Process of Registration Under GST: Through registration under the GST, a person who pays tax can register themselves under the GST if they are running a business. After they have successfully registered, they will receive a unique registration number. The number is unique to all taxpayers, and it is called the Goods and Services Tax Identification Number of GSTIN. The number is a 15 digit long number that the central government assigns to all taxpayers after obtaining their registration.
The Constitution of India, under Section 279A, formed the GST council. The Union finance minister, the union minister of state revenue, and the union minister of tax and finance are the group of people who form the GST council. All the respective laws and regulations that apply to GST registration for a business will be on their respective central and state websites. The law came into being on 1st July 2017 to remove all other forms of indirect taxation in the country. GST applies to all records of services and products that have been manufactured and produced in our country. It also applies to the freelancers according to the new labour law amendments.
Since GST came into being, all other forms of taxes, such as value-added tax, entertainment tax, sales tax, etc., are combined under Goods and Services tax. There is a specific percent of the amount that people charge under the GST for every step in the supply chain. Since GST registration is online, businesses would not have to go offline to make their registration under the GST.
If a person or a business operates from more than one state, they will have to get a separate registration for each operating state. We can understand if every company has to register under the GST by understanding the GST registration procedure in detail.
- Who is eligible to register under the GST?
- What are the documents people require to register under the GST?
- Categories of GST Registration
- Procedure for GST Registration
- What is the penalty for not filing under GST?
- Benefits of registering under the GST
- What is ITC under the GST regime?
- Tax rates for GST Registration
Suppose a person’s business supplying goods has a turnover of Rs. Forty lakhs or more in a financial year have to register as an individual taxable person. Though the threshold limit for people with businesses in the north-eastern states such as Jammu and Kashmir, Himachal Pradesh, and Uttarakhand is Rs. 10 lakhs, the turnover limit is of Rs. 20 lakh for individual category states and Rs. 10 lakh for service providers.
Certain businesses have to mandatorily register under the GST irrespective of their turnover if they belong to any of the following categories.
- Input service distributor or ISD and Casual taxable person
- Non-resident taxable person
- Interstate goods and services supplier
- Goods supplier through an eCommerce portal or online portal
- Any category of the service provider
- Obligation to pay tax under the reverse charge mechanism
- Online data access and retrieval service provider
- TDS or TCS deductor
People who have to register under the GST need to have the following documents.
- Permanent Account Number or PAN of the applicant
- Proof of business registration or incorporation certificate
- Copy of Aadhaar card
- Address proof and identity of promoters and director with their recent photographs
- Authorisation letter or a board resolution for authorised signatory
- Bank account statement or cancelled cheque for proof
- Digital signature
There are various categories of taxpayers according to their GST registration and their jobs. Here are the types of GST registrations below.
Normal Taxpayers: Normal taxpayers are the majority of businesses in India. These are the businesses whose turnover is more the Rs. Forty lakhs in one financial year. They have to register as an average taxable person. But, if the threshold limit is less than that according to their residential states, they have to register if their turnover is more than Rs. 10 lakhs.
Casual Taxable Person: If people have occasional or seasonal businesses, they can register their business under the GST for casual taxable persons. They can make a deposit that is equal to their GST liability for the occasional business operations. The tenure for them is three months, but they can apply for extensions and renewals for their businesses.
Non-residential Taxable Person: People who live outside India but occasionally supply their goods or services as agents or in other capacities to the Indian residents have to file for their business registration under this category. They need to pay a deposit equal to the standard GST liability during their GST active tenure. The typical term for such people is three months, but they can also extend or renew their registrations if they want.
Composition Registration: Suppose a business has an annual turnover of up to Rs. One crore, then they have to register under the Composition scheme. Companies have to pay a fixed amount of GST in this category regardless of their actual turnover amount.
Obtaining a GST registration is easy and free. People can do it online at the comfort of their homes through the official GST portal. A taxpayer who has to register for the normal registration can visit their site and fill up form GST REG 1.
- Step 1: Visit the GST portal.
- Step 2: Click on the registration option under the services tab and then click on new registration, i.e., Services> Registration> New registration.
- Step 3: The application form has two parts- part A and part B. According to the type of taxpayer from the ‘I am a’ drop-down list, people have to select the’ taxpayer’ option.
- Step 4: Now, they have to select the state and district to which they belong to and want a registration from the ‘State/ UT and District’ drop-down list.
- Step 5: They can enter the Legal Name of the Business in the field with the same title and enter the entity’s name according to the PAN database documents.
- Step 6: They can input the PAN of the business or the PAN of the proprietor in the Permanent Account Number field.
- Step 7: Next comes the email address field. They have to mention a functional email address of the primary authorised signatory.
- Step 8: They have to input their valid mobile number if they are the primary authorised signatory.
- Step 9: They have to enter the captcha and proceed to click on the ‘proceed’ button.
- Step 10: Once they have completed all the above steps, they will move on to part B of the form. Here, they will receive an OTP and after inputting it, they will become verified, and their information will be saved so far. They will then receive a temporary reference number or TRN that they will receive in their registered email address and their mobile number.
