In India, the GST or Goods and Service Tax was implemented on 01.07.2017. This Indirect Tax Regimeapplies to every trader, manufacture, and provider (including freelancers). In this blog, we will talk about the Concept, Advantages, Documents, and the process to obtain GST Registration Online.
Further, this one tax has absorbed various of Central Taxes, such as CST (Central Sales Tax), Service Tax, Excise Duty. Moreover, several State Taxes, such as Octroi, VAT (Value Added Tax, Entertainment, and Luxury Tax, are also absorbed in it.
Concept of Goods and Service Tax
GST is an Indirect Tax Structure that undergoes multiple stages and levied at every step of Supply Chain. The Process to obtain GST Registration is completely online. That means there is no need for any Manual Intervention.
Further, there are three components of GST, which are as follows:
- CGST (Central Goods and Service Tax);
- SGST (State Goods and Service Tax); and
- IGST (Integrated Goods and Service Tax).
The concept of CGST and SGST will apply to every entity and transaction within a state, i.e., Intra-State Sales. But, the idea of IGST will only be applicable in the case of Inter-State Sales.
Concept of Input Tax Credit
In simple terms, when a taxpayer can reduce the tax already paid on inputs from the one, he needs to pay on output is known as Input Tax Credit.
For Example, B is a Manufacturer, the tax payable by him on Output is Rs 450, and the tax already paid by him on input is Rs 300. In this case, he can claim ITC (Input Tax Credit) of Rs 300. That means he just needs to pay the remaining amount, i.e., Rs 150.
Eligibility Criteria for GST Registration Online
The Person Eligible to obtain GST Registration Online are as follows:
- Individuals Registered under the Excise, Service Tax, VAT (Value Added Tax), etc.;
- Businesses that have an Annual Turnover above Rs 40 Lakhs;
- Businesses located in J&K, North-Eastern States, Uttarakhand, Sikkim, and Himachal Pradesh, and have an Annual Turnover of Rs 10 Lakhs;
- Casual Taxable Person;
- A Non-Resident of India;
- Agent of a Supplier;
- Input Service Distributor;
- Those who are paying taxes under the Reverse Charge Mechanism;
- E-commerce Aggregator;
- Persons who are providing Online Information and Database Access or Retrieval Services from outside India, other than the Registered Taxable Person.
Concept of GST Tax Rates
Under the Indirect Tax Regime, the Tax Rates are divided into five slabs, that are as follows:
- Exempt Items, such as Basic Necessities;
- 5% GST slab includes Life-saving Drugs;
- 12% GST slab includes Processed Food Items and Computer Parts;
- 18% GST slab includes Soaps, Toothpaste, Industrial Intermediaries, and Capital Goods;
- 28% GST slab includes Luxury Items.
Concept of GST Number
GSTIN, GST Number, or Goods and Service Tax Identification Number is a unique identification number given by the Government of India to each registered taxpayer. It is a 15-digit alphanumeric PAN base number.
The breakdown of the Format of GST Number is as follows:
- The first two digits of GSTIN Number denotes the State Code as per Census 2011;
- The next ten digits will represent the PAN (Permanent Account Number) of the Taxpayer;
- The thirteenth digit will be allocated based on the registration number within a state;
- The fourteenth digit will always be alphabet “Z”;
- The last digit will be known as Checksum Digit. It can either be alphabet or number.
Advantages of GST Registration Online
The Advantages of GST Registration are as follows:
- It Eliminates Cascading Effect;
- Offers High Threshold Limit to Obtain Registration;
- Composition Scheme for Small Businesses;
- Easy and Straightforward Registration Procedure;
- Fewer Compliance Requirements;
- Prescribed Treatment for E-commerce Aggregator;
- Improves the Efficiency of Logistics;
- Regulates the Backward and Deprived Sectors of Society.
