The Goods and Services Tax, or GST, is hailed as one of the biggest tax reforms in our country. The tax was first introduced on July 1, 2017; since then, the first of July is celebrated as GST Day. GST registration is a process that involves taxpayers enrolling themselves and receiving a unique registration number. The GSTIN is a 15-digit number the central government assigns to taxpayers after registration. There are multiple GST registration benefits, from uniform tax accounting to legal business recognition. Let’s understand the different GST registration types before delving deep into their advantages.
Different Types of GST
The Central Government collects the Integrated Goods and Services Tax, or IGST. It covers imports and exports and is levied on the supply of goods and services between two states. If a business sells goods or services from one state to another, 18% IGST will be applied. The tax is also divided between the two states after the collection process.
State Goods and Services Tax, or SGST, is charged when trade takes place in the same state. Such a transaction will be charged with both state tax and central tax, but the former collects the tax in this regard.
The central government levies the Central Goods and Services Tax during an intrastate trade or trade within the same state. It works in sync with the state tax and is controlled by the CGST Act.
Union Territory Goods and Services Tax, or UTGST, replaces SGST within the union territories. They include Chandigarh, Andaman and Nicobar Islands, Daman and Diu, Dadra and Nagar Haveli, and Lakshwadeep.
Know About GST Registration Types
- The first category under this section is normal taxpayers. A business with a turnover of over Rs. 40 lakh in a financial year must register as a normal taxpayer. A 10 lakh threshold limit exists for businesses in Uttarakhand, Jammu & Kashmir, and Himachal Pradesh.
- The next category is casual taxable individuals. This is usually for occasional or seasonal trading. Businesses make a deposit equal to their GST liabilities from their seasonal operations. While a 3-month tenure for registration exists, businesses may seek extensions.
- People who reside outside India and sometimes supply goods and services must register under the non-resident taxable category. They may trade as principals or agents with Indian residents.
- The next on the list is composite registration. This plan applies to businesses with an annual turnover of over Rs. 1 crore. They must pay a fixed GST amount, regardless of their exact turnover.
Benefits of GST Registration
Starting A Business is easier.
The introduction of the GST structure has streamlined starting a business. One no longer needs to deal with varied tax rules from state to state. Besides removing the high fees one needs to pay when beginning, the centralized taxation system reduces the time behind establishing a business. The advantages of GST registration include the ease of operating a business between two or more states.
Higher Threshold Limit
Earlier, under the VAT format, any business with a turnover of over five lakhs was required to pay VAT in most states. However, the limit differed from one state to another. Besides, service providers with a turnover of less than ten lakhs were exempted from the service tax. The threshold under the GST module has been increased to twenty lakhs. This exempts several service providers and small traders.
Eliminates the Cascading Effect
Different types of taxes that existed earlier have been brought under the single umbrella of CGST or SGST. GST is a comprehensive indirect tax that has eliminated the cascading effect of taxes. Instead of paying multiple taxes simultaneously, one must now pay one tax that covers them all. It has made business operations more economical for all.
Enhanced Logistics Efficiency
When goods were transported from one state to another, they had to undergo different checks due to different state tax rules. It took a lot of time. However, among the other advantages of GST registration types in business is the increased efficiency of state-cross-border goods transportation. It has tremendously reduced the number of checks goods need to undergo during transportation. Lowering unnecessary logistics expenses has simultaneously increased revenues for businesses involving transportation.
Simple Registration Procedure
The complete GST registration process is online, making it super simple. It has been an excellent advantage for start-ups. They may need more resources to register for different taxes individually. However, the online and simple registration makes it easier and faster for a business to get started.
Small Business Composition Scheme
Small businesses with a turnover of over Rs. 20 lakhs and 75 lakhs can lower their taxes by availing of the composition scheme under GST. It is beneficial for bringing down the tax compliance burden for small businesses.
Helps Regulate Unorganized Sector
Certain industries in the country, like textiles and construction, were non-regulated and unorganized in the pre-GST period. GST allows online payments and compliance, making it easier to regulate these industries. It has brought accountability and helped make these sectors more organized.
