Documents required for GST registration
According to Goods and Service Tax regulation, it is mandatory for a business that has turnover above 40 lakhs to register as a regular taxable entity. This is called the GST registration process. The turnover limit is Rs. 10 lakhs for businesses present in hill states and North-Eastern states. The registration process can be completed within six working days.
Goods and Service Tax is an indirect tax applicable in India. It includes different taxes, such as excise duty, service tax, VAT, entry, and customs duty, into a single tax system. Goods and Service Tax was introduced to reduce complexities and compliances for doing business for millions of small and medium businesses in India.
Registration of any business entity under the Indian GST law implies availing a unique number from the concerned authorities to collect tax on behalf of the Indian Government and obtain Input Tax Credit for the taxes on inward supplies.
GST registration can be done quickly on the online GST portal. You can fill a form on the online GST portal and submit the required documents for registration. Businesses must complete the GST registration process. It is important to note that it is a criminal offense to carry out business operations without GST registration. Heavy penalties are levied for operating business without a valid GST registration.
Steps to complete GST registration
Following is the step by step procedure that individuals must follow to complete GST registration.
- Visit the official GST portal at https://www.gst.gov.in/.
- Click on the “Register Now” link under the “Taxpayer” tab.
- Select the “New Registration” option.
- Fill the details mentioned below:
- Select “Taxpayer” under the “I am a” dropdown menu.
- Select your respective state and district.
- Enter the name of your business.
- Enter the PAN number of your business.
- Enter your email address and mobile number in the respective boxes. The mobile number and email address must be valid and active as the system will send an OTP for verification.
- Enter the captcha and click on the “Proceed” button.
- On the next page, enter the one-time password (OTP) that was sent to your mobile number and email address in the respective boxes.
- Once entered, click on the “Proceed” button.
- The system will give you a Temporary Reference Number (TRN) on the screen. Make a note of the TRN.
- Revisit the GST portal using the link mentioned earlier, click on the “Register” link under the “Taxpayer” option.
- Now select “(TRN) Temporary Reference Number.”
- Enter the TRN and captcha details and click on “Proceed.”
- You will receive an OTP on your registered email address and mobile number. Enter tis OPT on the next webpage and click on the “Proceed” button.
- The status of your GST application will be displayed on the next page. Click on the “Edit” button on the right side of the webpage.
- There will be approximately ten sections on the next page. Fill out all the relevant details and submit the required documents such as a photograph, business card proof, bank details such as bank name, branch name and IFSC code, authorisation form, and the taxpayer’s consultation.
- Visit the “Verification” webpage and check the declaration. Then apply by using one of the below-mentioned ways:
- By EVC (Electronic Verification Code). This code will be sent to your registered mobile number.
- By e-sign method. The system will send an OTP to your mobile number linked with your Aadhaar card.
- In case you are a company, the application must be submitted using the Digital Signature Certificate.
- Once completed, a success message will be displayed on the screen. The ARN (Application Reference Number) will be sent to your registered mobile number and email address.
- You can now check the status of your ARN on the GST portal.
Types of GST registration
As per the Indian GST Act, GST Registration can be of several types. It is important that you are aware of the different types of GST registration before applying for one. The different types of GST registrations are:
- Regular Taxpayer: Most businesses in India fall under this group. You need not provide any deposit amount to become a normal taxpayer. There is no expiry date for taxpayers who come under this category.
- Casual taxable individual: Individuals who want to set up a seasonal shop or stall can opt for this category. You have to deposit an advance amount equal to the expected GST amount during the time the business or seasonal shop is operational. The time period of the GST Registration under this group is 3 months, and it can be extended or renewed.
- Composition Taxpayer: You can apply for this category if you want to obtain the GST Composition Scheme. You will have to deposit a particular amount under this category. Input tax credit can’t be obtained under this class.
- Non-Resident Taxable Person: In case you live outside India, however, supply goods to individuals who stay in India, opt for this form of GST Registration. Similar to the Casual Taxable Person, you are also required to deposit an amount equal to the expected GST liability during the time the GST registration is effective. The duration of this type of GST registration is usually 3 months, but it can be extended or renewed.
- Non-Resident Online Service Provider
- GST/TDS Collector – E-commerce Companies
- Special Economic Zone Developer
- UN Embassy/Body/other notified individuals
- GST/TDS Deductor – Government entities
- Special Economic Zone Unit
Who should complete GST registration?