Types of Taxpayer under Goods and Service Tax
The different types of Taxpayer mentioned under the Goods and Service Tax are as follows:
- Normal Taxpayer;
- Casual Taxpayer;
- Composition Scheme Taxpayer;
- Non-Resident Taxpayer;
- Non-Resident Online Service Provider;
- Special Economic Zone (SEZ) Developer;
- GST TDS Deductor (Government Entities);
- UN Embassy/ Body/ any other notified individuals;
- Special Economic Zone (SEZ) Unit;
- GST TDS Collector (E-commerce Companies)
Documents Required to Obtain GST Registration Online
The Documents Required to Obtain GST Registration Online are as follows:
a) Sole Proprietorship:
- PAN Card of the Sole Proprietor;
- Address Proof of the Proprietor.
b) Limited Liability Partnership:
- PAN Card Details of the LLP;
- A copy of LLP Agreement;
- Name and Address of Designated Partners
c) Private Limited Company:
- Certificate of Incorporation (COI)
- PAN Card Details of the Company;
- AOA (Articles of Association);
- MOA (Memorandum of Association)
- Resolution Passed and Signed by the Board of Directors;
- Identity Proof of the Directors;
- Address Proof of the Directors;
- Digital Signature Certificate.
The following documents can be shown as Address Proof of a Director:
- Voter Identity Card;
- Aadhar Card;
- Ration Card;
- Telephone or Electricity Bill;
- Driving License;
- Latest Bank Account Statement
Procedure to Obtain GST Registration Online
The steps included in the procedure to obtain GST Registration Online are as follows:
Step 1: Visit the official GST Portal, i.e., https://www.gst.gov.in/;
Step 2: Now, click on the option saying “Register Now as Taxpayer (Normal)”;
Step 3: Now the applicant will be redirected towards a Form, in which he/she needs to fill the following details in Part A:
- Choose New Registration;
- Select “Taxpayer” from the “I am a” drop-down menu;
- Choose the State and District from the Drop-down menu;
- Enter the Registered Email-ID and Mobile Number. OTP (One Time Password) will be sent on these;
- Now Click on “Proceed”.
Step 4: Now enter the received OTP and click “Continue”. However, if the applicant has not received the OTP, then click on “Resend OTP”;
Step 5: After entering the OTP, the applicant will receive a TRN (Temporary Reference Number) on the same email-id and mobile number;
Step 6: Now, once again visit the home page, and click on “Register Now”;
Step 7: Now choose Temporary Reference Number, and enter TRN, along with CAPTCHA Code. After that click on “Proceed”;
Step 8: Again, and OTP will be sent on Registered Email-ID and mobile number;
Step 9: After entering OTP, the applicant will see the status of the Application Form as Draft. Now, click on the “Edit” icon;
Step 10: The applicant will be redirected to the application form. Part B of the form contains 10 sections. The applicant is required to fill in all the details and needs to keep the following documents handy:
- Passport-sized Photographs;
- Identity Proof;
- Address Proof of the Registered Office;
- Bank Account Details;
- Authorization Form.
Step 11: Once all the details are filled, the applicant will be redirected towards the Verification Page. He/she needs to tick on the checkbox and submit the application by either of the following ways:
- E-sign (Digital Signature Certificate), the OTP will be sent registered Aadhar Card Number;
- Using EVC, wherein the OTP will be sent to the Registered Mobile Number.
Step 12: A success message will be displayed on the screen, and ARN (Application Reference Number) will be sent on the Registered Mobile Number and Email-ID.
Note: By using this ARN, the applicant can track the status of his/her application.
Penal Provision for Not Obtaining GST Registration
If in case a taxpayer pays the amount lesser than the amount due, he/she will be liable to pay 10% of the actual amount due. However, the minimum penalty is Rs 10000.
Further, if a taxpayer is registered under the Goods and Service Tax, and deliberately tries to evade taxes, then he/she will be liable to pay the penalty, which will be 100% of the amount due as tax.
We at Growth Begins aim to spread awareness among the People about the Personal Finance and Investment Opportunity, which will help them in their financial journey. In this blog, we have tried our best to provide you in-depth knowledge about the concept of GST and its Online Registration Process. Hope you like this post.