by: Bhavika , B.A.LL.B, 4th year , Lovely Professional University
Introduction
In the tax system, the registration of a company plays an important role in collecting taxes on behalf of the government and applying taxes on investments. It is very important for any business to register under the GST law to collect taxes from their clients and get tax credits. Without registration, a company cannot collect taxes from customers nor apply for input tax credits.
A person with gross income exceeding 40 Lacs in a financial year has to register under the Act, while for special states, gross income is limited to 20 Lacs in a financial year for registration of any business entity. Basically, after registering a business entity, the tax authorities assign a unique identification number which includes permanent identification number (PAN) and country specific Aadhaar number. The unique number is called the GST Identification Number (GSTIN) which is a fifteen digit number. The first two digits of the GST Identification Number (GSTIN) represent the laws of the country and the next ten digits represent the taxpayer’s Permanent Account Number (PAN) followed by a thirteenth numerical digit the unique registration number follows
However, GST is divided into four categories like CGST, SGST, UTGST, IGST etc. But in all the categories, there is no need for registration, there is only one line for all taxes.
Different Types of GST Registration
The GST Act provides for various GST registrations to meet business needs. Before deciding which one is right for your business, it is important to understand the options available to you. Here are different types of GST registration:
1. Normal Taxpayer- The general class of taxpayers is the most common and covers most of the industries in India. Under this registration, companies do not have to pay any deposit, and there is no specific deposit period. This means that your GST registration is valid for as long as your business is running. It is a simple form of registration and provides flexibility for businesses of all sizes.
2. Casual Taxable Person- Individuals or corporations intending to set up shops or commercial establishments during the period may opt for passive taxable persons. If you are registering as a seasonal taxpayer, you are required to make an up-front deposit equal to the expected GST during the period your seasonal shop or outlet is in operation. This registration is ideal for transient businesses, such as festivals or special events. It allows for registration for a fixed period, usually three months, and can be extended or renewed as needed.
3. Composition Taxable- Businesses wishing to avail of the GST composition scheme must apply for composition taxpayer registration. Unlike ordinary taxpayers, those registered under the composition scheme have to pay flat tax. However, one important limitation is that Input Tax Credit (ITC) cannot be claimed. Such a registry is useful for small businesses whose income does not meet certain thresholds and who want a simpler tax structure.
4. Non-Resident Taxable Person- The registration of non-resident taxable persons consists of persons or businesses outside India who supply goods to customers in India. As with passive taxpayers, a deposit is required at the time of registration, which must be equal to the expected GST at the time of registration. This GST registration usually takes three months, with options for extension or renewal before it expires. It is designed to facilitate short-term transactions within India by foreign businesses.
Eligibilty :
In order to register for GST, certain individuals and businesses must meet specific criteria, including:
1. Pre-GST Registrants: Individuals who were registered under the previous tax system before GST was implemented.
2. Non-Resident and Casual Taxable Persons: Individuals who are required to pay tax under certain circumstances, especially when their business operations are temporary or seasonal.
3. Reverse Charge Mechanism: Individuals who are obligated to pay tax under the reverse charge mechanism, where the recipient of the goods or services is responsible for paying the tax instead of the supplier.
4. E-commerce Aggregators: All e-commerce aggregators are required to register for GST to comply with the law.
5. Turnover Threshold: Businesses with an annual turnover exceeding Rs. 40 lakh must register for GST.
6. Service Distributors and Agents: Individuals who act as agents or distributors for a supplier, offering input services.
7. E-commerce Suppliers: Those who sell goods through e-commerce platforms need to sign up for GST.
8. Database Access and Online Information Providers: Companies or individuals providing database access and online information services to Indian residents from overseas must register, unless they are already registered as taxable entities.
9. Annual Turnover exceeding Rs. 20 Lakh: Typically, any business with an annual turnover of Rs. 20 lakh or higher must register for GST.
Documents Required
To complete your GST registration, the necessary documents include:
1. PAN Card: Provide your Permanent Account Number card.
2. Aadhaar Card: Submit your Aadhaar card.
3. Bank Account Information: Include details of your bank account such as the account number, bank name, branch, and IFSC code.
4. Proof of Address: Provide a document as evidence of your business address.
5. Digital Signature: Obtain a digital signature certificate for online verification.
6. Photograph: Attach a recent photograph in JPEG format with a maximum size of 100 KB.
7. Articles of Association/Memorandum of Association: For companies, these legal documents are required.
8. Certificate of Incorporation: This document is issued by the Ministry of Corporate Affairs for companies. It serves as proof of the company's legal existence.
9. Proof of Appointment of Authorised Signatory: This document is used to verify the appointment of an authorised signatory within a company. It confirms the individual's authority to act on behalf of the company.
10. LLP Registration Certificate/LLP Board Resolution: These documents are necessary for Limited Liability Partnerships (LLPs) if applicable. They demonstrate the registration of the LLP and any resolutions passed by the board of directors.
Procedure:
1. You can register for GST online on the GST Portal (www.gst.gov.in).
2. Before filing GST, ensure you have the following information ready:
· Sales and purchase invoices.
· Details of purchases made from unregistered persons.
· GST Challan used for the payment of GST.
· Any other relevant documents.
3. Before filing GST, ensure you have the following information ready:
· Sales and purchase invoices.
· Details of purchases made from unregistered persons.
· GST Challan used for the payment of GST.
· Any other relevant documents.
4. File GST Return