Introduction
On July 1, 2017, India introduced the Goods and Services Tax (GST), a unified and comprehensive tax system that applies to the supply of goods and services across the country.
Before this structure was introduced, there were many indirect taxes levied by the state and centre.
GST is now the only national indirect tax regulation applicable in India. Registering for it facilitates companies and entrepreneurs to comply with the laws, enhance credibility, and unlock a range of benefits of registering for GST.
In this write-up, we will delve deeper into who can register for GST, how an entity can register for GST, and why GST is important in India.
Who needs to register for GST?
As per the GST law, any individual, firm, company, or organisation engaged in the supply of goods and services with an aggregate turnover exceeding the threshold limit of Rs. 40 lakh must register for GST. This limit is often referred to as the GST exemption limit.
According to the update in September 2021, the following is the eligibility for GST registration:
- Regular Taxpayers: Entities with an aggregate turnover of more than Rs. 20 lakhs in a financial year (Rs. 10 lakhs for Special Category States and North-Eastern States).
- Casual Taxable Persons: Individuals or businesses supplying goods or services occasionally in a territory where they do not have a fixed place of business.
- Non-Resident Taxable Persons: Foreign entities providing taxable goods/services in India.
- Input Service Distributors (ISD): Businesses that receive tax invoices for input services and distribute the credit of Central GST (CGST), State GST (SGST), Integrated GST (IGST), or Union Territory GST (UTGST) among their branches.
- E-commerce Operators: Platforms facilitating the supply of goods and services through their portals.
- E-commerce Sellers: Sellers operating on e-commerce platforms.
- Persons Deducting TDS: Government agencies and specified persons making payments to suppliers at a prescribed rate.
Whether you are a large enterprise or a startup, understanding registration in GST is essential to remain compliant and avail of the full GST registration benefits.
Which documents are needed for GST Registration?
The process to apply for GST involves submitting a few documents along with an application form. Although the specific documents may vary depending on the type of entity, the general documents required include:
- PAN Card of the Applicant
- Identity Proof: Aadhaar card or any other government-issued identification.
- Address Proof: Electricity bill, Rent Agreement, or any other document verifying the registered address of the business.
- Bank Account Details: Scanned copy of the first page of the passbook or a bank statement.
- Photograph
- Business Proof: Incorporation Certificate, Partnership Deed, or any other registration certificate depending on the type of business.
- Letter of Authorisation: For authorised signatories, a letter of authorisation or a copy of the resolution of the managing committee or board of directors
Once the application form is submitted along with the required set of documents, a 15-digit unique code is assigned to the registered company.
The process of registration under GST is free of cost and typically takes 2–6 business days to complete.
Importance & Benefits of GST Registration
As GST replaced several indirect taxes, it led to a reduction of regulatory complexity. It made the compliance procedure streamlined and straightforward, which highlights the importance of GST for the Indian taxation system.
One of the key benefits of GST registration is the eligibility to claim Input Tax Credit, i.e., the taxes paid on goods or services purchased for the business itself. This provision can help reduce the overall tax burden and improve cash flow, making it one of the core GST registration benefits.
By enrolling for GST, businesses can capitalize on a range of government schemes such as GST Compliance Scheme, incentives and tax benefits, ultimately fostering business growth. This is one of the significant benefits of registering for GST.
The GST system is managed digitally, hence it reduces paperwork and the risk of manual errors. This also makes the process more transparent for taxpayers, a point that strengthens the importance of goods and services tax in building a modern economy.
With GST, the cumbersome process of goods passing through multiple state checkpoints for tax inspection is eliminated, reducing transportation time and costs. For anyone evaluating GST for business, these improvements offer operational advantages that directly impact profitability and logistics.
Most essentially, GST has contributed to the formalisation of the economy, leading to increased tax collection, infrastructure development, and overall economic growth. This underlines the importance of GST, not just from a compliance standpoint but also from a developmental perspective.
To summarise, GST registration in India is not only a statutory requirement but offers numerous advantages to businesses and the economy as a whole. The importance of GST lies in how it facilitates the flow of goods and services across the country while ensuring simplified taxation, enhanced economic efficiency, and a transparent tax system.
