The GST (Goods and Service Tax) Bill was approved by Narendra Modi, the Prime Minister of India, in an effort to replace all state or central government-imposed indirect taxes. As a result, it is now compulsory for entities engaging in the supply of goods and services across states to do GST registration online.
The GST bill was recently passed by the Lok Sabha on March 30th and it is going to directly affect everyone in the country. So, what is GST? GST stands for Goods and Services Tax. It will be imposed by the state and central governments and will subsume most of the indirect taxes such as VAT, Service Tax, etc.
Anyone who has a valid PAN is registered under the current Income Tax Law and crosses the turnover GST limit can register for GST. People who have to pay TDS, casual traders, etc., have to register for GST. Existing assesses have to get their provisional ID and password for GST portal from their state’s ACES or VAT website. After they log in on to the GST portal, they will have to create a new user ID and password.
Mandatory GST Registration Online
All businesses whose turnover is above Rs.20 lakh, or Rs.10 lakh (for North-Eastern states), are expected to do GST registration as a regular taxable person. GST online registration is also mandatory for NRI taxable individuals, entities engaging in e-commerce, entities supplying goods and services via e-commerce operators, individuals who are eligible for TDS (Tax deducted at source), entities engaging in the provision of online information or retrieval services or database access, etc.
Most entities and businesses in the country are required to complete GST registration online. Even entities that are not mandated to complete GST online registration can do so on a voluntary basis as registration enables the entity to gain legal recognition as a supplier of goods and/or services, thereby allowing the entity to levy GST on customers who avail their goods or services. As such, entities that have completed GST registration online can be eligible to avail input tax credit.
How to do GST Online RegistrationHere is a Step-by-Step Procedure to Complete GST Online Registration
- Log on to www.gst.gov.in.
- Click on the ‘Services’ tab on the menu at the top of the page.
- You will have three options, viz. ‘Registration’, ‘Payments, and ‘User Services’.
- Click on ‘Registration’ and select ‘New Registration’.
- You will be redirected to a new page wherein you will have to select whether you are a taxpayer or a GST practitioner before entering a few details such as the legal name of the business, the state and district in which the entity is located, Permanent Account Number, email address and mobile number. This is basically Part-A of the form.
- The details you have entered will have to be verified by the portal, so you will receive a one-time password or an email for confirmation.
- Based on the kind of business you are running, you will be required to upload a few documents as requested.
- Part-B of the form will then have to be filled in with a few details after which you will receive the Application Reference Number through email or SMS.
- Your application will then be verified by a GST officer and it could either be approved or you will be requested to provide some more details or documents until the authorities have all the required information to approve your application.
Separate registration has to be done for each state if a trader has branches in multiple states. Businesses with more than 1 vertical can register separately for each of them.
As GST has just been introduced, it may take us a while to get used to it and understand it. At present, all assessees have been asked to register for GST and not procedure is in place for people who do not want to register for it. They can choose to cancel their registration after registering though.
Penalties for not Completing GST Online Registration
Offenders who do not pay tax or fail to make the full payment will face a penalty of 10% of the tax amount. The minimum amount of fine will be Rs.10, 000 if the 10% amounts to anything less. In the case of deliberate tax evasions, offenders will be charged a penalty of 100% of the tax amount. The penalty will be 10% of the tax due in case of genuine errors.
Benefits of GST Registration:
There are a number of benefits or advantages of GST Registration. Some of them are discussed below:
- Elimination of the cascading effect of tax: The Goods and Services Tax or GST has been designed to subsume a number of indirect taxes which were prevalent. These indirect taxes have been subsumed by GST and has been included under one broad heading, the GST. GST helps to eradicate the cascading effect of tax which was faced earlier because of the multiple effective indirect taxes.
- Higher threshold limits for registration: In the erstwhile Value Added Tax (VAT) structure, a business which had a turnover of Rs.5 lakh or more were liable to pay VAT. The turnover limit varied from one state to another. However, the limit was Rs.5 lakh and more for most states. At the same time, service providers who had a turnover of Rs.10 lakh or more were required to pay service tax. With the rollout of the Goods and Services Tax (GST), the threshold limits have been increased to Rs.20 lakh. This decision has benefitted a number of small traders and service providers.
- Composition scheme for small businesses: The rollout of the Goods and Services Tax (GST) has been very beneficial for small businesses which have a turnover of Rs.20 lakh to Rs.75 lakh. The small businesses can utilise the Composition scheme which offers the option of reducing the tax burden. This decision has helped a number of small businesses to bring down the burden of tax and its compliance.
- Simplicity of registration and ease of filing returns: The process of the Goods and Services Tax (GST) is completely an online process. From registration under GST to filing of returns under GST, everything has been made online. In addition to that, the process has been kept very simple. This helps a business to enrol itself and file its timely returns with ease. The process is especially beneficial for startup businesses as they are not required to run around to get the different registrations done such as VAT, service tax, and excise. The number of compliances has also been reduced under the GST regime. Earlier, businesses had to file a number of returns for each of Value Added Tax (VAT), service tax, and excise (if applicable). However, under the Goods and Services Tax (GST), the number of returns has been reduced as only a unified return is to be filed now.
- Defined treatment for e-commerce operators: The erstwhile Value Added Tax (VAT) regime did not provide a definition for the supply of goods through e-commerce sectors. It varied from state to state. However, the Goods and Services Tax (GST) regime has chalked out the provisions for the supply of goods through e-commerce companies. This has reduced the complications in regards to the inter-state movement of goods as the provisions mapped out by the Goods and Services Tax (GST) regime are applicable all across the country.
- Regulation of unorganised sector: Before the rollout of GST there were certain industries such as the construction industry and the textile industry which were not regulated and worked in an unorganised manner. However, after the rollout of the Goods and Services Tax (GST) regime, new provisions have been defined for the online compliance and online payments. This has helped to bring in accountability and made these industries regulated.
Documents required for GST Registration:
The following documents are required for the process of the Goods and Services Tax (GST) registration:
- Permanent Account Number (PAN) of the applicant
- Aadhaar card of the applicant
- Proof of address of the business place
- Business registration proof or certificate of incorporation
- Photograph of Director(s)
- Proof of identity of Promoters
- Proof of address of Promoters
- Statement of bank account/cancelled cheque
- Authorisation letter or Board Resolution for Authorised Signatory
- Digital Signature
GST Registration Fees:
The process of registration under the Goods and Services Tax (GST) is an 11-step long process. This process requires the applicant to submit a number of business details and soft copies of documents. This process might be monotonous and very tiring.
In this case, be informed that the government does not charge any fee for the purpose of registration under the Goods and Services Tax (GST) regime. However, there are a number of professionals who would help you to get the registration done by carrying out the tedious process of registration on your behalf. You will only be required to provide the required documents to the professionals and pay the respective fees for their service. The fees charged by these professionals might vary from person to person. However, you might also consider getting registered under the Goods and Services Tax (GST) regime through some third-party websites who offer the same service online. In such cases, you will be required to upload the required documents on the website and the rest will be taken care of by them.