Goods & Service Tax
GST or say “ Goods and Services Tax” is one of the biggest tax reforms (in terms of indirect taxes) in India came into effect from July 1, 2017. Under this fabled tax system, the tax payers in India will pay a consolidated tax instead of the plethora of taxes such as Value-Added Tax (VAT), Central Excise, Service Tax, Entry Tax or Octroi, Customs Duty, Central Surcharge & Cess, Luxury Tax, Entertainment Tax, and Purchase Tax and a few other indirect taxes. Thereby helping to consolidate, streamline and make easier and more effective the process of indirect taxation.
The tax rates, rules and regulations are governed by the GST Council which comprises finance ministers of centre and all the states. GST simplified a slew of indirect taxes with an unified tax and is therefore expected to dramatically reshape the country. GST is levied at every step in the production process, but is refunded to all parties in the chain of production other than the final consumer.
Registration: Mandatory or Suo-moto under GST ?
For certain businesses, registration under GST is mandatory. If the organization carries on business without registering under GST, it will be an offence under GST and heavy penalties will apply.
With the startup community migrating towards GST, the Do It Yourself (DIY) model has enabled for startup founders to complete taxpayer registration, tax return submission, tax payments, and other related works etc. for all sorts of enterprises irrespective of sector.
A ‘taxable person’ under GST, is a person who carries on any business at any place in India and who is registered or required to be registered under the GST Act. Any person who engages in economic activity including trade and commerce is treated as taxable person. A taxable person with one PAN having work in different states can apply multiple GSTIN on state basis.
‘Person’ here includes individuals, HUF, company, firm, LLP, an AOP/BOI, any corporation or Government company, body corporate incorporated under laws of foreign country, co-operative society, local authority, government, trust, artificial juridical person.
A common threshold exemption would apply to registration under both CGST and SGST, taxpayers with an annual turnover of Rs. 40 lakhs (earlier it was Rs. 20 lakhs till 31-03-2019) and Rs. 10 lakhs for special category States. Under the threshold limit taxpayer can Suo-moto take GST registration, whereas above the threshold limit it has to be mandatory to take registration under GST Act.
An optional composition scheme registration (i.e. to pay tax at a flat rate on turnover without credits) is available to small taxpayers (including to manufacturers other than specified category of manufacturers and service providers) having an annual turnover of less than Rs. 1.5 crore** per annum ( Rs.75 Lakhs for NE States and Himachal Pradesh) can opt for Composition scheme.
* CBIC has notified the increased in the threshold turnover for opting into the Composition Scheme from Rs 1 crore to Rs 1.5 crores with effective from 1st April 2019.
GST Registration : Types of Taxable Person..
With GST, all states in India will have the same tax rate, either on the supply of goods or services or both, which will bring down the logistics costs for many businesses, wheather on Supply of Goods or Services or both. However, while filing for GST, they have to execute only two types of registration, one for State-GST and another for Central-GST.
* Every person has to apply for registration in every State in which he is liable, within thirty days from the date on which he becomes liable to registration.
* Casual/ non-residents should apply at least five days before their commencement of business.
* Registration number in GST will be PAN based and hence, having PAN would be a prerequisite for obtaining registration.
* The assessee must obtain separate registration for each State, as registration under GST will be State-wise.
* The assessee has an option to obtain a separate registration for each of the ‘business vertical’ in the same State.
Documents Required for GST Registration
PAN card of the business entity/ Individual in case of Proprietor.
Identity proof along with photographs- PAN and Aadhar is mandatory for proprietor and all partners/ Directors, Trustee/ Members; as per business nature along with Photograph passport size required.
Address proof of promoter- Documents like passport, driving license, aadhaar card, voters identity card and ration card can be submitted as address proof for proprietor and all partners/ Directors, Trustee/ Members; as per business nature.
Business location/ Registered office address proof - Rent agreement along with NOC and ownership proof required, like: electricity bill, House tax receipts, water bill, gas bill, telephone bill.
Bank account proof - Scanned copy of the first page of bank passbook or the relevant page of bank statement or scanned copy of a cancelled cheque containing name of the proprietor or business entity, bank account no., MICR, IFSC and branch details including code needs to be uploaded.
Nature of Business of the business entity in all cases.
List of Items Supply/ Manufactured/ Purchased and /or service provided in all of the cases.
Additional Documents Required for GST Registration in case of other than Individual
Business registration document- In case of Company or LLP ; incorporation certificate required; for Partnership firm, Partnership deed required and for the case of society, trust, club, government department or body of individuals must provide the registration certificate.
Board Resolutions- In case of Company copy of board resolution required and for the case of society, trust, LLP copy of minutes of meeting required.
List of Directors/ Partners/ Members- In case of Company list of Directors required; for Partnership firm/ LLP list of Partners and for the case of society, trust, club, body of individuals list of members required.
Digital Signature- In case of Company, LLP, society, trust, club, body of individuals Digital Signature Certificates are required.
Who is liable to register for GST ?
Generally, the liability to register under GST arises when you are a “supplier” within the meaning of the term, and also if your aggregate turn over in the financial year is above the specified exemption threshold. However, the GST law enlists certain categories of suppliers who are required to get compulsory registration irrespective of their turnover that is to say, the specified threshold exemption limit is not available to them.
Under the GST Act, GST Registration can be of various types. Taxable person should aware of the different types of GST Registration before selecting the appropriate one. They are:
GST registration is mandatory for -
a. Any business whose aggregate turnover in a financial year exceeds Rs 40 lakhs
or likely to exceeds Rs. 40 Lakhs (Rs 10 lakhs for North Eastern and hill states).
b. Persons making any inter-State taxable supply of goods/ services.
Aggregate Turnover includes:- Taxable Sales, Exempt Sales, Export Sales, Interstate Sales, Sales by Agents or Principal, (Amount of taxes not included).
If your turnover is exclusively supply of only exempted goods/services which are exempt under GST, no need to take Registration
Registration limit in GST is Rs. 20 lakhs (40 lakhs w.e.f. 01-04-2019 via notification no.10/2019) for both local and interstate supply; earlier the registration is necessary for service provider if he making even Rs. 1 as interstate supply. However in the case of goods supplier, it has necessary to take registration for inter state supply.
However in the following cases No limit of Turnover required, i.e. the cases for mandatory registration under GST Act, irrespective of turnover:-
Every person who is registered under an earlier law (i.e., Excise, VAT, Service Tax etc.) needs to register under GST, too.
When a business which is registered has been transferred to someone/demerged, the transferee shall take registration with effect from the date of transfer.
Casual taxable person*.
Non-Resident taxable person*.
Agents of a supplier (Persons who supply goods and/or services on behalf of other registered taxable persons whether as an agent or otherwise).
An aggregator who supplies services under his brand name or his trade name.
Persons who are required to pay tax under the reverse charge mechanism.
Persons who are required to deduct/ collect TDS/ TCS under GST(Government Entities, E-commerce Companies).
Input service distributor*.
E-commerce operator or aggregator**
Person who supplies via e-commerce aggregator.
Special Economic Zone Unit / Developer.
Person supplying online information and database access or retrieval services from a place outside India to a person in India, other than a registered taxable person.
such other person or class of persons as may be notified by the Central Government or a State Government on the recommendations of the Council (such as UN Embassy/ Body/ other notified individuals).
* Person define in the website in special registration category.
** E-commerce operators/aggregators (services of transportation of passengers by Ola, Uber etc.) need not register if total sales is less than Rs. 20 lakhs/40 lakhs (amended). Notification No. 65/2017 – Central Tax dated 15.11.2017