Getting registered under GST (Goods and Services Tax) is necessary for businesses depending on their turnover or activities. If a business deals with goods, or provides services, it must apply for GST Registration if its total turnover for a financial year goes beyond Rs. 40 Lakhs (or Rs. 20 Lakhs in some cases). However, for businesses in North Eastern States, these limits are lower at Rs. 20 lakhs and Rs. 10 lakhs respectively. Many dealers also choose to register voluntarily under GST because of its advantages.
Registering for GST in India is entirely done online. It ensures a smooth flow of Input Tax Credit and gives recognition as a registered supplier.
Components of GST:
GST will have 3 main tax parts: Central Goods and Services Tax (CGST), State Goods and Services Tax (SGST), and Integrated Goods and Services Tax (IGST).
– CGST and SGST are collected by the central and state governments respectively when a transaction occurs within a state.
– IGST is imposed by the central government for transactions between different states.
Every business involved in buying, selling, or providing services needs to register for GST. It’s mandatory for businesses with an annual turnover exceeding Rs. 20 lakhs (for services) or Rs. 40 lakhs (for goods) to register for GST.
Businesses making interstate outward supplies of goods must also register for GST. The same goes for businesses providing services on behalf of other taxable persons, like agents and brokers.
GST Tax Rates:
Here’s how different items are taxed under GST in simpler terms:
– Essential items like household necessities and life-saving drugs are not taxed at all.
– Everyday products are taxed at 5%.
– Things like computers and processed food are taxed at 12%.
– Items like hair oil, toothpaste, soaps, as well as capital goods, industrial intermediaries, and services are taxed at 18%.
– Luxury items face the highest tax rate of 28%.
Benefits:
Here are the benefits of having GST registration in simpler words:
– You can charge taxes from your customers legally and pass on the tax benefits to your suppliers.
– Your business becomes fully tax compliant.
– You can claim back the taxes you’ve paid on your purchases, which helps improve your profits.
– Your GST certificate can be used as a document when opening a current or business account.
– Having a GSTN (Goods and Services Tax Identification Number) allows you to easily apply for tenders from various states and the Central Government.
Here’s a simpler breakdown of the documents needed for GST registration based on different types of businesses:
For Proprietorship:
– PAN Card and address proof of the proprietor.
For LLP (Limited Liability Partnership):
– PAN Card of LLP.
– LLP Agreement.
– Names and address proofs of partners.
For Private Limited Company:
– Certificate of Incorporation.
– PAN Card of the Company.
– Articles of Association (AOA) and Memorandum of Association (MOA).
– Resolution signed by board members.
– Identity and address proofs of directors.
– Digital Signature.
For proof of address, directors can show:
– Passport.
– Voter Identity Card.
– Aadhar Card.
– Ration Card.
– Telephone or Electricity Bill.
– Driving License.
– Bank Account Statement.
For identity proof:
– PAN Card.
– Aadhar Card.
For address proof:
– Voter’s ID.
– Passport.
– Telephone Bill.
– Electricity Bill.