Request A Call Back
Goods and Service Tax (GST) is one of India’s indirect taxes, with effect from 1st July in the year 2017. GST is wholesome of all indirect taxes, i.e., VAT, service tax, etc. The tax is applicable on the sale of goods and services, which the end consumer ultimately bears as the concept of GST taxation is destination-based. However, it is imposed on every trade step but ultimately refunded to previous parties, known as Input Tax Credit (ITC). GST is applicable in five slabs which differ as per the items categorized under them. The different slabs are 0%, 5%, 12%, 18% and 28%. However, some of the goods are exempted from GST and taxed separately by State Governments, i.e., electricity, petroleum products and alcohol. Some special items such as gold are charged with 3% GST and precious stones for 0.25%. On the GST mentioned above rates, an additional cess of 22% is applicable. The rules and regulations related to GST are governed by the finance ministers of the central and state government, which together forms the GST Council of India. However, nine states of India are classified as certain states under the GST Act for paying tax at concessional rates.
Every individual or a group of people running a business in India needs to register under the GST Act. Once you register yourself under GST, you are provided with a GSTIN, which is a GST number. This GSTIN should be mentioned in every invoice and legal paper of your business. Any person supplying goods or services without GST registration shall be levied with fines and penalties as applicable. You can collect GST from your customers only if you have made a registration under GST.
Types of GST
In India, the GST is a dual model, which means that certain taxable items shall be levied with both central and state GST. Both the central and state government charges all the interstate transactions of goods and services. There are three different types of GST.
CGST – The Central Goods and Service Tax (CGST) is levied by the central government of India on all types of goods and services that are supplied within a state. The central government of India collects the revenue under CGST. The input tax credit of CGST can only be taken from the input of CGST and IGST.
SGST – The state government levies the State Goods and Service Tax (SGST). It is similar to CGST and is also applicable to the goods and services supplied within the state. The revenue under SGST goes to the state government’s funds and income. The input tax credit of SGST can only be taken from the input of SGST and IGST. The central and state GST cannot take input tax credit from each other’s information.
IGST – Inter-State Goods and Service Tax is applicable when the buyer and the supplier are located in two states. The central government collects the IGST revenue, and they further share the tax revenue collected with the state government, which has imported the goods. The input tax credit of IGST can be taken from all, i.e., CGST, SGST and IGST.
Who is liable for GST registration?
Every person buying or selling goods and services in India for profit should be registered under GST mandatorily. Apart from this, these people should be registered under GST.
- People registered under the previous indirect tax laws, Service tax, VAT or excise.
- A goods provider with more than 40 lacks per year or 20 lacks pa, for specific states.
- A service provider with a turnover of more than 20 lakhs in a year or 10 lakhs pa, for special states
- Goods and service providers without a permanent place of supply shall pay GST as per the estimated turnover of 90 days. Such casual taxpayers have a registration validity of 90 days only.
- Any supplier’s agent or Inside Service Distributor (ISD) for collecting input tax credit.
- NRI or any agent of NRI, managing or handling NRI’s business in India.
- Businesses are paying tax under the reverse charge mechanism.
- E-commerce portals and the suppliers selling goods under them
- Any supplier supplies information or allows access to data to people of India from outside of India.
- Regardless of the amount of turnover, the business making inter-State supplies needs to register itself in every state it makes supply in.
- Person supplying goods or services under their brand name or trade name.
- Person or business taking over another GST-registered business.
- Business with branches in different places or states needs separate registration.
- Any person willing to voluntarily apply for registration under GST without falling under the following heads.
Process of GST registration on the government portal.
These are the following steps to be followed carefully by people registering themselves under GST online —
- Open the government portal of GST https://reg.gst.gov.in/registration/ and click on the registration tab.
- In Part-A, fill in the required details of the form GST REG-01.
- After OTP verification, you will receive a reference number on your mobile and email.
- Then comes Part-B of the above form. Fill in the required details and sign it using a DSC or EVC. The documents mentioned need to be uploaded on the site for verification.
- The system will generate a form GST REG-02, acknowledging the success of uploading the previous form
- Any pending documents to be uploaded shall be reminded to you by form GST REG-03. The pending documents should be uploaded within 7 days in the form GST REG-04.
- If your application is not appropriate, it shall be rejected in Form GST REG-05.
- If the department approves your application after all verification, it shall issue a registration certificate to you in GST REG-06.
The documents required for registration can vary according to the type of applicant. At the same time, some of the essential documents necessary include Aadhar card, PAN card, proof of address of the applicant’s office, a photograph of the related people, bank account details, certificate of registration in case of companies and LLPs.