Understanding GST Registration: A Comprehensive Guide

GST is a digitalized form of VAT where you can also track the goods & services. Both VAT and GST have the same taxation slabs. It is a comprehensive, multistage, destination-based tax: comprehensive because it has subsumed almost all the indirect taxes except a few state taxes. Multi-staged as it is, the GST is imposed at every step in the production process but is meant to be refunded to all parties in the various stages of production other than the final consumer, and as a destination-based tax, it is collected from the point of consumption and not a point of origin like previous taxes. The following blog has a detailed description of GST Registration.

INTRODUCTION

In the tax system, registration of the company entity is essential for both obtaining the Input Tax Credit and collecting taxes on the government’s behalf. Under GST Law, registering any company entity is crucial for tax collection from customers and obtaining the Input Tax Credit. Any business entity that is unable to register themselves will not be able to collect tax from customers or benefit from the Input Tax Credit.

For some special category states, the aggregate turnover is 20 Lacs in a financial year for the registration of any business entity. Anyone with an annual turnover of more than 40 Lacs is required to be registered under the act.

Basically, the tax authority issues the relevant details the Unique Identification Number, which contains bank account details the Permanent Account Number (PAN), and the State-specific number, following the registration of any company entity. Basically, The 15-digit GST Identification Number (GSTIN), also known as the Unique Identification Number, is used to identify goods and services. The State code is represented by the first two digits of the GST Identification Number (GSTIN), while the taxpayer’s Permanent Account Number (PAN) is represented by the next ten digits. Next, the fourteenth digit of the Unique Identification Number—Z by default—and the fifteenth digit—for check code—indicate the number of registrations inside the state. The thirteenth digit of the Unique Identification Number follows.

There are 3 sub-tabs under the registration tab, namely: New registration – This tab contains a brand-new, complete GST registration for taxpayers. Under the services tab of the GST Portal, there are 4 kinds of sub-categories: Under the registration tab, every taxpayer can register in the goods and services tax regime.

DEFINITION

The term GST is defined in Article 366 (12A)

“any tax on supply of goods or services or both except taxes on supply of the alcoholic liquor for human consumption.

Definition of Supply

supply’ includes all forms of supply of goods and/or services such as sale, transfer, barter, exchange, license, rental, and lease made or agreed to be made for consideration by a person in the course or furtherance of business, (b) importation of service, for a consideration whether or not in the course or furtherance of business.

Definition of Goods

“Goods” refers to any movable items, excluding cash and securities, but also to actionable claims, growing crops, grass, and items attached to or constituting a part of the land that are agreed to be severed prior to supply or as specified in the supply contract; Actionable Claim if only Lottery, Gambling or betting shall be treated as Supply Intangible Assets like DEPB License to be treated as “Goods”.

Definition of Services

In terms of Section 2(102) “Services” means anything other than goods, money, and securities.

LEGAL FRAMEWORK OF GOODS AND SERVICE TAX (GST)

1. Taxable Event under GST:

An occurrence that triggers a tax liability is known as a “taxable event.” The’ supply of goods and/or services’ is regarded as a taxable event in the context of GST.

2. Applicable on Supply:

The tax was levied under the previous tax system on both the sale of products and the rendering of services. The term “supply” has, however, been expanded under the GST to include all types of supply, including sale, transfer, barter, rental, provision, exchange, license, lease, and disposal.

3. Nature of Supply:

GST is assessed on the provision of goods and services, as was previously mentioned. Therefore, a key factor in determining which type of GST is applied to the transaction is the nature of the supplier. This means that IGST (Integrated Goods and Services Tax) will be levied on interstate supplies while CGST (Central Goods and Services Tax) and SGST (State Goods and Services Tax) will be levied on intrastate supplies.

Similarly, when the supply of goods and services is within a Union Territory, UTGST (Union Territory Goods and Services Tax) and CGST will be applicable.

4. Destination-Based Tax:

GST abides by the premise of destination-based consumption taxation. According to this approach, GST will be applied at the point of consumption rather than the point of origin, meaning that the goods and services will be subject to tax if they are used domestically. This theory explains why imports are liable to GST but exports are not.

5. Dual GST:

India follows a dual GST model, wherein both the state and the central government impose GST on the supply of goods and services concurrently. In India GST comprises of:-

6. Classification of Goods and Services:

In the goods and services tax, the classification of goods and services utilizes a Harmonised System of Nomenclature (HSN). This classification divides them into five different types of slabs or tax rates, which are 0%, 5%, 12%, 18%, and 28%, based on the requirements of the taxpayer.

7. Registration:

It is necessary to obtain registration by every supplier of goods and services, from the state or union territory where the supplier provides taxable supply when the aggregate turnover in the financial year is greater than the limit specified in this regard. Moreover, suppliers involved in the e-commerce business and those who are engaged in interstate sales also require registration under GST.

