The Indian government introduced the GST system in 2017 to create a uniform taxation system across the country while abolishing multiple other indirect taxes. Apart from enhancing taxation efficiency, GST implementation eases tax collection and reduces the chances of tax evasion.
According to the GST definition, it is the Goods and Services Tax, an indirect tax that applies to all goods and services meant for sale within India. Every business owner with a turnover exceeding a certain limit must register under GST to receive a GSTIN (Goods and Services Tax Identification Number), a unique 15-digit registration number issued by the central government. After successful registration, a business owner becomes eligible to collect taxes from the customers and remit them to the government. Read on for further details about GST registration, types, process, and benefits.
Who Must Register for GST?
All businesses supplying goods or services with a certain turnover limit must register for GST, including the following:
- Input Service Distributor (ISD) or casual taxable persons
- Non-resident taxable persons
- Inter-state suppliers of goods and services
- Goods suppliers through e-commerce portals
- Service providers
- Those liable to pay tax under the reverse charge mechanism
- TDS/TCS deductors
- Online data access or retrieval service providers
Types of GST Registration
According to the GST definition, business owners can apply for these types of registration:
- Normal Taxpayers: Most Indian businesses apply for this type of registration. Any business owner with a turnover exceeding Rs 40 Lakh in a fiscal year must register for GST as a normal taxpayer. Businesses in north-eastern states, Uttarakhand, Himachal Pradesh, and Jammu & Kashmir have a lower threshold limit of Rs 10 Lakh.
- Casual Taxable Individuals: Seasonal and occasional business owners must register their business for GST in this category. They must make deposits equal to their GST liabilities from their occasional operations. This type of registration is valid for three months, after which they can extend or renew their registration.
- Non-Resident Taxable Individuals: Individuals residing outside India but supplying goods or services to India as agents or principals can file for this type of GST registration. Business owners must pay a deposit equivalent to their expected GST liabilities during the active term. Usually, it is valid for three months, after which they must renew or extend their registration.
- Composition Registration: Businesses with an annual turnover exceeding Rs 1 crore must register for GST under the composition scheme. Owners must pay a fixed GST amount irrespective of their turnover.
Stepwise Procedure for GST Registration
Taxpayers must follow these steps to register for GST:
- Visit the GST portal, create a username and password, and fill out an online form.
- Select ‘taxpayer’ from the drop-down menu.
- Select your respective state and district.
- Enter business details like name and PAN number.
- Provide mobile number and email address and verify with OTP.
- Enter the Captcha and click on ‘Proceed’.
- Receive a TRN (Temporary Reference Number).
- From the application status, click on the ‘Edit’ icon to fill in the required details and submit the necessary documents.
- Click on the ‘Verification’ page, check the declaration, and submit the application through EVC, e-Sign method, or Digital Signature Certificate (DSC).
- A success message will appear on the screen, and the applicant will receive an ARN on their email ID or mobile number.
- Check the ARN status on the GST portal.
Advantages of GST Registration
Taxpayers enjoy the following benefits when they register for GST:
- Simplified Taxation: GST combines various indirect taxes under a uniform taxation system, integrating the Indian market.
- Reduced Costs: The taxation system nullifies the cascading effects of various VATs, lowering the cost of goods and services.
- Streamlined Taxation Services: GST registration avoids lengthy taxation procedures and exempts businesses with low turnovers from GST payments.
- Reduced Corruption and Tax Evasion: Registering for GST reduces corruption by avoiding sales without receipts.
- Uniformity in Taxation: The system brings uniformity in taxation by allowing centralised GST registration, helping businesses file their tax returns timely through an online platform.
GST registration provides legal recognition to a business, making it eligible for tax collection, remittance, and several tax benefits under the regime. Bringing uniformity into the taxation system is an effective way to simplify the economy and prevent tax evasion. Business owners must register for GST to become legal entities operating in India.