Goods and Services Tax (GST) Explanation

Goods and Services Tax (GST) is a tax system in India that replaced several older taxes, including excise duty on goods and service tax, with a unified tax on the supply of goods and services. The law for GST was officially implemented on 29th March 2017 and became effective from 1st July 2017. In simple terms, GST is a tax levied on the sale of goods or services at each stage of production or distribution, based on the final destination or consumption of the goods or services. This tax remains consistent throughout India.

GST registration is a crucial requirement for businesses to operate legally and efficiently. It not only enhances the credibility and authenticity of a brand but also ensures compliance with legal regulations. According to GST regulations, businesses with an annual turnover exceeding Rs. 40 lakhs are required to register as regular taxable entities.

Is GST Registration Necessary for Your Business?

A ‘taxable person’ under GST is s a person who carries on any business at any place in India and who is registered or required to be registered under the GST Act. Any person who engages in economic activity including trade and commerce is treated as a taxable person.

1. Taxable Persons: Individuals or entities carrying out any business activity in India and are registered or required to be registered under the GST Act are considered taxable persons.
2. Casual Taxable Persons: Individuals or entities engaged in economic activities, including trade and commerce, for a limited period without a fixed place of business.
3. Non-Resident Casual Taxable Persons: Individuals or entities engaged in economic activities in India for a limited period but are not residents of India.
4. Inter-State Suppliers: Individuals or entities making taxable supplies across different states within India.
5. Agents: Individuals or entities acting on behalf of a registered taxpayer in the course of business.
6. E-commerce Operators: Individuals or entities operating e-commerce platforms facilitating the supply of goods or services.
7. TDS/TCS Deductors: Individuals or entities required to deduct tax at source or collect tax at source.
8. Business Across Multiple States: Individuals or entities conducting business in a state other than their location.
9. Online Sellers: Individuals or entities selling products on e-commerce platforms like Amazon and Flipkart..
10. Import-Export Industry: Individuals or entities engaged in import-export activities.
11. Reverse Charge Taxation: Individuals or entities liable to pay tax on behalf of the supplier under reverse charge mechanism.
12. Businesses Registered Under Previous Taxes: Individuals or entities registered under previous tax regimes such as VAT, excise, and service tax.
13. Aggregator Companies: Individuals or entities operating aggregator platforms that connect customers with service providers.
14. Input Service Distributors: Individuals or entities receiving tax invoices for input services and distributing the credit to other registered entities.
15. OIDAR Service Providers: Individuals or entities providing Online Information Database Access and Retrieval services in India.

Documents Required for GST Registration

1. PAN Card: Permanent Account Number (PAN) of the applicant entity or individual.
2. Proof of Business Registration: Document proving the legal existence of the business entity, such as Certificate of Incorporation, Partnership Deed, or Registration Certificate under any other applicable law.
3. Proof of Identity: Identity proof of the applicant entity or individual, which could be Aadhaar Card, Voter ID, Passport, or Driving License.
4. Photographs: Passport-sized photographs of the authorized signatories or partners of the business.
5. Business Bank Account: Bank statement or a canceled cheque of the business entity’s bank account.
6. Business Address Proof: Document confirming the business address, such as a rent agreement, lease deed, or utility bill (electricity bill, water bill, etc.) not older than two months.

Mandatory GST Registration Requirements

Threshold Limits for Mandatory GST Registration:

1. Manufacturing Sector: Annual turnover of Rs. 40 lakhs or higher.
2. Service Sector: Annual turnover of Rs. 20 lakhs or higher.
3. Special Category States: Annual turnover of Rs. 10 lakhs or higher.
4. Specific Category States (Jammu and Kashmir, Assam): Annual turnover of Rs. 40 lakhs or higher for goods.
5. Specific Category States (Puducherry): Annual turnover of Rs. 20 lakhs or higher for goods.