In India, all businesses having sale of goods with an annual turnover of Rs 40 lakhs, or service with an annual turnover of Rs 20 lakhs have to mandatorily be registered for GST and have a valid GST number.
GST was launched on July 1, 2017 by the Government of India and it applies to all Indian service providers including freelancers, traders as well as manufacturers. The GST is actually a centralised tax which has amalgamated various taxes like service tax, CST, excise duty and the state taxes such as the entertainment tax, luxury tax, octroi and VAT.
Each and every product goes through multiple stages all along the supply chain, be it purchasing raw materials, manufacturing, sale to the wholesaler, selling to the retailer and then finally the sale to the consumer. GST is levied on all the stages. So, if a product is produced in Assam, but is consumed in Rajasthan, the entire revenue will be received by Rajasthan. Additionally, consumers/t taxpayers with an annual turnover of less than Rs. 1.5 crore can choose a composition scheme and start paying GST at a fixed rate of turnover, doing away with all the hassles of GST.
Components of GST
GST has 3 components:
- Central Component – Central Goods and Services Tax (CGST)
- State Component – State Goods and Services Tax (SGTC), where centre and state levy GST on all entities if the transaction occurs in the state.
- Inter State Component – Integrated Goods and Services Tax (IGST), charged by the centre when a transaction happens between two states.
Eligibility Criteria for GST Registration
- All businesses and corporations involved in buying and selling of goods and services can and should register for GST.
- Companies with an annual turnover of Rs 40 lakhs, or service with an annual turnover of Rs 20 lakhs have to mandatorily be registered for GST and have a valid GST number.
- Businesses that make outward supply of goods also should register for GST.
- E commerce retailers do not have to register for GST if total sales is of less than Rs 20 lakhs.
GST Tax Rates
- Essential household items and life saving drugs are taxed at 5%.
- Products such as processed food or computers are charged as 12%
- Products like hair oil, soaps, sanitary napkins, industrial intermediaries and services are taxed at 18%.
- Luxury goods are taxed at 28%.
- Basic necessity goods come under the exempt list, which means they are not taxed.
Website to check GST rates for all products :
GST Return refers to the document which contains the details of income that is to be filed with the tax authorities, as per the law. Under the GST, a registered dealer is supposed to file GST returns containing purchase, sales, output, GST on sales and GST paid on purchases. Taxpayers have to file two returns every monthly and one return every year. There is no way for revision, and unreported invoices from the past can be included in the present month.
GSTIN is an unique identification number that is assigned to each and every GST taxpayer. GSTIN has to be verified by logging on to the GST portal.
GSTN stands for Goods and Service Tax Network and is a non profit, non government, private limited company which is a network that helps you in preparation, filing and getting returns of your indirect tax liabilities.
Documents Required for GST Registration – Online
The list of documents required varies from business to business.
- Address proof of Proprietor
- PAN Card of Proprietor
- LLP Agreement
- Names and Address proof of all the partners
- PAN Card of LLP
Private Limited Company
- PAN Card of the company
- Certificate of incorporation
- Identity Proof of all the directors
- Address proof of all the directors
- Articles of Association (AOA)
- Memorandum of Association (MOA)
- Signed Resolution by board members
- Digital Signature Certificates
Procedure of GST Application
Fill out the form – The first step will involve our GST representative collecting all the necessary documents from you and file the GST application on the iCFO platform. The ARN number will be released right after that.
GST Registration Certificate – The GST Registration Certificate and GSTIN is issued once the GST application and documents have been verified by the GST officer. The certificate can be downloaded from the GST Portal.
Penalty in case of failure of GST registration – According to the Section 122 of the CGST act, there is a direct penalty for any taxable person who fails to register for the GST.
Voluntary GST Registration
This is only in case of companies with an annual turnover of less than Rs 20 lakhs as it is advantageous even if it is not mandatory.
- Taking Input Credit
- Doing inter state business without any restrictions
- Registering on e commerce websites to expand the business.
- Having a competitive edge over the competitors.
Filing GST Returns
GST Return is a document that contains the details of the income of the taxpayers and this document has to be filed with the GST authorities so that the tax liabilities of the taxpayer can be calculated properly. Here’s what a GST Return file should include:
- GST Output on sales
- GST paid on purchases
GST Penalty you should remember
For late filing – Penalties for late filing is Rs 100 for each day and Rs 200 for each CGST and SGST. The penalty can accumulate upto a maximum limit of Rs 5000 along with the payment of tax at 18% per annum.
For not filing – If you miss out on filing any one of the GST , then the subsequent forms can also not be submitted before filing the outstanding ones.
For the 21 Offences – If there’s no intention of tax fraud found, a penalty of 10% or a minimum of Rs 10,000, or a jail term can be an option, depending on the amount of the taxes.