Further, the threshold limit varies from one State/UT to another, depending upon the supply, i.e. whether the supplier is engaged in the supply of goods only, services only, or both.

8. Payment of Tax:

Suppliers can opt for any of the two modes for making GST Payment:

• Electronic Payment Mode.
• Over the Counter payment.

WHY IS GST IMPORTANT?

It is significant because it succeeded in unifying India’s taxation, which increased confidence abroad in Indian products and services. Additionally, because businesses could now function under a single common taxation system, doing business within the nation became exceedingly simple.

How GST Works?

• Manufacturer: The manufacturer will have to pay GST on the raw material that is purchased and the value that has been added to make the product.
• Service Provider: In this case, the GST services provider will be responsible for paying GST on both the product’s purchase price and the value added to it. However, the manufacturer’s tax payment may be deducted from the total GST that must be paid.
• Retailer: It must be paid by the retailer on both the product they bought from the distributor and the margin they added. However, the retailer’s tax payment may be deducted from the total amount of GST that must be paid.
• Consumer: GST must be paid on the product that has been purchased.

TYPES OF GST

THERE ARE FOUR TYPES OF GST:

1. Central Goods and Service Tax (CGST)

2. State Goods and Service Tax (SGST),

3. Union Territory Goods and Service Tax (UTGST)

4. Integrated Goods and Service Tax (IGST)

Features of Goods and Services Tax (GST)

The salient features of goods and services tax (GST) are discussed here under:

• Comprehensive Tax: GST is comprehensive in nature because it has substituted various indirect taxes in India, for example, Sales tax, Service Tax, Excise Duty, Entertainment tax, VAT, luxury tax, entry tax, etc.
• Multistage Tax: GST is imposed on each stage of the production process on the value addition made by each party. However, the input tax credit is available to all the parties, except the final consumer of the goods and services.
• Destination-based tax: As GST is collected from the point of consumption, i.e. the final consumer, it is a destination-based tax.
• Tax Credit: GST offers an inclusive and continuous chain of tax credits from the point of view of the producer or service provider. In this way, tax is levied only on the value addition at each stage.
• Tax burden falls on the final consumer: The supplier of goods or service provider can avail of the input tax credit at each stage, on the GST paid on inputs and set off the credit against the GST payable on the supply. In this way, it is the final consumer who bears the tax burden, on the GST charged by the last supplier in the supply chain.
• Eliminating the Cascading Effect: In the previous tax regime, the biggest issue was the cascading effect, which resulted in double taxation of goods. However, with the emergence of GST, it completely eliminates the cascading effect as only the value added at each stage is taxed.

GST REGISTRATION

Every business with a revenue of Rs 4 lakhs must register for GST as a  regular taxpayer under the GST regime. The GST registration threshold limit for the  North-Eastern states and hill states is Rs. 10 lakh. Some businesses must register for the GST. If a taxable business person operates without registering for GST, he will be subject to significant fines.

WHAT IS THE PROCESS FOR GST REGISTRATION (Section 25)

AMENDMENT OF GST REGISTRATION

If a registered individual wants to amend the information provided at the time of registration after receiving the Unique Identification Number, they must notify the appropriate office within fifteen days of receiving the Unique Identification Number.

Benefits of GST registration?

The primary goal of the GST, an indirect tax in India, is to eliminate a number of other indirect taxes. After the government eliminated several indirect taxes, they created a single platform for tax payments.

There is the following benefit of  Registration of GST, which are as follows:

Easy Application Procedure. A person can save time by registering themselves online and filing their GST using the GST portal.

Recognition: After the registration of GST, a person becomes legally recognized as a supplier of goods and services.

Regulation of Input Tax Credit. After registering, an individual can claim the Input Tax Credit for taxes paid and use it to pay taxes owed on the provision of goods and services, ensuring the transparency of the tax collection process.

DOCUMENT REQUIRED FOR REGISTRATION OF GST

A person has to submit valid proof documents at the time of registration of GST which is

mandatory requirements are as follows:

PAN of the Applicant. An applicant has to submit the details of the Permanent Account Number (PAN) at the time of registration.

Aadhar card. At the time of registration of GST, an applicant has to submit personal details like a copy of the Aadhar card.

Business address proof of the place of the business. A person needs to submit the Business address proof of the place of business where he is planning to set up from where he wants to commence business.

bank account statement. An applicant has to submit the bank account statement, and canceled cheque at the time of registration of GST.

Digital Signature. The digital signature of the applicant is necessary at the time of registration of GST.

Letter of Authorization. At the time of registration, a person needs to submit a letter of authorization or board resolution for the authorized signatory.

Incorporation Certificate. An incorporation certificate is a legal document or license that is related to the formation of a company, so a person needs to submit the incorporation certificate at the time of registration of GST

Identity and Address proof of the Directors. At the time of registration, a person has to submit the identity and address proof of the directors.

