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GST Registration in India: A Detailed Guide
Goods and Services Tax (GST) is an indirect tax that was rolled out on July 1, 2017. It is levied on the supply of goods and services across the country. After successful registration, one can obtain a GST number and enjoy tax benefits. It has brought about a uniformity in the indirect tax structure by replacing all the indirect taxes that existed in the pre-GST regime such as VAT, service tax, CST, state tax, Excise duty, etc. Simply put, GST has incorporated the concept of "One nation One Tax." The GST is paid by consumers, but it is remitted to the government by businesses selling goods and services. In effect, GST provides revenue for the government. For some businesses, registration under GST is mandatory. If in case the organization carries on business without registering under GST, it is an offence under GST Act and heavy penalties will apply.
As per GST legal process, any business operations or any entity with an annual turnover exceeding Rs 40 lakhs (Rs 20 lakhs for North Eastern – All hilly states for sale of goods) must undergo GST process/procedure in India as a separate taxable provision. GST tax rates vary from 0% - 28% depending on the type of service or Nature of Goods Your business is selling.
Special Category States: Under GST, the following are listed as special category states - Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh & Uttarakhand.
- GST registration typically takes between 2-6 working days. You need to file your application with the department and sign it.
- One of the key objectives of GST was to remove cascading effect of taxes. Earlier taxpayers were unable to set off tax credits of one tax with other which led to cascading effect of taxes.
- GST was also introduced to curb instances of tax evasion. Under GST, taxpayers can claim input tax credit only on invoices uploaded by respective suppliers which reduces the chances of claiming input tax credits on fake invoices.
- The concept of GST was introduced to fulfil the vision of one nation one tax. Earlier various indirect taxes existed but now GST has replaced all of them.
What is GSTIN?
GSTIN is an abbreviation for Goods and Service Tax Identification Number. It consists 15-digit PAN-based number assigned to every individual registered under GST. This is generated by the Government after you have successfully completed GST registration.
What is a GST Return?
A GST returns is a document containing details of income that is required to be filed as per the law with the tax authorities. Under the GST law, a taxpayer has to submit two returns on a monthly basis and one such return annually. All returns have to be filed online. Please note that there is no provision for revising the returns. All invoices for the previous tax period that went unreported must be included in the current month.
Benefits of GST Registration?
Simplified Taxation Services: GST has combined a number of indirect taxes under one umbrella and integrated the Indian market. The number of compliance requirement has reduced considerably as compared to earlier tax regime.
Relief from Double Taxation: Any business that is registered with GST as per the government requirements would get reliefs and exemptions from double taxation.
Bank Loans: GST registration and GST return filing serve as proof of business activity and create track record for a business. Banks and NBFCs lend to businesses based on GST return data.
Supplier Onboarding: To become a supplier of reputed companies, GST registration is often times a must during the supplier onboarding process. Example Amazon, Flipkart, Indiamart, Udaan, Zomato and many more.
eCommerce: GST registration is a must to sell online and through various platforms
Scheme for Small Traders: GST has provided composition of scheme for ease of small traders and companies. The traders of small businesses are allowed to register and pay a a very low and fixed rate of tax to the government.
List of documents required for GST registration
Private Limited Company
- Certificate of Incorporation
- PAN Card of Company
- Articles of Association AOA & MOA
- PAN card and address proof of all directors
- Bank account details
- Board resolution appointing
- Authorised signatory
LLP / Partnership
- PAN Card of LLP/Partnership Firm
- LLP Registration Certificate / Partnership Deed
- Partners Pan & Aadhaar
- Photograph of all partners
- Bank account details
- Address proof of principal place of business
Individual/Proprietorship
- PAN Card of proprietor
- Address proof of proprietor
- Photograph
- Bank account details
| Form of Business | PRIVATE LIMITED COMPANY | ONE PERSON COMPANY | LLP | PARTNERSHIP FIRM | PROPRIETORSHIP FIRM |
|---|---|---|---|---|---|
| Recommended For | Startups & Growing Companies | Sole Promoters | Professional Services Companies | Small Businesses Firms | Small Traders, Agents & Manufactures |
| Prevailing laws | Companies Act | Companies Act | LLP Act | Partnership Act | NA |
| Charter Documents | MOA & AOA | MOA & AOA | LLP Agreement | Partnership Deed | NA |
| Limit of Members | 2-200 | 1 | 2-Unlimited | 2-20 | NA |
| Separate legal identity | Yes | Yes | Yes | NO | NO |
| Limited Liability | Yes | Yes | Yes | NO | NO |
| Tax Advantage | High | High | Low | Low | Low |
| Annual Statutory Compliances | High | High | Low | Low | Low |
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FAQs
Simplified Performa for Incorporating Company Electronically, also known as SPICe, was introduced in the year 2016 for the purpose of incorporation of the companies. Under the Ease of Doing Business (EODB) initiative, the MCA released the new form SPICe+ to further ease the company incorporation process. The new SPICe+ form encompasses more features than the earlier SPICe form. Name approval is integrated as part of the SPICe+ form. The AGILE form has been converted to AGILE Pro to provide GSTIN / ESIC / EPFO / Bank account as well along with company incorporation. Apart from that, even after affixing DSC in the form, information can be modified in the SPICe+ form.
After the introduction of the SPICe+ form, the name approval has been integrated with SPICe+. Part-A of SPICe+ is for name approval. Therefore, from 15th February 2020, the RUN form can only be used for a change of name.
Company Limited by Shares: The liability of the shareholders is limited only to the amount that is unpaid on the shares held by them. Company Limited by Guarantee: A company having no share capital where the liability of the shareholders is limited up to the amount undertaken to be contributed by them in the event of liquidation of the company.
Yes. private limited companies are eligible for attracting foreign direct investments in compliance with the relevant laws and regulations.
DIN, also known as Director Identification Number, is an identification number of a person intending or has become a director in a company. DPIN, also known as Designated Partner Identification Number, is an identification number for a designated partner in LLP. It is similar to DIN in the case of companies. DIN and DPIN are issued by the Ministry of Corporate Affairs.
Yes. Even a foreign national can become a director in a private limited company.
As per the Companies Act, 2013, only an individual natural person can become a director in a company. Therefore, neither a company, firm, or association can become a director in any company. This is to ensure the fixation of duties and responsibilities that would be difficult in the case of companies and firms becoming directors.
The private limited company registration cost depends upon various factors like authorized capital, number of directors, etc. Initiate your Pvt. Ltd. Company Registration with eAuditor Office as your partner in corporate compliance! Reach out to us for any professional assistance.