs. 10 lakhs in the North Eastern states and Uttarakhand).
In addition to the turnover-based criteria, certain businesses are required to register for GST, regardless of their turnover:
Casual Taxable Person / Input Service Distributor
Non-Resident Taxable Person
Inter-State Suppliers of Goods and Services
Entities Liable to Pay Tax under Reverse Charge Mechanism
Suppliers Utilizing E-commerce Portals
TDS/TCS Deductors
Online Data Access or Retrieval Service Providers
If your business falls into any of these categories, it is essential to ensure timely GST registration to comply with tax regulations and requirements.
Is Voluntary GST Registration Possible?
Absolutely. An individual has the option to voluntarily register under GST. Upon registration, all the relevant provisions of the Act will be applicable to them, just as they are to a registered taxable person.
How Long is a GST Certificate Valid?
A GST certificate, once issued, holds a lifetime validity, unless it is surrendered, canceled, suspended, or revoked.
Can an Unregistered Person Collect Tax and Claim Input Tax Credit?
No, an individual without GST registration cannot collect GST from their customers nor can they claim any input tax credit for GST payments made by them.
Do I Have to Submit GST Returns Monthly, Even with No Business Activity?
After completing GST registration, monthly returns must be filed, even if there are no transactions during a specific month. In such instances, a Nil return should be filed. It’s important to note that failing to file returns on time or not filing them at all can result in substantial penalties.
What Are the GST Rates in India?
In India, GST rates for different goods and services are categorized into four slabs: 5% GST, 12% GST, 18% GST, and 28% GST.