October 10, 2019
5 min read
Read our blog to know about 8 important things regarding GST registration in India. Know about the GST registration process, GST tax rates, applicability and GST returns.
Applicable over the entire country from July 1 2017, Goods & Services Tax (GST) is a destination-based consolidated indirect tax applicable over to all Indian service providers, traders and manufacturers, on the consumption of goods and services. GST replaced the different indirect taxes that were previously applicable over the sale of goods or services such as VAT, Entertainment Tax, Luxury Tax, Octroi, Sevice Tax, CST, and Excise Duty.
There are three kinds of Goods and Service Taxes under the GST regime in India:
Central Goods and Services Tax or CGST levied by the central government.
State Goods and Services Tax or SGST levied by the centre and state when a transaction happens intra-state i.e. within a state.
Integrated Goods and Services Tax or IGST levied by the centre when a transaction happens inter-state i.e. from one state to another.
There are 4 GST tax slabs and the GST Council assigns the rates at which goods and services fall. The different kinds of goods and services are classified under these different classes:
Luxury items are taxed at 28%.
Hair oil, toothpaste and soaps, capital goods, industrial intermediaries and services are taxed at 18%.
Products like computers and processed food are taxed at 12%.
Household necessities and life-saving drugs etc. are taxed at 5%.
Basic necessity items come under the exempt list and are not taxed.
A startup must talk to a GST consultant to know the applicability of GST registration on it. The following need to obtain GST Registration in India mandatorily:
Persons making inter-state supply, irrespective of any threshold limit.
Casual taxable persons, irrespective of the threshold specified.
Persons who are required to pay tax under reverse charge.
Non-resident taxable persons.
Persons who are required to deduct tax under Section 37 (TDS)
Input service distributor
Supply of goods or services through electronic commerce operator, other than branded services
Every electronic commerce operator
Aggregator who supplies service under his brand name or his trade name
Other notified persons
Suppliers with an aggregate turnover in a financial year exceeding INR 40 lacs and INR 10 lakhs in NE states including Sikkim.
Persons who were already registered under the earlier law.
Transferee in the case where the business is transferred.
Any person who is liable to get the GST registration under the GST act becomes liable to get the registration done within 30 days from the date on which he becomes liable to registration. Once the 30 days are over, the person becomes liable to penalties from the GST authority.
GST Registration Process In India
There are 2 kinds of GST registrations in India:
Registration under Composition Scheme
Registration as a Casual Taxable Person
To get GST registration done, the GST consultant can file an application on behalf of the startup along with the requisite documents. The application and the documents are then processed and verified by the GST Authority. Upon verification, the GST registration certificate is issued to the startup along with the GSTIN. There are no fees to register for GST in India.
The following documents are submitted along with the GST registration application, but the list is not exhaustive:
Certificate of Incorporation
Photograph of GST Applicant
Proof of business address such as electricity bill or property tax receipt
Copy of Resolution in case of a company.
Bank accounts details such as a copy of bank statement, cancelled cheque, etc.
Once the registration is complete, the person or business becomes liable to submit the different kinds of GST returns with the authority. GST Return is a document that lays down the details of income, sales made, purchases made output and any Input Tax Credit. All GST returns in India are filed online through the GST Portal. After the GST registration, a startup must consult a GST consultant in India to get the GST return filing done for the business in a timely manner.
ALSO READ: Types Of GST Returns In India
Failing to obtain GST registration any person liable under the GST Act can result in a penalty of a minimum INR 10,000 or 10% of the amount due. However, in the case of intentional tax evasion, the penalty can increase to 100% of the owed taxes.
It is essential for a new startup, who has limited knowledge about the tax system, to consult a tax advisor to know the applicability of GST, GST registration process and the return filing process. SeekWiser has a wide network of tax consultants in India who specialise in GST matters. Call us at +91-7827886239 or send us an email at [email protected] to know more.
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