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GST Registration - Types of GST Registration, Documents and Fees
In the field of taxation within India, the introduction of "Goods and Services Tax" or GST has led to a significant and fundamental change. It is a type of tax that was created to replace several other individual taxes like VAT, Excise duty, service tax etc. prevalent in the country. Its aim was to establish a single tax system to make collecting taxes easier and improve the efficiency of the process. GST has made the tax system clearer and more organised.
In this article, we'll discuss different aspects, including the types of GST categories, necessary paperwork, and the fees linked with the process.
Exploring types of GST
Integrated Goods and Services Tax (IGST)IGST is applied when goods and services move across state or international borders. The central government collects this tax and then fairly divides the revenue between states and the central authority to ensure fairness.
State Goods and Services Tax (SGST)SGST is relevant for transactions that happen within one state. The money collected from SGST goes to the government of that specific state.
Central Goods and Services Tax (CGST)Similar to SGST, CGST is pertinent to transactions transpiring within a state's boundaries. Nevertheless, the tax collected is directed to the central government, thereby fostering a balanced allocation of resources.
Union Territory Goods and Services Tax (UTGST)UTGST comes into effect in Union Territories devoid of a legislative assembly. The collected tax is subsequently channelled into initiatives aimed at advancing development and progress within these territories.
Who should register for GST?
GST registration is mandatory for several categories of individuals/entities, including:
Businesses exceeding the thresholdIn most states, you need to register for GST if your annual turnover for goods reaches ₹40 lakhs or ₹20 lakhs for services. Special category state businesses like Arunachal Pradesh, Manipur, Meghalaya, Mizoram, Nagaland, Tripura, and Sikkim have lower thresholds of ₹20 lakhs for goods and ₹10 lakhs for services.
Inter-state suppliersBusinesses dealing with transactions across state borders are required to be GST-registered.
E-commerce operatorsOnline platforms that facilitate the sale of goods or services must also be GST-registered.
Non-resident taxable individualsThose residing outside India but supplying taxable goods/services within the country need to register for GST.
Tax deducted/collected at sourceIndividuals or entities responsible for deducting or collecting tax at source must undergo GST registration.
Casual taxable individualsThose engaged in occasional or seasonal businesses are required to register for GST during the periods of operation.
Input service distributorsBusinesses that receive invoices for input services and then distribute them to various branches need GST registration.
Agents of a supplierIndividuals or entities that supply goods/services on behalf of others also need to be GST-registered.
Types of GST Registration
Normal TaxpayerMost businesses fall under this category. No deposit is needed to register as a regular taxpayer here. Additionally, those within this group have no expiration date.
Casual Taxable IndividualIf your business operates on an irregular or seasonal basis, you have the option to choose this type of registration. This is suitable for individuals who are involved in business temporarily and wish to take advantage of GST benefits. When your seasonal store is operating, you need to pay an upfront sum equal to the expected GST amount. For those belonging to this category, the GST registration stays valid for 90 days. It can be extended or renewed once it expires.
Composition TaxpayerSmall businesses with a turnover below ₹1.5 crore can opt for the composition scheme. It offers a simpler tax regime with reduced compliance, although it comes with certain restrictions.
Non-Resident Taxable IndividualIndividuals residing outside India but involved in supplying taxable goods/services in the country need to register under this category. This GST registration remains effective for a period of three months. However, there is an option to extend or renew it once it has lapsed.
Documents Necessary for New GST Registration
To complete the GST registration process, you need to provide a set of essential documents, including:
PAN card of the business/entityThe Permanent Account Number is crucial for GST registration as it serves as a primary identifier.
Aadhaar cardDetails of the authorised signatory or partners/members for verification.
Proof of business registrationThis involves the partnership deed, company's incorporation certificate, or other relevant documents.
Identity and address proofProof of identity and address of the promoters, partners, directors, and authorised signatories.
Bank account proofA scanned copy of the first page of the passbook or a bank statement.
Digital signatureFor companies and LLPs, a Class 2 or Class 3 digital signature is required.
Letter of AuthorisationIn the case of authorised signatories, a letter of authorisation is needed.
After providing all the specified documents, a 15-digit GSTIN is generated, which is distinct for each registered business operating in the nation.
Advantages of GST Registration
Input Tax CreditRegistered businesses can claim Input Tax Credit (ITC) on the taxes paid on their purchases. This significantly reduces their tax liability.
LegitimacyGST registration lends your business credibility. It makes your business eligible for government tenders and trade benefits, boosting trust among customers and partners.
E-commerce BenefitsE-commerce operators and sellers can reap benefits like Amazon's 'Fulfilment by Amazon’ only if they possess GST registration. It's a gateway to expanding your business through online platforms.
Reorganisation of Unorganised SectorsThe introduction of GST led to the restructuring of sectors like textiles and construction, which were not well-organised until July 1, 2017. This restructuring improved business conditions while also enforcing responsibility and rules in these industries.
Simplified Online ProcessThe Goods and Service Tax website offers a user-friendly and efficient online registration process for GST. This method is much more preferable than having to go through separate registrations for various taxes like VAT, Excise, and Service Tax all over again.
Reduced Compliance BurdenCompared to the time before GST, filing GST now involves submitting a single unified return instead of dealing with multiple compliance requirements and returns related to VAT, Excise, and Service Taxes.
When is GST Deregistration Possible?
Deregistration of GST is possible under various circumstances, such as:
Business ClosureIf your business shuts down or discontinues operations, you can apply for GST deregistration.
Business TransferIn cases of business transfer, amalgamation, or demerger, you can opt for GST deregistration.
Change in Business NatureIf there's a significant change in the nature of your business activities, you might consider surrendering your GSTIN registration.
Threshold Falls Below LimitIf your turnover falls below the threshold limit, you can apply for deregistration.
How to Apply for Cancellation of GST Registration?
To cancel your GST registration, follow these steps:
LoginAccess the GST portal using your login credentials.
ApplicationGo to the 'Services' tab and choose 'Application for Cancellation of Registration.'
Form FillingComplete Form GST REG-16 with accurate details.
VerificationVerify the application using your Digital Signature Certificate (DSC) or Electronic Verification Code (EVC).
AcknowledgementOnce your application is approved, you will receive an acknowledgement. Your registration will be cancelled accordingly.
In the domain of Indian taxation, enrolling for Goods and Services Tax is quite significant. This step ensures not only following the law but also easily taking part in a new tax system. Understanding the different kinds of GST, who can apply, and the necessary paperwork is crucial for a successful registration process. When you get registered for GST, it boosts your business's trustworthiness and opens up various benefits that can help your business grow better and work more efficiently. Remember, getting registered for GST is not just a legal rule, but it's also a chance to join a modernised tax system that is advantageous for both businesses and the country.