GST Registration

GST registration is the process of enrolling a business under the Goods and Services Tax regime in India. GST is a comprehensive indirect tax that subsumes many indirect taxes that were imposed by the central and state governments. Some of the categories of persons who need to register under GST Act are:

• Persons making any inter-state taxable supply
• Casual taxable persons making taxable supply
• Persons who are required to pay tax under reverse charge/li>
• Persons who are required to pay tax under sub-section (5) of section 9
• Non-resident taxable persons making taxable supply
• Persons who make taxable supply of goods or services or both on behalf of other taxable persons

• Input Service Distributors
• Electronic commerce operators
• Persons supplying online information and database access or retrieval services from outside India
• Such other persons or class as may be notified by the government
• Persons who are required to deduct tax under section 51

The threshold limit for GST registration is Rs. 20 lakh for most states and Rs. 10 lakh for special category states. However, for goods only, the limit is Rs. 40 lakh. These limits are based on the aggregate turnover of the business in a financial year.

• Eliminating the cascading effect of tax: GST avoids the tax on tax situation that was prevalent in the previous tax system. For example, under the VAT regime, a manufacturer had to pay tax on the raw materials as well as the final product. Under GST, the manufacturer can claim input tax credit for the tax paid on the raw materials, and only pay tax on the value added to the final product.
• Higher threshold for registration: Under the previous tax system, any business with a turnover of more than Rs. 5 lakh had to register for VAT. Under GST, the threshold limit for registration is Rs. 20 lakh for most states and Rs. 40 lakh for goods only. This means that many small businesses are exempt from GST registration and compliance.
• Composition scheme for small businesses: GST also offers a composition scheme for businesses with a turnover of less than Rs. 1.5 crore (Rs. 75 lakh for special category states). Under this scheme, the businesses can pay a lower rate of tax (1% for traders, 5% for restaurants, and 6% for manufacturers) and file quarterly returns instead of monthly returns. This reduces the tax burden and compliance cost for small businesses.
• Simple online procedure: GST registration is a simple and hassle-free online process that can be done through the GST portal. The applicant has to fill an online form and upload the required documents. The GST registration certificate is issued within 3 to 6 working days after verification.
• Defined treatment for e-commerce operators: GST has brought clarity and uniformity in the taxation of e-commerce transactions. Under GST, e-commerce operators have to collect tax at source (TCS) at the rate of 1% from the sellers who sell goods or services through their platform. The e-commerce operators have to file monthly returns and remit the TCS to the government. The sellers can claim the TCS as input tax credit while filing their returns.
• Lower compliance rate: GST has reduced the number of returns and forms that a business has to file. Under GST, a regular taxpayer has to file only one monthly return (GSTR-3B) and one annual return (GSTR-9). A composition dealer has to file only one quarterly return (GSTR-4) and one annual return (GSTR-9A). This simplifies the compliance process and saves time and resources for the businesses.
• Increased logistical efficiency: GST has eliminated the need for interstate check posts and barriers that used to cause delays and increase the transportation cost for goods. GST has also enabled the seamless movement of goods across the country with a common e-way bill system. This has improved the logistical efficiency and reduced the inventory cost for businesses.
• Regulation of the unorganised sector: GST has brought many unorganised and informal sectors under the tax net. GST has made it mandatory for businesses to maintain proper records and invoices of their transactions. GST has also increased the audit and scrutiny of the businesses by the tax authorities. This has enhanced the transparency and accountability of the businesses and reduced the scope for tax evasion and corruption.

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