Lesser Number of Compliances
VAT and services earlier had their own returns and compliance schemes. However, GST has resulted in a unified return that needs filling. It has brought down the number of returns that must be filed. Around 11 returns under GST exist. Four of them are basic and apply to everyone under GST.
|Service Tax||Proprietorship or Partnership: Quarterly
Company or LLP: Monthly
|VAT||* Differs from one state to another. *
Some states ask for monthly returns over a threshold limit.
Karnataka and some other states need a Monthly return.
Defined E-Commerce Operations
The supply of goods and services in the e-commerce sector was not defined earlier. Varied VAT laws existed before the introduction of GST. A VAT declaration was needed to be filed for online websites delivering to Uttar Pradesh besides the delivery truck’s registration number.
In contrast, states like West Bengal and Rajasthan treated e-commerce brands as mediators and didn’t require VAT registration.
Pros and benefits of different GST registration options include the removal of differential treatments and compliances. GST has clearly stated the provisions that the e-commerce sector must follow. These provisions apply all over India and eliminate intra-state trade challenges.
Ten Facts To Know About GST Registration
- GST involves no registration fees.
- Businesses that supply goods to more than one state must ensure GST registration in all states where the goods are being supplied.
- A business with over 20 lakhs INR turnover must register for GST.
- 10,00 or 10% of the due amount is fined in case of failing to file GST.
- The GST structure in India is inspired by the one in Canada.
- The first state to implement GST in India was Assam.
- Vijay Kelkar Committee suggested the application of GST in India.
- The GST Council has 33 members in 2023.
- The president of India established the GST Council in September 2016.
- Amitabh Bachchan was chosen as the brand ambassador of GST.
How Does GST Work
GST in India is not levied where the goods and services are produced. Instead, it is applicable in states where those goods and services are consumed. The tax is levied at each point of sale, and the rates usually include the purchasing price of a good or service.
The GST application unifies the Indian market. It replaces the several state and central taxes applied before the GST era. Besides, it is seen as a value-based tax. It is applicable at each point of a sales chain that involves a supplier, manufacturer, or wholesaler.
This indirect tax lowers the burden on manufacturers by eliminating the need to pay multiple taxes. It has brought uniformity to the economy, which puts our country on par with other global markets. Besides, the implication promotes entrepreneurship. Taxpayers can also reclaim their GST if they fulfill certain criteria prescribed by the Indian Government. It is among the most significant GST registration benefits.
Documents Needed For GST Registration
Here are a few documents that you will need for GST registration:
- PAN, or Permanent Account Number, of the applicant
- An Aadhar Card copy
- Incorporation certificate or proof of business registration
- Identification and address proof of the directors or promoters and photographs
- Cancelled cheque or bank account statement
- Digital signature
- Authorization letter
While change may not be easy, the goal of the GST implication was to smooth the road for business operations. Several global economies have implemented GST to overcome economic troubles. The advantages of easy input credits and a unified tax system are undeniable. It was implied that we would abolish several indirect taxes and create a single system. It has eased the tax collection process, enhanced the efficiency of business operations, and continues to do so.
- What are the four types of GST names?
What are the four GST types are SGST, CGST, IGST, and UTGST.
- How many GST slabs are there in India?
Four GST slabs are available for the various goods and services in India. They are 5% GST, 12% GST, 18% GST, and 28% GST.
- Who introduced GST in India?
Arun Jaitley introduced The GST bill in the Lok Sabha in February 2015.
- What are the 18% GST items?
Items under the 18% GST slab include hair oil, shampoo, stationery, computer monitors, weight-weighing devices, etc.
- How many days are required for GST registration?
The GST registration process may take up to 5-6 working days.
- What is the turnover limit for GST?
A business with over Rs 20 lakh turnover must ensure GST registration. The limit for hilly and northeastern states is Rs 10 lakh as they are considered special category states.
- Who passed GST in India?
Rajya Sabha passed the Constitutional (122nd Amendment) Bill on 3rd August 2016. Lok Sabha passed it on 8th August 2016.
- Is GST compulsory?
If your turnover exceeds the specified limit, you must register for GST.
- Why is the HSN code used in GST?
The idea behind using HSN is to make GST more systematic and acceptable. HSN codes eliminate the need to upload detailed descriptions of the goods. It makes filing returns easier and also saves much time.
- Can GST expire?
There is no GST registration expiry date for regular taxpayers. It is valid until it is canceled or surrendered.