WHO SHOULD DO GST REGISTRATION

• Individuals registered under pre-GST laws like Excise, VAT, and Service Tax, etc.
• Businesses should register for GST if their annual turnover exceeds Rs. 40 lakh. For the North Easter States, Jammu & Kashmir, Himachal Pradesh, and Uttarakhand, the threshold turnover limit is Rs. 10 lakh.
• Casual Taxable Person: Anyone who occasionally provides taxable products or services to a taxable region without a permanent place of business should register with the GST. Non-resident Taxable Person is another name for a Casual Taxable Person.
• Distributor and supplier agents for input services.
• Taxpayers who are subject to the Reverse Charge Mechanism.
• All E-commerce aggregators and every person who supplies through E-commerce aggregators.
• Any person who provides online information, database access, or reclamation services from outside India to a person in India who is not a registered taxable person.

HOW TO DO GST REGISTRATION?

• Purchase the plan according to the nature and  Type of business detail.
• An expert will be assigned to authorize your inputs.
• Upload the required documents.
• Submit the documents and other required information in the government portal
• The system will generate the Acquirer Reference Number (ARN).
• GSTIN issued.

ONLINE GST REGISTRATION PROCESS

1. To start with a SEARCH button and Go to the authentication link GST portal.
2. In the New Registration page, furnish the details in the prompted fields and click the PROCEED button.
3. Enter the OTP sent to the registered mobile number /email address and click proceed.
4. The system will display a Temporary Reference Number (TRN) for your online GST registration, which the user must note down for future reference.
5. Go back to the GST portal and select Register seen under the Taxpayers menu.
6. Select TRN, enter the generated TRN along with the Captcha code, and click Proceed.
7. User should enter the second OTP received through a registered E-mail / mobile number and click on Proceed.
8. Next page will display the status of your application on which you will see an Edit icon on the right side. Click the Edit icon.
9. When the user clicks the Edit icon, they will see a page where they need to enter the correct information and submit the necessary documents, as detailed in the following section of this article.
10. The user can verify the entered details from the Verification page and then submit the article using EVC/E-sign/DSC.
11. The system will display a success message and send the ARN to the registered mobile number /E-mail ID for online GST registration.
12. You can check the ARN status of the new GST registration.
13. We will generate a GSTIN (GST Identification Number) for your registration, which is very important for you – so please secure it.

OFFLINE GST REGISTRATION PROCESS?

it has a simple procedure for the offline GST registration process.

The user will receive a GSTIN when registering under GST offline. It’s crucial to keep this GSTIN properly for future requirements. You must carefully review the application for GST registration and agreements pertaining to the business you are operating and register in accordance with them.

GST Registration Certificate

If a business registers for the GST system, the necessary authorities will award it with a GST registration certificate. Under this system, enterprises have a yearly revenue of at least Rs. 20 lakh and some special businesses must register. From the official GST Portal, you can download the GST registration certificate if you are a registered taxpayer under this system.

Benefits of GST

• Regulation of the unorganized sector.
• E-commerce operators no longer suffer from differential treatment.
• Fewer complications.
• Composition scheme.
• The registration process and filing of returns are simple.
• Higher threshold.
• Elimination of the cascading tax effect.

WHAT ARE THE GST REGISTRATION FEES?

The government is completely free of charge and does not impose any GST registration fees. the applicant opts to do it through an intermediate agency, there will be a handling fee imposed by the agency as per their discretion.

PENALTY FOR NOT REGISTERING UNDER GST?

If the defaulter fails to pay tax for legitimate reasons, the penalty will be 10% of the unpaid tax, up to a maximum of Rs. 100,000. Defaulters who evaded taxes for the purpose of cancellation will face a penalty equal to 100% of the amount of the overdue tax.

CANCELLATION OF GST REGISTRATION

Detailed procedures can help taxpayers to cancel their GST registration online.

Before beginning the process, the taxpayer must file all overdue GST returns. If there is non-compliance with the GSTR-3B, GSTR-1, or GST annual return, the taxpayer must file the late return before starting the cancellation of the registration process.

Step 1

Taxpayers submit a cancellation of GST registration application to government websites using Form GST REG-16 on the common GST portal. The GST cancellation application must include the following information.

• Contact address, which includes the mobile number and e-mail address.
• Reason for  cancellation of GST registration
• The desired date of cancellation of GST registration
• Particulars of the value and the tax payable on the stock of inputs, the inputs available in semi-finished goods, inputs available in finished goods, and the stock of capital goods/plant and machinery.
• The taxpayer files particulars of the latest GST return along with the ARN of the particular return.

Step 2

The GST Officer has to review the application and issue an order cancellation in Form GST REG-19 within 30 days from the application’s date. The Officer will determine a cancellation date and notify the taxable individual.

Consult an India Filings GST Expert if you have a GST cancellation you want to cancel. We’ll check your GST return filing status, assist you in completing any outstanding GST returns. Further file for GST registration cancellation.

This Blog is written by Ruchi Sinha.