The Goods and Services Tax (GST) is an indirect tax on goods and services consumed in India, replacing several other indirect taxes such as excise duty, VAT, and services tax. GST became effective on July 1, 2017, following the enactment of the Goods and Service Tax Act by the Indian Parliament on March 29, 2017.
Taxable Entity under GST
A ‘taxable entity’ as per the GST Act refers to any person or entity engaging in business activities in India, either already registered under the GST Act or obligated to register. A taxable entity can take various forms, including individuals, Hindu Undivided Families (HUFs), companies, partnerships, Limited Liability Partnerships (LLPs), associations, corporations, foreign corporations, co-operative societies, local authorities, government bodies, trusts, or artificial legal entities.
GST Registration Threshold
GST registration can be voluntarily obtained by any person or entity, regardless of their turnover. However, it becomes mandatory when the turnover from the supply of goods or services exceeds certain thresholds.
- Service Providers: If an individual or entity provides services with an aggregate turnover exceeding Rs. 20 lakhs in a year, they must obtain GST registration. In certain states categorized as special, this threshold is lowered to Rs. 10 lakhs.
- Goods Suppliers: Exclusive suppliers of goods must obtain GST registration if their aggregate turnover surpasses Rs. 40 lakhs in a year. To qualify for the Rs. 40 lakhs threshold, suppliers must meet specific conditions, including not providing services, refraining from intra-state supplies in specific states, and not dealing in products like ice cream, pan masala, or tobacco. If these conditions are not met, suppliers of goods should register for GST when their turnover exceeds Rs. 20 lakhs or Rs. 10 lakhs in special category states.
Special Category States
Special category states under GST encompass Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh, and Uttarakhand.
Aggregate Turnover
Aggregate turnover is computed by adding up taxable supplies, exempt supplies, exports, inter-state supplies, and subtracting taxes, value of inward supplies, value of supplies taxable under reverse charge, and value of non-taxable supplies. This calculation relies on the Permanent Account Number (PAN), necessitating the summation of turnover across all business locations.
Types of GST Registration
Several types of GST registration exist, encompassing regular registration, registration for casual taxable persons, non-resident taxable persons, and eCommerce operators. Casual taxable persons, non-resident taxable persons, and eCommerce operators are required to register for GST irrespective of their turnover.
- Casual Taxable Persons: These are individuals or entities that sporadically supply goods or services in a state or union territory where they lack a fixed place of business, such as temporary businesses at fairs or exhibitions.
- Non-resident Taxable Persons: Non-resident taxable persons encompass foreign individuals, businesses, or organizations supplying goods or services to India without having a fixed place of business or residence in India.
- E-Commerce Operators: E-commerce operators are entities that own, operate, or manage digital or electronic platforms for e-commerce, including those selling goods online. They are obligated to register for GST, regardless of their turnover.
GSTIN (Goods and Services Tax Identification Number)
GSTIN is a 15-character identification number assigned to entities with GST registration. The first two digits denote the State Code, and the subsequent ten digits represent the PAN of the applicant.
Obtaining the GST Registration Certificate
A GST Certificate is issued to those registered under GST, and it must be prominently displayed at the place of business. The certificate can be downloaded conveniently through the GST Portal.
Registration for GST through Arrarwal M & Associates
You can acquire your GST registration through Arrarwal M & Associates in less than 7 working days. Just provide your name, phone number, and email to initiate the process. An expert will guide you through the necessary steps and documentation.
Voluntary GST Registration
Any person or entity desiring to supply goods or services can voluntarily register for GST. This allows them to avail Input Tax Credit and issue GST invoices to customers.
Penalty for Non-compliance with GST Registration
Entities that surpass the aggregate turnover threshold must obtain GST registration within 30 days. Failing to do so may result in a penalty of Rs. 10,000 and forfeiture of input tax credit during the period of delay.
Documents Required for GST Registration
- Sole proprietor/Individual
- PAN card of the owner
- Aadhar card of the owner
- Photograph of the owner
- Bank account details
- Address proof
- LLP and Partnership Firms
- PAN card of all partners
- Copy of partnership deed
- Photograph of all partners and authorized signatories
- Address proof of partners
- Aadhar card of authorized signatory
- Proof of appointment of authorized signatory
- Registration certificate/Board resolution of LLP (for LLP)
- Bank account details
- Address proof of principal place of business
- HUF
- PAN card of HUF
- PAN card and Aadhar card of Karta
- Photograph of the owner
- Bank account details
- Address proof of principal place of business
- Company (Public and Private) (Indian and foreign)
- PAN card of Company
- Certificate of incorporation by the Ministry of Corporate Affairs
- Memorandum of Association/Articles of Association
- PAN card and Aadhar card of authorized signatory
- PAN card and address proof of all directors
- Photograph of all directors and authorized signatory
- Board resolution appointing authorized signatory
- Bank account details
- Address proof of principal place of business
Benefits of GST Registration
Some advantages of GST registration include:
- Access to Bank Loans: It serves as proof of business activity and can facilitate obtaining loans from banks and NBFCs.
- Supplier Engagement: Many reputed companies require GST registration for supplier engagement.
- Participation in eCommerce: It is essential for selling products online through platforms like Amazon, Flipkart, etc.
- Input Tax Credit: Entities with GST registration can collect GST from customers and offset it against taxes paid on purchases, resulting in tax savings and improved profit margins.