If you are thinking of starting a business or already operating one, registering it with the Department of Goods and Services Tax (GST) is one of the most important tasks you need to complete.
Before getting into the details of how to register your business for GST, let’s understand what GST is all about.
GST was launched by the government back in 2017 to simplify filing tax returns for businesses and make the process seamless and efficient.
Several indirect taxes are now combined into a unifying taxation system for service and product-based businesses. As part of the GST policy, goods and services are taxed at the place of consumption and not at the place of origin, making it a destination-based system of taxation.
Depending on the type of business, GST in India have four different tax slabs – 5, 12, 18 and 28 percent.
GST for businesses
Experts believe that GST will lower the cost of services and products over the long term.
Pre-GST, a series of taxes levied by the Central and State governments included service tax, value-added tax (VAT), central sales tax, etc. Most of these indirect taxes have now been brought under the ambit of the GST to curb the cascading effect of taxes.
Another aspect of GST for businesses is that the process of registering is easy and seamless. It eliminates costs pertaining to different taxation guidelines in different states.
Since all GST processes are done online, it gives a lift to India’s policy of ease of doing business.
Under the GST policy, businesses would need to obtain a GST registration, which would work across the country.
Input tax credit: What you need to know
Businesses that want to have a GST registration need to keep in mind how the input tax credit works.
Input tax credit implies that you can adjust the tax you have paid upon purchasing a product or service with the taxes on sales and pay the balance to the government.
Take this example: You have bought an item worth Rs 100 and paid taxes of 10 percent. Next, you sell this item for Rs 150 and collect a tax of Rs 15 from the purchaser. You have to pay Rs 15 to the government. But since you have already paid Rs 10, which is your input tax credit, you only need to pay the tax of Rs 5.
However, if you have not registered your business in GST, you may not be able to claim this input tax credit. Also, if you pay GST under the composition scheme, which is a type of GST registration, you may not be allowed to make use of input tax credit.
Now that you know why your business should have a GST registration, you would need to know how to go about it and learn the different requirements for GST registration.
Types of GST registration
There are different types of GST registrations and you would need to pick the right one based on the type of taxpayer you are. These are the categories under which GST for businesses is available in India:
- Normal: If your business turnover from the sale of goods crosses Rs 40 lakh annually, you could register as a normal taxable individual. The limit is Rs 10 lakh if you have a business in the North East or hilly states like Uttarakhand, Jammu & Kashmir and Himachal Pradesh. For services-led businesses with an annual turnover of Rs 20 lakh and Rs 10 lakh for businesses based in special states, registration as normal taxable individuals may be availed of
- Casual: This type of GST registration is for someone whose business is seasonal or infrequent
- Composition: This is for businesses that have an annual turnover of up to Rs 1.5 crore. Composition taxpayers are needed to pay tax at preset rates on the overall sales
- Non-resident: This type of registration pertains to an individual who is a non-resident Indian and is supplying services or goods to India
A step-by-step guide to register your business for GST:
The GST portal is the official platform for all the activities pertaining to GST, including registration, filing returns and payment of taxes. Registering your business for GST is a two-step process, which includes filling in all personal and business details and secondly authenticating them with a one-time password.
Here is how you can register your business for GST:
- Head to the GST portal: https://www.gst.gov.in
- Click on the ‘Services’ tab on top and choose ‘Registration’
- Opt for the ‘New registration’ tab and select the taxpayer option from the drop-down menu
- Fill in the form by entering the district, state, business name, and the PAN details of your business. You would also need to input your contact information, including your email ID and mobile number. You will receive an OTP and once you input that you will get a temporary reference number
- Input this reference number and you will be given another OTP for verification
- Following the verification, you will be taken to your saved application page, where you may have to fill in other details such as contact information. You will also be asked to provide the following documents:
Aadhaar
PAN card
Address proof of your business
Your bank statement and a cancelled cheque
Proof of business registration or incorporation
Digital signature
Identity and address proof of the director/promoter, apart from photographs
Authorisation letter from a signatory (authorised) or board resolution
- Once you submit the documents, you will be provided with an application reference number, which can be used to track your registration status on the GST portal.
GST registration with Aadhaar number
You could also opt for GST registration by authenticating your Aadhaar. This procedure involves these steps:
- When you apply for registration, you will be given an option of Aadhaar authentication
- Click ‘Yes’ on the link for authentication and type in your Aadhar number. Click validate
- After the details are matched, you will get an OTP that you would need to enter to complete the registration process
You can download your GST registration certificate on the GST portal once your application is verified. This GST registration certificate is a document of proof.
Conclusion
GST is a key reform in India’s taxation landscape. GST for businesses helps in streamlining and simplifying taxation, making compliance easier and transparent. If you are a business, visit the GST portal and go through the easy steps that will get your business a GST registration.
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