The following individuals and businesses must avail GST registration:
- Individuals who had registered under tax services before the GST regulations came into existence.
- Non-Resident Taxable individual and Casual Taxable individual.
- All e-commerce aggregators
- Individuals who pay tax as per the reverse charge mechanism.
- Businesses who have a turnover of more than Rs. 40 lakhs per annum. In the case of Uttarakhand, Jammu and Kashmir, Himachal Pradesh, and North-Eastern states, the turnover should go over Rs. 10 lakhs.
- Input service distributors and supply agents
- Individuals who supply goods and services through an e-commerce aggregator (e-commerce sellers)
- Individuals offering database access and online information from abroad to people who live in India other than those who are registered as taxable individuals.
Documents required to complete GST registration
- Aadhaar card
- PAN card
- Bank account statement and cancelled cheque
- Incorporation certification or the business registration proof
- Business address proof
- Digital signature
- Letter of authorisation or Board Resolution from Authorised Signatory
- Director’s or promotor’s ID proof, photograph and address proof
Penalty for not completing GST registration
If you do not pay GST or pay a lesser amount than what is due, the penalty levied is 10% of the unpaid amount in case of genuine errors. However, the minimum penalty is Rs. 10,000.
If you have not registered for GST and are purposely trying to avoid tax, the penalty levied is 100% of the due tax amount.
Cost of availing GST number
The Government does not charge anything when it comes to GST registration. However, if you approach a CA or consultant, they may charge you a professional fee as the entire GST registration process is tedious.
Surrender your GST number
You can surrender your GST number. However, you can do so only after a year from the date of registration. It can be carried out in the following ways:
- The registered individual/business can apply for cancellation
- The legal heir can apply for cancellation following the death of the GST number holder.
- Cancelled by the GST officer
Impact of GST on e-commerce marketplace sellers
The Indian e-commerce sector is booming since the past few years and is expected to generate approximately $100 billion online revenue by the year 2022. The growth in the Indian e-commerce sector has also resulted in the conception of a number of online marketplaces. An e-commerce marketplace is a platform owned by an e-commerce operator. Some of the features of an e-commerce marketplace are:
- It enables third-party sellers to register and sell online on their platform.
- It charges a subscription fee or commission on sale value from the listed sellers.
- Third-party sellers under this business model gain access to a larger customer base listed with the marketplace.
- Customers, on the other hand, gain access to multiple sellers and competitive pricing for desired products.
The Government also allows Foreign Direct Investment in such a business model to promote the country’s e-commerce marketplace model.
Marketplaces have provided sellers with an additional channel of sales and broad reach, which was unimaginable for an offline seller. While the number of online sellers and their businesses has increased significantly, Goods and Service Tax has specifically taken up the marketplace and has designed certain rules and regulations specific to this segment.
The introduction of these rules has compelled the online seller community to welcome the GST regime. Some of these compliances are:
No minimum limit for GST registration: The Government of India has specified an entry limit for all the businesses. A business is liable to register under GST once the specified limit is reached. E-commerce sellers need not register if total sales are less than Rs. 20 lakhs.
No benefit under composition program: Most of the sellers registered with the marketplace are generally small and medium businesses. The Government has introduced a composition scheme under the GST Act. This scheme is primarily aimed to lower the burden of compliance for small and medium businesses. Under the composition scheme, businesses are required to file returns every quarter instead of a monthly basis and pay tax at a nominal rate of up to 2%. However, GST law has excluded e-commerce businesses from this scheme.
Tax collection at source by marketplace operator: As per the new tax regime, e-commerce marketplace operators are required to deduct a percentage amount in the form of GST liability of the seller and deposit the same with the Government. This mechanism is termed as TDS (Tax Collection at Source). Eventually, the marketplace sellers will have to file a monthly return to claim the credit of TCS collected by the marketplace operator. This somehow also impacts the liquidity and cash flow of sellers.
While all marketplace operators have already completed the initial level of analysis of the impact of GST on their operations, marketplace sellers are still unaware of these regulations.
As a seller, the need of the hour is to keep yourself aware of these changes to conduct smooth business operations. Also, sellers should start planning their transition strategy for the GST regime.