Goods and services tax (GST) launched in the year 2017 applies to all Indian businesses, traders, manufacturers, and service providers including freelancers As per the new GST regime, every individual involved in business having an annual turnover of above 20 lakhs is required to have GST registration. In the case of special category, north-eastern states will have to pay GST having an annual turnover of 10 lakhs. In some specific cases like E-Commerce businesses, it is mandatory to register for GST from the beginning without even crossing the annual turnover limit.

All the existing registered companies under central excise, VAT, and service tax are needed to register under GST as all these different types of central and state taxes are combined to make a new single tax. GST is charged in every step of the business starting from the supply chain which includes purchasing raw materials, manufacturing, packaging to selling to the wholesaler to the retailer, and finally to the consumer.

The online process makes it easier for business persons to register under the GST portal by easily using the required documents without visiting any offices or any manual intervention. So that they can focus on the key areas. After registering your business on the GST portal the registration will be done within 2 to 6 working days and then a unique GSTIN number will be generated for your business and allocated to the individual for further communication.

Components of GST

GST combines all forms of direct and indirect taxes into a single tax both at the state and central levels. Hence eliminating the effect of multiple taxes to be applied on the product and services.it effectively solves the drawbacks of the previous taxation system.

There are majorly 4 main components of GST

  • Central GST
  • State GST
  • Integrated GST
  • Union Territory GST

Central GST(CGST):

CGST is levied on the purchase of any goods and services and it is governed by the central Goods & Services Act, 2017.

State GST (SGST):

SGST is levied on interstate supply of goods and services and is levied by section 15 of the state goods and services act.

Integrated GST (IGST):

IGST is levied by the central government for the inter-state supply of goods and services.it is also applicable in the import and export of goods and services.

Union Territory GST (UTGST):

It is an indirect tax levied on inter-state supply of goods and services and it is governed by UTGST Act,2017.

Who is required to do GST registration?

  • Every individual or business corporation registered under old tax laws i.e Vat, CST
  • If your annual turnover is more than 40 lakhs, 20 lakh for service provider. For some northern and northeastern states, the turnover is 10 lakhs.
  • NRI person having business in India
  • E-commerce aggregator and suppliers
  • Agents of input service distributor
  • Person providing information, database, and retrieval services from a place outside India to India.
  • When a business registered under GST is transferred or merged, then the transferee shall take registration.

Documents required for GST registration

  • Pan card
  • Aadhaar card
  • Business address proof
  • Digital signature (If taxpayer is a company or LLP)
  • Incorporation certificate
  • Directors id proof, photo, and proof of address
  • Letter of authorization
  • Office documents like electric bill, rent agreement, and NOC of the owner

Steps for online GST registration

  1. Visit the official GST portal
  2. Click on the register now link
  3. Select new registration
  4. Fill in the details mentioned below and click proceed
  5. Enter the OTP received on the registered email and mobile number
  6. Note the temporary reference number(TRN) mentioned on the screen
  7. Now revisit the GST portal
  8. Click on the register under the taxpayer menu and proceed
  9. Now enter the TRN and captcha details to proceed
  10. Now enter the new OTP sent to your mobile and proceed
  11. The status of your application will be displayed on the new page and after completion, the application reference number will be sent to your registered mobile number and email id.

GSTIN

GSTIN or goods and services identification number will be issued to the applicant after completion of the registration process. The GSTIN is a unique 15-digit identification number issued to every taxpayer.

The 1st two digits of the GSTIN represents the state code of the registered business, the next 10 digits represent the PAN number of the registered person followed by the 13th digit which is the entity number of the same PAN holder in a state, then 14th character is an alphabet set by default and the last digit is a check sum character.

Benefits of GST registration

  • The simplified and uniform structure which combines all forms of indirect taxes
  • Higher threshold for businesses as compared to older VAT structures which required to pay tax for 5 lakhs turnover
  • Super easy online procedure for filing tax returns
  • Increase trust between your customers
  • Sell all around in India without any restrictions
  • Take input tax credit while purchasing raw materials
  • Sell online in e-commerce platform without any restrictions

GST Tax Slabs

The government has made a 4-tier tax structure for all the goods and services which falls under the following slabs

  1. Basic necessity items are exempted from the list like cereals, grains, meat, egg, chicken, jute flour, napkin, newspaper
  2. Household necessities and life-saving drugs like spices, paneer, footwear, milk, bread insulin, coal, and kerosene are taxed at a 5% slab
  3. Apparels, dry fruits, books, notes, game equipment are taxed at 12%
  4. Electronic gadgets, instant foods, steel products, water bottles are taxed at 18%
  5. Luxury items like cars, motorcycles fall under the 28% tax slab

GST return

It is a document containing all details about the income which is required to be filled according to the tax laws. All the GST return is to be filled online. under the law, a taxpayer has to file monthly, quarterly, and annual returns based on their business. under this, you have to file the purchase, sales output, and input tax credit. you can also add the unreported returns from the previous month.

GST penalties and interests

  • GST penalizes 100rs per day as a late fee for filing late returns and it can go up to 5000/-rs along with tax payments at 18% per annum
  • If anyone fails to file a particular form, they cannot file the subsequent form without filling it.
  • People having the intention to defraud and not paying tax can be liable to pay a penalty sum of 10% of pending tax along with jail term for several years.
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