What is Goods and Service Tax?
GST integrates the country into a common market by removing barriers across states and enabling smooth flow of goods from one state to another. It has subsumed the indirect taxes levied by the Centre and the States such as excise duty, service tax, value-added tax, entertainment tax and octroi to bring in a pan-India uniform indirect taxation system. It has done away with the need for businesses to pay multiple taxes and has also eliminated double taxation by removing the cascading impact of taxes.
Getting GST Registration
To avail benefits of GST, a person/business needs to register under the GST Act. There are certain thresholds that make registration compulsory. Any proprietor or business entity must get registered once the threshold is reached.
Following is the criteria for compulsory GST registration:
- Businesses and individuals that were registered under the previous taxation system.
- Individuals and Entities whose annual turnover exceeds INR 40 Lakhs (20 Lakhs in case of North-Eastern States, J&K, Uttarakhand and Himachal Pradesh).
- Service Providers whose annual turnover exceeds INR 20 Lakhs (10 Lakhs in case of North-Eastern States, J&K, Uttarakhand and Himachal Pradesh).
- Businesses supplying goods inter-state.
- Entities falling under the reverse charge mechanism.
- Businesses supplying products through e-commerce websites and those running e-commerce websites.
Advantages of GST Registration
- Prevents cascading effect
- Higher threshold for compulsory registration than previous tax laws
- Option of composition scheme for small business
- Provides tax input facility which saves tax liability
- Provides ease of filing taxes
- Lesser paperwork than previous laws
Consequences of not getting GST Registration
- Failure to get yourself registered within the stipulated time period prohibits you from taking input tax credit of the taxes already paid by you.
- You won’t be able to issue GST invoices without registration which demotivates GST registered customers.
- Tax evasion is accompanied by fines, penalties and imprisonment. The minimum penalty is INR 10,000.
Schemes under the Goods and Service Tax
There are 2 different types (Schemes) of registration under the GST Act and based on the type of registration every business is required to file the applicable returns and follow other compliance. Which scheme should a person opt depends upon the turnover threshold set by the GST Council. Following are the schemes:
Businesses with a turnover of 1.5 Cr or more have to be registered under the regular scheme. Regular dealers have to pay GST at product and service specific rates. In comparison with the other kind i.e. composition dealers, the regular dealers pay higher taxes but as a result they also enjoy several other benefits that others don’t. Apart from paying higher taxes, the regular dealers also file more returns than the composition dealers that too on shorter intervals. Regular dealers are allowed to take GST Input Credit i.e. they are allowed deduction in their total liability up to the amount of GST paid by them as consumers. Suppose if your business’s liability is INR 10,000 and you brought a computer system for your business for which you paid INR 5,000 as GST, you would be allowed to claim this amount as input tax credit when filing your GST return.
In contrast to the Regular dealers, Composition scheme allows dealers to pay less taxes at a fixed rate. The businesses that do not cross the above mentioned threshold can opt for composition scheme wherein they have less compliance, less return filing and less tax payable. This reduces the over all expenditure of the businesses. Composition dealers are not allowed to claim input tax credit and cannot sell inter state.
Pros of Composition Scheme
- Limited compliance
- Less tax liability
- High working capital (as tax rates are less)
- Ease of doing business
- Quarterly filing of returns
Cons of Composition Scheme
- No interstate business
- No credit of input tax (results into cascading effect)
- Cannot recover taxes from buyers (so, pay taxes from your own pockets)
Documents required for online GST Registartion
- CoIN, MOA, AOA in case of companies
- PAN of the entity, partners/directors
- Adhaar of proprietor/partners/directors
- Place of proof of Business (Rent agreement/no objection certificate)
- Bank Statement/cancelled cheque
- DSC (in some cases)
- Photograph of director/partner/proprietor
What you get?
- Successful GST registration within a week
- DSC of the authorized signatory (except individuals)
Order GST Filing and avail registration service at no extra cost.