- Step 1: Click on services> Registration> New registration and then select the temporary reference number or TRN button to log into the site using the number.
- Step 2: You have to enter the TRN you generated in the TRN field and type the captcha text you can see on the screen. After that, click on ‘proceed.’ TRN is a temporary reference number and it will not be the same after completing the process. But people need it for the next steps of registration. It is important to note it carefully.
- Step 3: Enter the OTP you got on your mobile and email and input it on the verify OTP page and click on the ‘proceed’ button.
- Step 4: You will be able to see the ‘My Saved Application Page,’ and you can click the action column and select the edit button.
- Step 5: Now, you have to go to the top of the page and click on the registration application form with ten tabs opened. Then click on each of these tabs and enter the details such as business details, partner detail, authorised signatory, principal and additional places of business, goods and services details, state information, verification, and Aadhaar card authentication.
- Step 6: Click on ‘save and continue,’ and then your application will get submitted. You have to sign it digitally using a DSC and then click to proceed.
- Step 7: Finally, after submission, you will get an Application Reference Number or ARN in your email or phone number, and you can confirm your registration.
If a taxable business does not register under the GST mandatorily, then they will have to pay a penalty of 10% of the tax amount, which can be up to Rs. 10,000. Therefore, all businesses have to register under the GST mandatorily if they fall under the following categories.
- Businesses that supply goods with a turnover of over Rs. 40 lakh in one financial year must register under the GST. If they belong to J and K, Himachal Pradesh, and Uttarakhand states, the turnover limit is Rs. 10 lakh.
- Service providers with a turnover of Rs. 20 lakh in a financial year and Rs. 10 lakh for the special states
- Causal table people or input service distributors or ISD: Every causal taxable person has to go for the process of GST registration.
- Non-resident taxable people: People who are not Indians also have to register for GST if they trade their goods or services to the people of India.
- Inter-state goods and service supplier
- E-commerce portal supplier of goods: All eCommerce aggregator has to consider the registration of GST are a mandatory document. If such an eCommerce entity does not produce a turnover of more than Rs. 20 lakh in one financial year, then they do not have to make such a registration compulsorily.
- Any other service provider
- Liable to pay tax under the reverse charge mechanism: Any e-commerce entity has to apply for the GST registration but any business whose turnover is less than Rs. 20 lakh per financial year does not have to register under the GST.
- TCS or TDS deductor
- Online data access or retrieval service provider: Companies that provide database access or any form of streaming system to a person residing in India have to register to GST as per the requirements.
Furthermore, if a business operates in two different states, they will have to obtain separate registrations for each state of their functioning. A person can also apply for multiple registrations within a state if require. Still, the government has removed the procedure of allocating numerous registrations for different businesses to operate efficiently. Usually, a company can get multiple registrations for GST under a state if they have separate business verticals and different products from one another.
The CBIC has issued a notification stating that if a business entity does not file for the GST return, then they have to face strict penalties. The defaulter will have their back accounts attached. Furthermore, they will have to pay Rs. 100 per day of non-compliance according to CGST and SGST. Any delay will lead to Rs. 200 fine according to Section 122 of the CGST Act for non-compliance. Other strict penalties can also apply according to their situation.
There are multiple benefits of registering under the GST, which are applicable for regular registered businesses such as the following.
- Operate business without restrictions in various states.
- Can avail of input tax credit
- The benefits for composition dealers if they register under the GST are as follows.
- Lower impact on working capital
- Limited compliance as compared to other categories of taxpayers
- The benefits for businesses that have voluntarily opted in for GST registration are as follows.
- Operate business without restrictions in various states
- Can avail of the input tax credit
- Competitive advantages in comparison to other businesses.
On the other hand, businesses registered with the GST can avail of other benefits as well. They will get recognised as an official business entity in the eyes of the law. The public and the consumers can also recognise them as a legal business. They will get appropriate accounting cycles, other governmental incentives, lower tax rates, double taxation, reliefs and exemptions from double taxations, e-way bills, and much more. It is best for business owners to register themselves under the GST.
ITC or input tax credit can allow a business person to pay less on taxes on their inputs of a specific amount of products. They will get benefits since they will have to pay reduced tax liabilities on the products.
Therefore when a business usually buys some form of product, they would have to pay a specific amount of tax when they receive the product from the seller who has a GST registration. When the business pays the fixed amount of tax, they can add the same to the taxes they spent at the time of purchase. Hence, ITC allows the registered business to consider adjustments on taxes.
The government has brought out various tax rates for the GST registration. They can change according to the requirements of the government. But here is the complete list of the GST tax rates that the government can levy as follows.
- Bare Necessities: The government does not levy any tax or GST for basic necessities and amenities.
- Household Necessities and drugs: People have to pay a 5% tax on basic household necessities and medicines.
- Computer products and processed foods: The government levies a rate of 12% from such products.
- Hair oil, raw materials, capital goods, and other forms of industrial products: On such items, people have to pay an 18% tax on consumer goods and capital goods. These are required for various industrial processing.
- Luxury items: It has the highest rate of tax. People have to pay a 28% tax for luxury goods. These can be cars and other products that fall under this category.